A step-by-step guide to earned income credit

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The Earned Income Credit is one of the biggest tax credits, especially since it is a refundable credit (which means it can create a tax refund for you). However, the rules for qualifying and claiming this credit are pretty tricky, to say the least. Fear not, because below you will find a step by step description of how to claim this precious credit.

Step 1: Check your qualifications

To be eligible for the earned income credit, you must meet certain basic conditions. First of all, you, your spouse, and all eligible children must all have a Social Security number. Second, you cannot use the separate filing status of the married filing. Third, your investment income for the year must be $ 3,450 or less. And fourth, you must have at least $ 1 of earned income for the year. “Earned income” includes wages, salaries, tips and other remuneration derived from employment; income from self-employment; and long-term disability benefits.

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Step 2: Add up your income

While it is necessary to have at least some earned income to qualify, you cannot exceed the income limits set by the credit. There are different income limits depending on your filing status and the number of eligible children you have. To be considered an eligible child, the child in question must be related to you (son, daughter, adopted child, stepson, foster child, grandchild, brother or sister or descendant of a brother. or a sister). They must also be under 19 (or under 24 if they are full-time students) and live with you more than half the year.

Here are the earned income credit income limits for 2017:

Filing status

No eligible child

An eligible child

Two eligible children

Three eligible children

Single, head of family or qualified widower (s)

$ 15,010

$ 39,617

$ 45,007

$ 48,340

Married spouse filing

$ 20,600

$ 45,207

$ 50,597

$ 53,930

If you earn more than the income limit that applies to you for the year, whether in earned income or in adjusted gross income (AGI), you cannot claim the earned income credit. Your income for the year also affects your credit amount, as you will see in the next section.

Step 3: Calculate your credit

If you meet the basic requirements for claiming the credit, then you need to determine the amount of credit you can claim (or have the IRS calculate it for you). The maximum amount of the earned income credit is based on the number of eligible children you have; for 2017, the maximum credit available is as follows:

  • No eligible child: $ 510

  • One eligible child: $ 3,400

  • Two eligible children: $ 5,616

  • Three or more eligible children: $ 6,318

However, the actual amount you can claim for this credit is based on your income for the year and your deposit status. If you want to simplify your tax return and your life, you can ask the IRS to calculate your earned income credit for you. You will need to write “EIC” next to line 66a (if using Form 1040) or line 42a (if using Form 1040A) or line 8a (if using Form 1040EZ) of the version of the Form 1040 that you are using. Leave the lines on your Form 1040 / 1040A / 1040EZ that refer to the total payments, overpayment, refund, and amount you owe, then complete the IEC Schedule (if you have eligible children) and send it with the rest of your tax return.

If you prefer to calculate the credit yourself, you can use the Won Tax Credit Assistant on the IRS website to do the math or you can view the earned income credits chart at the end of Publication 596. If you choose this approach, be sure to use the post (or wizard) for the correct tax year – as of this writing, the 2017 versions are not yet available. Once you know the amount of credit to which you are entitled, enter this amount on line 66a (if you are using Form 1040) or on line 42a (if you are using Form 1040A) or on line 8a (if you are using Form 1040). use Form 1040EZ) of your income tax return.

Step 4: Submit your tax return (and prepare to wait)

Once you have calculated your earned income credit or have chosen to have the IRS calculate it for you, you can complete the rest of your tax return and submit it as usual. However, claiming the earned income credit means that your repayment for the year may be delayed. By law, the IRS must withhold until mid-February any refunds for tax returns, including the earned income credit or the additional child tax credit, in order to submit those returns to an official. additional review.

Yes, it is complicated to claim this credit and to have to wait for your repayment in addition. But considering how much money you can make out of it, the Earned Income Credit is well worth all the trouble.


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