The basic rules for the Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable tax credit for people with low to moderate earned income. You must have worked during the tax year, earned less than a certain amount (which varies by filing status and number of dependents), and meet citizenship and residency rules. The IRS uses your tax return to determine whether you may have access to — there is no separate process process.

The credit phases in as your income rises, reaches a maximum, then phases out. This means the amount you receive depends on how much you earned, not just whether you earned something. A single person with no children faces different income limits and a smaller maximum credit than a married couple with two children.

You must file a tax return to claim the EITC, even if you would not otherwise be required to file. The credit can result in a refund larger than the taxes you paid during the year, which is why it is called refundable.

Key Takeaways

  • You must have earned income from work — self-employment, wages, or certain other sources — to may have access to for the EITC.
  • Income limits depend on your filing status and number of may have access to children; a single parent with one child has a higher limit than a single person with no children.
  • You must be a U.S. citizen or resident alien for the entire tax year, and your Social Security number must be valid for work.
  • The credit is claimed on your tax return using Schedule EIC (Form 1040 Schedule EIC) or by entering the information directly if you file electronically.
  • If you earned too little to owe taxes, filing a return to claim the EITC can result in a refund of money you did not pay in taxes.

Income limits and filing status

The IRS sets income thresholds each year. For the 2023 tax year, a single filer with no children could earn up to roughly $16,810 and still may have access to; a single parent with one child could earn up to roughly $43,492. These numbers change annually and are higher for married couples filing jointly.

Your filing status matters because it determines which income limit applies to you. Married couples filing jointly have higher limits than single filers. If you are married but file separately, you cannot claim the EITC at all. Head of household status (used by single parents) has its own set of limits, usually between single and married filing jointly.

The income figure used is your Adjusted Gross Income (AGI) plus any nontaxable combat pay you elected to include. This is the number on your tax return, not your gross wages before deductions.

Earned income requirements

The EITC requires earned income, which means money you received for work. Wages from a job, net profit from self-employment, and certain other work-related payments count. Income from investments, Social Security, unemployment benefits, or disability payments does not count as earned income for EITC purposes.

If you are self-employed, your net profit (after business expenses) counts as earned income. You must have a Schedule C or Schedule C-EZ on file to report this income. If you had a loss in your business, that does not count as earned income, and you would not may have access to for the EITC that year unless you had other earned income.

Certain military families can elect to include nontaxable combat pay as earned income, which can increase the credit. This election is made on your tax return and can be useful if your regular earned income is low.

Citizenship and residency rules

You must be a U.S. citizen or resident alien for the entire tax year. A resident alien is someone who has a green card or meets the substantial presence test (generally, being in the U.S. for at least 31 days in the current year and 183 days over a three-year period). Nonresident aliens cannot claim the EITC.

Your Social Security number must be valid for employment in the United States. If you have an Individual Taxpayer Identification Number (ITIN) instead, you cannot claim the EITC, even if you are otherwise may be able to access. Your spouse, if you file jointly, must also have a valid Social Security number or ITIN that is valid for work.

If you are unsure of your status, the IRS website has a tool to determine whether you are a resident or nonresident alien for tax purposes. This status can change from year to year depending on how much time you spend in the U.S.

may have access to children and dependents

The EITC is larger if you have may have access to children. A may have access to child must be your son, daughter, stepchild, foster child, sibling, or descendant of any of these; must be under age 17 at the end of the tax year; must have lived with you for more than half the year; and must be a U.S. citizen, national, or resident alien. The child must also have a valid Social Security number.

You can claim up to three may have access to children on the EITC. The credit increases with each child: one child gives you a larger credit than no children, two children give you a larger credit than one, and three or more children give you the maximum credit for that filing status.

If you have a may have access to child but do not claim them as a dependent for other tax purposes, you can still claim them for the EITC. However, only one person can claim the same child on their tax return. If two people claim the same child, the IRS will disallow one of the claims and may assess penalties.

How to claim the EITC on your tax return

If you file on paper, you use Schedule EIC (Form 1040 Schedule EIC) to list your may have access to children and calculate your credit. You then transfer the credit amount to your Form 1040 or Form 1040-SR. If you file electronically, most tax software will ask you questions about your income, filing status, and children and will calculate the credit automatically.

You do not need to send any documents with your return to claim the EITC. However, you must keep records of your income (pay stubs, 1099 forms, or business records) and proof that any children you claim are yours and lived with you (birth certificates, school records, or lease agreements). The IRS may ask to see these documents if they audit your return.

If you earned very little or no income, you still file a return to claim the EITC. Many tax preparation services offer free filing for low-income taxpayers through the IRS Free File program. You can also use IRS Form 1040-N-EZ if you meet the requirements, though this form is being phased out.

What happens if your income changes during the year

The EITC is based on your total earned income for the entire tax year. If you worked part of the year or had variable income, you add up all your earnings from January through December. A month of unemployment or unpaid leave does not reduce your credit if you earned enough in other months to stay under the income limit.

If you expect your income to be very low for the year, you can claim the EITC when you file your return. You do not need to estimate or predict your income in advance. However, if you received an advance EITC payment from your employer during the year (a rare option), you would need to account for that when you file.

If you are unsure whether you will stay under the income limit, it is usually safer to file and let the IRS determine your may be able to access based on your actual earnings. Overpaying taxes during the year and then receiving a refund through the EITC is common and not a problem.

Frequently Asked Questions

Can I claim the EITC if I am married but file separately?

No. If you are married, you must file jointly to claim the EITC. Filing separately disqualifies you entirely, even if your individual income would otherwise be low enough. This is one of the few tax credits with this restriction.

What if I have a child but the other parent claims them on their return?

Only one person can claim the same child for the EITC. If both parents claim the same child, the IRS will disallow one claim and may assess penalties. You and the other parent should agree in advance who will claim the child, or you can take turns claiming them in different years.

Do I have to have a job to may have access to, or does self-employment income count?

Self-employment income counts as earned income for the EITC. You must report it on Schedule C and have a net profit (after business expenses) to may have access to. A business loss does not count as earned income.

Can I claim the EITC if I receive Social Security or unemployment benefits?

Social Security and unemployment benefits do not count as earned income for the EITC. However, if you also had wages or self-employment income during the year, that earned income can may have access to you for the credit. The Social Security or unemployment does not disqualify you; it straightforward does not count toward the earned income requirement.

What if I think I was denied the EITC by mistake?

If the IRS denied your EITC claim, they will send you a notice explaining why. You can respond to that notice or file an amended return (Form 1040-X) if you believe the decision was wrong. Keep copies of any documents that support your claim, such as birth certificates for children or pay stubs showing your income.