What It Is & How to Qualify
In general, the less you earn, the larger the credit. Families with children often qualify for the largest credits.
What is the earned income tax credit (EITC)?
The earned income tax credit, also known as the EITC or EIC, is a refundable tax credit for low- and moderate-income workers.
For the 2021 tax year, the earned income credit ranges from $1,502 to $6,728 depending on tax-filing status, income and number of children. People without kids can qualify.
How does the earned income tax credit work?
Here are some quick facts about the earned income tax credit:
For the 2021 tax year (the tax return you'll file in 2022), the earned income credit ranges from $1,502 to $6,728 depending on your filing status and how many children you have.
You can use your 2019 income instead of your 2021 income to calculate your EITC — but only if your 2019 income is higher than your 2021 income.
You don't have to have a child in order to claim the earned income credit.
The earned income tax credit doesn't just cut the amount of tax you owe — the EITC could also score you a refund, and in some cases, a refund that's more than what you actually paid in taxes.
If you claim the EITC, the IRS cannot issue your refund until mid-February by law.
Below are the maximum earned income tax credit amounts, plus the max you can earn before losing the benefit altogether.
2021 Earned Income Tax Credit
Both your earned income and your adjusted gross income each have to be below the levels in the table.
In general, the less you earn, the larger the earned income credit.
Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer. Your adjusted gross income is your earned income minus certain deductions
Who qualifies for the earned income tax credit?
Besides staying below the income thresholds noted above, there are other qualification rules and requirements here are the big eligibility rules.
You must have at least $1 of earned income (pensions and unemployment don't count).
Your investment income must be $10,000 or less.
For the 2021 tax year, you can qualify for the EITC if you’re separated but still married. To do so, you can’t file a joint tax return and your child must live with you for more than half the year. You also must have not lived with your spouse during the last six months or you must have a separation agreement or decree.
You must not have to file Form 2555, Foreign Earned Income; or Form 2555-EZ, Foreign Earned Income Exclusion.
There are special EIC rules for members of the military and the clergy, as well as for people who have disability income or who have children with disabilities.
Kids and the earned income tax credit
If you claim one or more children as part of your earned income credit, each must pass certain tests to qualify:
The child can be your son, daughter, adopted child, stepchild, foster child or grandchild. The child also can be your brother, sister, half-brother or half-sister, stepbrother or stepsister or any of their children (your niece or nephew).
The child must be under 19 at the end of the year and younger than you or your spouse if you're filing jointly, OR the child must be under 24 if he or she was a full-time student. There's no age limit for kids who are permanently and totally disabled.
The child must have lived with you or your spouse in the United States for more than half the year.
For each child you're claiming with the EITC, you’ll also need:
A Social Security number (be sure to use the child’s name and Social Security number exactly as they appear on the Social Security card).
His or her birthdate.