What is EIC/EITC and Who Qualifies?
The EIC/EITC is known as the Earned Income Tax Credit. This tax credit is available for those who have a low or moderate income.
The amount that you receive for this credit is determined based on the filing status you use and your salary for the year. Those who qualify pay less in federal taxes and usually get a refund when they file their tax returns.
Table of Contents
- 1 Basic Requirements to Be Eligible
- 2 Getting the EIC without Having to File a Tax Return or Being Unemployed
- 3 Qualifying for the EIC with No Dependents
- 4 How Do Dependents Affect the EIC?
- 5 Age Limits and the EIC for Adults
- 6 What is A Refundable Tax Credit?
- 7 What is EITC Fraud?
- 8 Bottom Line
Basic Requirements to Be Eligible
- You have to have a qualifying child and both must have a social security number
- You cannot file married or file separately
- Your investment income should be no higher than $3,300
- You have to be a U.S. citizen or resident alien for the entire year
- Your earned income must come from employment or self-employment.
When you file with H & R Block online tax filing, they will help you calculate the credit and make sure you complete the correct form by analyzing your answers to specific questions.
Getting the EIC without Having to File a Tax Return or Being Unemployed
If you are not required to file taxes, you should still file if you are eligible for this tax credit. You will only receive it if you file your taxes. Sometimes those who do not work are eligible for this tax credit too.
For example, if you receive specific disability benefits they would qualify as earned income and you could receive the tax credit. However, if you receive unemployment you will not qualify for the tax credit if that is your only income source. You must have some sort of earned income to be able to meet the basic requirements for eligibility.
Qualifying for the EIC with No Dependents
It is possible to receive this tax credit when you have no dependents. However, keep in mind that you probably are not going to receive as much as someone who has dependents, since they are a determining factor in the amount issued. Nevertheless, many people who do not have dependents still qualify for this tax credit.
How Do Dependents Affect the EIC?
Qualifying Dependents – When it comes to who qualifies as a dependent the guidelines are the same for qualifying children. This means they have to be a relative who has a social security number, meets the age qualifications, relationship, residency requirements. They should be your son, daughter, adopted child, stepchild, foster child, sister, brother, stepbrother, stepsister, or a descendent of them.
Age Requirements – They should be under the age of nineteen unless they are a college student and in that case, they should be under the age of twenty-four. If the child is disabled, there are no age requirements.
Dependent Phase Out – Your EIC will no longer increase after three qualifying children have been claimed.
Age Limits and the EIC for Adults
If you and your spouse are trying to qualify for the EIC without qualifying dependents, you have to be over the age of 25 yet under the age of 65 to receive the credit. The age is based on the age you are on the last day of the year. If you have a qualifying child, there is no age limit.
What is A Refundable Tax Credit?
The EITC is a refundable tax credit, which means it will be added to your refund if you do not owe the IRS any money. In the event that you do owe the IRS money, a portion of the credit will pay off the amount, if the refund is large enough, to reduce the amount you owe to zero.
What is EITC Fraud?
The IRS is cracking down to make sure that fraud is decreased when it comes to the EITC. This means that you may have to provide them with documents to prove that you are eligible to receive this tax credit. If you have to provide verification such as, birth certificates, school records, or medical records, your refund may be delayed until they analyze the information.
If you file with H & R Block, they will ask you a few questions to determine whether you are eligible for the EITC to insure that you receive the largest refund ever. H&R Block also offers a free tax refund calculator so you can know how big your refund will be. Lastly, many companies make your W2 form available online so you can get it instantly with the H&R Block early W2 access tool.