EARN INCOME TAX CREDIT


The Earned Income Credit (EIC) is a tax credit for certain people who work and have less than $55,952 of earned income.  This “refundable” credit may give you a refund even if you had no tax withholding.  In order to claim this credit, you must file an income tax return and qualify by meeting certain rules.


THE CREDIT CAN BE AS MUCH AS:

  • $529 for earned income and adjusted gross income (AGI) less than $15,570 with no children ($21,370 if married filing jointly)

  • $3,526 for earned income and AGI less than $41,094 and one qualifying child ($46,884 if married filing jointly)

  • $5,828 for earned income and AGI less than $46,703 and two or more qualifying child ($52,493 if married filing jointly)

  • $6,557 for earned income and AGI less than $50,162 and three or more qualifying child ($55,952 if married filing jointly)


RULES FOR ALL FILERS FOR EIC:

·         You must have earned income (wages or self-employment income)

·         You (AND your spouse AND any qualifying child) must have a valid social security number

·         Your filing status cannot be married filing separately

·         You must be a U.S. citizen or resident alien all year

·         You cannot file Form 2555 or Form 2555-EZ (which excludes foreign earned income)

·         Your investment income must be $3,600 or less


ADDITIONAL RULES IF YOU HAVE A QUALIFYING CHILD:

·         Your qualifying child must meet the relationship, age and residency tests

·         Your qualifying child cannot be used by more than one person to claim the EIC

·         You cannot be a qualifying child of another person


ADDITIONAL RULES IF YOU DON’T HAVE A QUALIFYING CHILD:

·         You must be at least age 25, but under age 65

·         You cannot be the dependent of another person

·         You cannot be a qualifying child of another person

·         You must have lived in the United States for more than half the year


QUALIFYING CHILD:
For EIC purposes a qualifying child must meet the relationship, residency, and age test, but does not have to meet the support test.

Relationship Test:
The qualifying child must be your son or daughter (including adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these.

An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.

An eligible foster child is any child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Residency Test:
The qualifying child must live with you in the U.S. for more than half of the year. A child who was born or died during the year is considered to have lived with you for the entire year if your home was the child’s home for the entire time he or she was alive during the year.

Age Test:
The qualifying child must be under age 19 at the end of the year, or a full-time student under age 24 at the end of 2019 or, if permanently and totally disabled, can be any age.


EARNED INCOME FOR PURPOSES OF EARNED INCOME CREDIT INCLUDES:

·         Wages, salaries and tips

·         Union strike benefits

·         Taxable long-term disability benefits received before minimum retirement age

·         Net earnings from self-employment

·         Nontaxable combat pay (code Q in Form W2, box 12) may be included if it increases your EIC


Yang & Associates, Ltd. professionals are available for your tax needs.  Please call your local Yang & Associates, Ltd. office for further information.