Thursday, November 29, 2012

Do you qualify for the Earned Income Credit (EIC)?

The earned income credit (EIC) is a refundable tax credit for certain people who work and have earned income under $49,078. The EIC is available to persons with or without a qualifying child. To qualify to claim the EIC, you must:

First, everyone must meet all the following rules:

1. Your adjusted gross income (AGI) must be less than:
  • $43,998 ($49,078 for married filing jointly) if you have three or more qualifying children,
  • $40,964 ($46,044 for married filing jointly) if you have two qualifying children,
  • $36,052 ($41,132 for married filing jointly) if you have one qualifying child, or
  • $13,660 ($18,740 for married filing jointly) if you do not have a qualifying child.                             
2. You must have a valid social security number.
3. Your filing status cannot be “Married filing separately.
4. You must be a U.S. citizen or resident alien all year.
5. You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income).
6. Your investment income must be $3,150 or less.
7. You must have earned income.                               

Second,  if you have a Qualifying Child, you must meet all the following rules:

8. Your child must meet the relationship, age, residency, and joint return tests.
9. Your qualifying child cannot be used by more than one person to claim the EIC.
10. You cannot be a qualifying child of another person.                             

Or if you do not have a Qualifying Child:

11. You must be at least age 25 but under age 65.
12. You cannot be the dependent of another person.
13. You cannot be a qualifying child of another person.
14. You must have lived in the United States more than half of the year.                             

Third, you earned income must be less than:
  • $43,998 ($49,078 for married filing jointly) if you have three or more qualifying children,
  • $40,964 ($46,044 for married filing jointly) if you have two qualifying children,
  • $36,052 ($41,132 for married filing jointly) if you have one qualifying child, or
  • $13,660 ($18,740 for married filing jointly) if you do not have a qualifying child.                             
 Ben Ekwalla, CPA

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