Earned Income Tax Credit is a refundable tax credit for low to moderate income families that can be worth as much as $7,430 for tax year 2023. The amount of credit varies depending on a taxpayer’s filing status, number of qualifying dependents, and the amount of earned income a taxpayer has.
The Earned Income Credit slowly phases in, until it reaches the maximum amount of credit, and then begins to slowly phase out when a taxpayer reaches a certain income threshold.
Reference our EIC chart for more information regarding phase-outs and whether a taxpayer qualifies for the maximum credit amount.
To qualify for EIC taxpayers and their spouses (if MFS) must:
Have valid Social Security numbers by the due date of the tax return (including extensions)
Not file MFS (Unless they lived apart from their spouse the last 6 months of the year or have a court ordered separation agreement valid on the last day of the tax year)
Must be a U.S. citizen or resident alien all year
Must not file form 2555
Must have investment income less than $11,000
Have earned income
Taxpayers without qualifying children must be age 25-65 (exceptions for tax year 2021)
Dependent Tests
In order to claim Earned Income Credit for a dependent the dependent must meet the following 4 IRS tests:
Relationship
Age
Residency
Joint return test
1. Relationship
To meet the relationship, test the child must be the taxpayer or spouses:
Son, daughter, or foster child
Brother or sister
A descendant of any of these
There are additional rules for foster children.
2. Age
Age To meet the age test, the child must be:
Under the age of 19 as of December 31st of the tax year, and younger than the
taxpayer/spouse
Under the age of 24 as of December 31st of the tax year, a student, and younger than the
taxpayer/spouse
Permanently and totally disabled during the tax year
3. Residency
To meet the residency test the child must have lived with the taxpayer in the United States more than half of the tax year.
4. Joint Return
To meet the joint return test the child must not have filed a joint return for
the tax year they are being claimed.
The only exception to this is if the dependent and their spouse are not required to file a tax
return and file to claim a refund only.