Checking your eligibility for the earned income credit (EIC)

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People are afraid of EIC looking at the eligibility conditions.  However if you spare a small time checking these conditions, the results can be worth the efforts.  If your income is under $39,783, this tax credit is very useful for you.

A tax credit is always good because it puts money in your pocket and reduces the amount of tax you pay. Just go through the eligibility checklist:

1. Your adjusted gross income (AGI)

Your AGI must be less than $12,590 ($14,590 for married filing jointly) if you do not have a qualifying child.  If you have one qualifying child, your AGI should not exceed $32,241 ($35,241 for married filing jointly).  If you’ll have more than one qualifying child, then your AGI should not exceed $37,783 ($39,783 for married filing jointly).

2. Social Security Number

You, your spouse and your qualifying child, each one should have a valid social security number.

3. Your filing status

If you are married, you must file joint return in order to be eligible For EIC.  Your filing status cannot be ‘married filing separately’. However if you are married and your spouse did not live in your home at any time during the last six months of the year, you can file as head of household instead of ‘married filing separately’.

4. Your residential status

You must be a US citizen or resident alien all over the year.  The only exception is, if you are filing as ‘married filing jointly’, one spouse is a US citizen or a resident alien and you choose to treat the non-resident spouse as a US resident.  Also, you must have lived in the United States for more than half of the year.

5. Income earned in foreign countries

If you have earned income in foreign countries, and you intend to file Form 2555, which is used for foreign earned income or Form 2555–EZ, which is used for foreign earned income exclusion, then you cannot claim EIC.

6. Your investment income

Your investment income must be $2,900 or less in order to qualify for EIC.

7. Dependency on another person

If you are a qualifying child of another person, or if you are dependent of another person, then you cannot claim EIC.

8. Age, residency and relationship tests for a qualifying child

To be your qualifying child, a child must be your:

  • Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or
  • Brother, half brother, sister, half sister, stepsister, stepbrother, or a descendant of any of them (for example, your niece or nephew).

Your child must be:

  1. Under age 19,
  2. Under age 24 and a student, or
  3. Permanently and totally disabled, regardless of age.

Your child must have lived with you in the United States for more than half of the year.

9. You must have earned income

The tax credit is called earned income credit because you can claim it only if your work and have earned income.  If you’re married and filing a joint return, then at least one spouse must be working and must have earned income.

10. Your qualifying child cannot be used by another person

Sometimes a child meets the rules to be a qualifying child of more than one person. However, only one person can treat that child as a qualifying child and claim the EIC using that child.

11. Age criteria

You must be at least 25 years old, but must be under the age 65.

12. Dependent of another person

If you are a dependent of another person, then you cannot claim EIC.

If you fulfill all these conditions, its time for you to go for EIC.

EIC has no effect on certain welfare benefits like food stamps, Medicaid and supplemental security income (SSI).

People who are eligible for EIC generally don’t have cash to hire a consultant and they are unable to claim EIC on their own due to its complicated criteria.  However IRS provides an online program to help these people.  So just check the eligibility criteria and you may be able to fit in yourself!

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