Do You Quality For the Earned Income Tax Credit?

The Earned Income Tax Credit (EITC) is one of the largest tax benefits available to moderate and low-income taxpayers, so it pays to investigate, to see if you qualify.

Last year more than 26 million eligible taxpayers received nearly $59 billion total in EITC. The economic stimulus law created a new category of families with three or more children and increased the maximum benefit of EITC for tax years 2009 and 2010. The Tax Relief and Job Creation Act of 2010 extended these changes through 2012.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. Even if you paid no tax, you could receive money from the Internal Revenue Service (IRS).

Do you qualify?

To qualify, you must meet certain requirements and file a U.S. Individual Income Tax Return. Individuals and families must meet certain general requirements:

• You must have earned income.
• You must have a valid Social Security number for yourself, your spouse (if married filing jointly) and your qualifying child.
• Investment income is limited to $3,100.
• Your filing status cannot be "married filing separately."
• Generally, you must be a U.S. citizen or resident alien all year.
• You cannot be a qualifying child of another person.
• You cannot file Form 2555 or Form 2555-EZ (related to foreign earned income).

Your income cannot exceed certain limitations. For Tax Year 2010, your earned income and adjusted grow income (AGI) must each be less than:

• $43,352 ($48,362 married filing jointly) with three or more qualifying children
• $40,363 ($45,373 married filing jointly) with two qualifying children
• $35,535 ($40,545 married filing jointly) with one qualifying child
• $13,460 ($18,470 married filing jointly) with no qualifying children

If you claim a child, he or she must have lived with you in the United States for more than half of 2010. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them. At the end of 2010, the child must have been under age 19, a full-time student under age 24, younger than the EITC-claiming taxpayer or any age if permanently and totally disabled at anytime during 2010.

Your qualifying child cannot be used by more than one person to claim EITC. If a child meets the rules to be a qualifying child of more than one person, only one person can treat that child as a qualifying child and claim EITC.

No kids

If you don't have a child, you must meet three additional tests:

• At the end of 2010, you must have been at least age 25, but under age 65.
• You cannot qualify as the dependent of another person.
• You must have lived in the United States for more than half of 2010.

Credit Limits for 2010 Tax Year

Income and family size determine the amount of the EITC. For tax year 2010, the maximum credit amounts are:

• $5,666 with three or more qualifying children
• $5,036 with two qualifying children
• $3,050 with one qualifying child
• $457 with no qualifying children