What Is the Earned Income Tax Credit and How to Know If You Qualify
At tax time, most of us have a similar goal: minimize our liability, and maybe even get some money back in the process. The Earned Income Tax Credit, or EITC, is a tax incentive that might be able to help.
You may be eligible for the EITC if you earned a relatively low income in the previous tax year — especially if you have children. In this article, we’ll explore exactly how to qualify, how much credit you can get, and how to claim it on your tax return. Then we’ll follow up with some frequently asked questions about the Earned Income Tax Credit.
What Is Earned Income Tax Credit?
The Earned Income Tax Credit (EITC) is a refundable tax credit available for low- to moderate-income individuals and families — especially those with children. The EITC is claimed when you file your tax return. The maximum amount available for 2022 taxes is $6,935, though the amount of credit you’ll receive depends on income, filing status, and how many qualifying children you have.
The EITC is a credit, not a deduction, which means it directly reduces the tax dollars you owe. A deduction, on the other hand, reduces how much of your income is subject to taxation. In practice, this means it’s even better than a tax deduction in most cases, and could substantially lower your tax liability or get you a bigger refund.
Who Qualifies for the Earned Income Tax Credit?
The basic qualification for the EITC is simple, but as with all things IRS, there are lots of nitty-gritty specifics that can make or break your eligibility. The first requirement is right there in the name: you must have earned income. You’ll also need to:
- Have a Social Security number by the due date of your 2022 tax return (including extensions).
- Have been a U.S. citizen or resident alien for the entirety of the tax year in question.
- Be at least 25 years old, but not over 65.
If you don’t have children, you may be eligible based solely on a low income. In the 2022 tax year, you’ll need to have earned an adjusted gross income, or AGI, of:
- Less than $16,480 as a single filer.
- Less than $22,610 for married couples filing jointly.
Otherwise, the income limits depend on the number of children you have — and the children must meet all qualifications, which include age and residency requirements, and a Social Security number of their own.
2022 Income Limits for Earned Income Tax Credit
| Number of Children | Single or Head of Household | Married Filing Jointly | ||
|---|---|---|---|---|
No qualifying children |
$16,480 |
$22,610 |
||
1 qualifying child |
$43,492 |
$49,622 |
||
2 qualifying child |
$49,399 |
$55,529 |
||
3+ qualifying child |
$53,057 |
$59,187 |
Additionally, there are some special rules for military and clergy members, as well those who earn select types of disabilities benefits. If you fall into one of these categories, definitely check out the links — these rules will help you determine whether certain monies can be claimed as earned income and applied toward eligibility credit.
How Much Can You Get From the Earned Income Tax Credit?
Although individuals without children have always qualified for a small earned income credit, it’s typically much less than what’s offered for those with children. While the 2021 tax year saw temporarily increased EITC amounts (for childless individuals) due to The American Rescue Plan Act, the 2022 EITC amounts are back to normal. In other words, the amounts for childless individuals and families are once again significantly lower than those available to filers with children.
Maximum EITC Based on Number of Children
| Number of Children | Maximum EITC Amount | |||
|---|---|---|---|---|
0 |
$560 |
|||
1 |
$3,733 |
|||
2 |
$6,164 |
|||
3+ |
$6,935 |
How to Get the Earned Income Tax Credit
If you’re eligible for the Earned Income Tax Credit and ready to see its effect on your return, the first thing you need to do is to file a tax return. You’ll need to do this even if you don’t owe any taxes or are not otherwise required to file — there’s no other way to claim the credit.
You can use U.S. tax forms 1040 or 1040-SR to claim the Earned Income Tax Credit if you don’t have qualifying children, but if you do have children, you’ll need to include Schedule EITC with your 1040. You can also gather all the necessary documentation and have a tax professional do the paperwork for you, or take advantage of the IRS online Free File tool.
Keep in mind that if you claim the EITC, your tax refund may be delayed. By law, the IRS cannot issue EITC refunds before mid-February.
If you are worried about making mistakes while filing, we highly recommend using tax software like TurboTax, H&R Block or TaxAct.
Frequently Asked Questions (FAQs) about the Earned Income Tax Credit
You’ve got questions about the Earned Income Tax Credit, don’t worry — we’ve got answers.
The Earned Income Tax Credit (EITC) is a credit offered to individuals and families that earned a low income during the previous tax year. The amount of credit offered is determined by your filing status (single or married filing jointly) and the number of children you have — generally, the more kids you have, the larger the credit you’ll be eligible for.
Since the EITC is a credit, rather than a deduction, it comes directly off your tax liability. In other words, if you are getting back $2,000 and get an Earned Income Tax Credit of $2,000, you would receive a total refund of $4,000.
To qualify for the EITC for the 2022 tax year, you must:
- Have earned an income under $59,187.
- Have investment income below $10,300.
- Have a valid Social Security Number.
- Be a U.S. citizen or resident alien.
You can qualify for the EITC using any of the following tax filing statuses:
- Married filing jointly
- Head of household
- Married filing separate
- Qualifying widow or widower
- Single
Several things can disqualify you from receiving EITC, including:
- Earning more than $59,187.
- Having investment income over $10,300.
- Filing a Form 2555 with the IRS, which is related to foreign income.
There may be other disqualifying factors. If you’re not sure whether you qualify, it’s best to consult with a tax professional. The IRS has a Qualification Assistant tool to help determine your eligibility.
Penny Hoarder contributor Dave Schafer has been writing professionally for nearly a decade, covering topics ranging from personal finance to software and consumer tech. Reporting by Jamie Cattanach and freelancer Larissa Runkle is included in this story.
