Earned Income Tax Credit

Eligibility

You can qualify for the Earned Income Tax Credit (EITC) when you file your taxes if you had earned income during the year for which you are filing taxes and you had an adjusted gross income below certain limits, which vary depending on how many qualifying children you have. First we’ll show you what the exact rules and income limits are. Later, we’ll explain exactly what “earned income,” “adjusted gross income,” and “qualifying children” actually mean so that you can make sure you understand whether or not you qualify.

DB101 has been updated for tax changes in the 2021 American Rescue Plan (ARP) Act. For 2021 taxes (due in April, 2022), you could get a much higher Earned Income Tax Credit (EITC) or Child Tax Credit. Make sure you file your taxes, even if you don't owe anything, so that you get these credits.

Earned Income Tax Credit (EITC) eligibility requirements

General requirements:

  • You must meet adjusted gross income requirements (see table below).
  • You must have earned income from employment, self-employment, or employer-paid disability benefits that you got before retirement.
  • You must have a Social Security Number valid for employment.
  • You cannot file your taxes as “married filing separately.” If you’re married, you must file a joint tax return.
  • You must be a U.S. citizen or resident alien. If you’re a nonresident alien, you must be married to a U.S. citizen or resident alien and filing a joint tax return.
  • You must live in the U.S. for more than half of the year.

Age requirements:

  • If you are claiming qualifying children, you can be any age.
  • If you’re not claiming a qualifying child, you must be at least 19 years old.

Additional requirements:

  • You cannot claim foreign income or a foreign housing deduction using Form 2555.
  • You must not have investment income that is above $10,000 (for 2021).
  • You cannot be the dependent of another person.
  • You cannot be the qualifying child of another person.
EITC Adjusted Gross Income (AGI) Limits and Maximum Credits*

No Children

1 Qualifying Child

2 Qualifying Children

3 or More Qualifying Children

Single

AGI limit: $21,430
Max credit: $1,502
AGI limit: $42,158
Max credit: $3,618
AGI limit: $47,915
Max credit: $5,980
AGI limit: $51,464
Max credit: $6,728

Married (filing jointly)

AGI limit: $27,380
Max credit: $1,502
AGI limit: $48,108
Max credit: $3,618
AGI limit: $53,865
Max credit: $5,980
AGI limit: $57,414
Max credit: $6,728
* Figures are for tax year 2021 (filing by April 2022).

Key Terms

Earned Income

To qualify for an EITC, you must have earned income. This can include your wages, salaries, tips, net earnings from self-employment, or any other form of taxable employee pay. You can also choose to include nontaxable combat pay as earned income.

The EITC program considers taxable benefits you get under your employer’s disability retirement plan before the minimum retirement age to be earned income. Benefits payments from a policy you paid the premiums for or that you got after retirement are not considered earned income.

Other things that do not qualify as earned income under the EITC include:

  • Interest and dividends
  • Social Security and railroad retirement benefits
  • Pensions and annuities
  • Alimony and child support
  • Workers’ compensation benefits
  • Unemployment compensation
  • Welfare benefits
  • Veterans benefits

If you are married and filing jointly, at least 1 spouse must have earned income to be eligible for an EITC.

Example

Roberto is single and has 1 child. Without the Earned Income Tax Credit (EITC), he would owe $2,000 on his federal income taxes based on the income from his job. However, he qualifies for a $3,618 EITC, meaning that instead of paying taxes, he will get a $1,618 refund from the IRS.

Adjusted Gross Income

In addition to the earned income requirement, you must have an adjusted gross income below certain levels to qualify for an EITC.

Your adjusted gross income includes all earned income before deductions for taxes, health care or other expenses, minus certain business, education-related, and other expenses. While filling out your annual tax return (IRS Form 1040), you will be asked a series of questions that will let you figure out what your adjusted gross income is.

Example

John earned $30,000 in wages for the year before taxes and other deductions were taken out of his paychecks. He also earned $4,000 in employer-paid disability insurance payments for the year. He had no deductions for business, education-related, or other expenses. According to John’s tax calculations, his adjusted gross income would be $34,000 — his gross wages plus payments he got from the employer-paid disability insurance.

Qualifying Children

For a child to be considered a “qualifying child” under the Earned Income Tax Credit (EITC), several requirements must be met:

  • Relationship: If you are claiming one or more children, they must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example, your grandchild, niece, or nephew).
  • Residence: For more than half the year, the child must live at the same residence as you do and the child must have a valid Social Security number.
  • Age: At the end of the tax year, the child must be under 19. Or, if going to school full-time, the child must be under 24.
    • Exception: If your child is permanently and totally disabled, there is no age requirement.

According to the IRS, a person is considered “permanently and totally disabled” if:

  • Their condition is expected to last continuously for at least 1 year or is expected to result in death, and
  • They cannot perform any Substantial Gainful Activity (SGA), which means they are unable to earn more than $1,310 per month ($2,190 if they are blind).

Qualifying children can only be used by 1 family member to claim an EITC.

Learn more