The earned income tax credit is one of the most valuable federal credits available to working families. It’s designed to help low-income to moderate-income workers get a tax break and pocket more of their wages.
Not sure if you can claim the earned income tax credit on your federal tax return? Read on to learn more about how this tax benefit works and the credit amounts available depending on your filing status, number of children, and income level.
The earned income tax credit or EITC (also sometimes shortened to earned income credit or EIC) is a dollar-for-dollar credit you can claim if you meet certain criteria. As the IRS.gov website states, “If you qualify, you can use the credit to reduce the taxes you owe — and maybe increase your refund.”
It’s important to note that the earned income tax credit isn’t available to all filers and the EIC amount you’re eligible to receive will depend on several factors including your income, tax filing status, and family size.
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A refundable tax credit can take your liability below zero and trigger a tax refund. In the case of the earned income tax credit, you’ll typically receive a larger credit if you have a child, but you don’t have to claim a dependent to be eligible for the credit.
For instance, if you owe $900 in taxes and your credit amount from the EITC is $632, you’d only need to pay the IRS $268. If your EITC credit was $4,213 because of a qualifying child, you’d receive a refund of $3,313 on your tax filing.
Because the Internal Revenue Service can’t issue refunds until mid-February by law, your tax return may be slightly delayed no matter how early you submit the form.
Read more: Child tax credit: Everything you need to know for the 2024 tax year
Families with multiple children benefit from larger EITC credit amounts. Below are the eligibility requirements for a qualifying child for EITC purposes. For tax preparation, separated spouses should note that only one person can claim each qualifying child on their tax return.
A qualifying child must be under 19 at the end of the tax year for which you are filing or under 24 if they are a full-time student. There is no age limit for claiming the EIC credit for a dependent who is permanently or totally disabled.
Relationship and residency
The child can be your biological or adopted child or a stepchild, foster child, sibling or step-sibling, grandchild, niece, or nephew. In all cases, the child has to have lived with you or your spouse for more than half the year and have a valid Social Security number.
If you don’t have qualifying children, you may still be able to claim the EITC depending on your marital status and adjusted gross income (AGI). To qualify, you need to meet the income requirements and have lived in the United States for the last six months, be at least 25 years old but not older than 64, and not be claimed as a dependent on anyone else’s tax return. The IRS also has a special rule that may enable military members and clergy to claim the EITC.
In general, taxpayers who are married filing separately are not eligible to claim the earned income tax credit. In addition to meeting the filing status and income levels, you can’t claim the 2024 EITC if you have any foreign-earned income or investment income that totals more than $11,600.
Still not sure if you qualify? You can use the IRS EITC assistant to check your eligibility and ensure you get the maximum credit amount.
Here’s how to claim the earned income tax credit if your status is single or married filing jointly:
Most tax software will walk you through filling out these forms, including calculating your adjusted gross income. Just note that you can claim the EIC whether you’re using a Form 1040 or a Form 1040-SR.
If you have qualifying children, you’ll be prompted by the schedule to enter information about each child, including birth date, Social Security number, and more. Again, this is a fairly straightforward form but double-check to ensure the info you provide is accurate.
As mentioned, the IRS is not allowed by law to release these funds until mid-February, so whether you file a joint return or an individual one, you may have to sit tight for a few weeks before certain credits are applied. If the IRS denies your claim to the EITC credit, you’ll have to submit a Form 8862 before you can correct your filing and submit again.
Read more: Everything you need to file your taxes on time
Yes, investment income can disqualify you from claiming the 2024 federal earned income tax credit, but only if it exceeds $11,600. Investment income includes interest, dividends, capital gains, royalties, and passive income like rental income. You’ll also be disqualified if you have to fill out a form claiming foreign earned income. See the full IRS eligibility requirements for claiming the earned income tax credit on their website.
Calculating your adjusted gross income is an important first step to see if you’re eligible to claim the earned income tax credit. Adjusted gross income is your taxable income, which includes an individual taxpayer’s wages, tips, and other self-employment earnings, minus any deductions. The IRS provides a free tool to estimate adjusted gross income.
The IRS allows qualified taxpayers to file for previously unclaimed federal EITC credits for up to three previous tax years. To claim this federal credit, you’ll have to amend your tax return for prior years. You can check the previous EIC credit amounts for 2023, 2022, and 2021 on the IRS website, although there are some special rules for how the credit was applied in 2021 because of the American Rescue Plan.
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