The Earned Income Tax Credit, EITC or EIC, is a benefit for working people with low to moderate income. The credit reduces the amount of tax you owe and may give you a refund.
To qualify, you must meet the following criteria:
1. You, your spouse (if applicable), and all listed qualifying children must have social security numbers;
2. Any filing status EXCEPT married filing separately;
2. Report earned income within a certain range for your filing status;
3. File a tax return, even if you do not owe any tax.
4. Have at least one qualifying child OR meet the requirements for workers without a qualifying child;
To determine if you have at least one qualifying child, answer the following three simple questions:
1. What is the dependent’s relationship to you?
The following relationships qualify you for the credit: son, daughter, adopted child, stepchild, foster child, grandchild, brother, sister, half brother, half sister, stepbrother, stepsister, niece or nephew
2. How old is the dependent?
The dependent must be younger than you. The dependent must also be younger than age 19 at the end of the year, younger than age 24 at the end of the year if the dependent is a full-time student, or any age if the dependent is permanently and totally disabled.
3. Where did the dependent live during the tax year?
The dependent must have lived with you in the United States for more than half of the year, which means you paid for more than half of their living expenses.
The dependent cannot file a joint return for the tax year unless they are only reporting income earned but no credits.
The amount of the credit you receive depends on your earned income, filing status, and whether you have any qualifying children. For 2020, the EITC is worth as much as:
- $538 for families with no qualifying children
- $3,584 for families with one qualifying child
- $5,920 for families with two qualifying children
- $6,660 for families with three or more qualifying children
The IRS expects the earliest EITC/ACTC related refunds to be available in taxpayer bank accounts or debit cards the first week of March 2021 for taxpayers that chose the direct deposit option and have no other issues with their tax return.