How do I know if I qualify for earned income credit?
Matthew Harrington
Updated on February 07, 2026
Basic Qualifying Rules Have investment income below $3,650 in the tax year you claim the credit. Have a valid Social Security number. Claim a certain filing status. Be a U.S. citizen or a resident alien all year.
Who can take earned income credit?
The general eligibility rules for the EITC are fairly straightforward: Taxpayers must file as individuals or married filing jointly. If married, you, your spouse and your qualifying children must have valid Social Security numbers. You must also be 25 or older but younger than 65.
What is earn income credit?
The earned-income credit is a refundable tax credit used to supplement the wages of low-income workers and help offset the effect of Social Security taxes. The EIC is available only to taxpayers with low or moderate earnings, whether or not they have qualifying dependents.
How does tax income credit work?
A tax credit is a dollar-for-dollar reduction of the income tax you owe. For example, if you owe $1,000 in federal taxes but are eligible for a $1,000 tax credit, your net liability drops to zero. Therefore, if your total tax is $400 and claim a $1,000 earned income credit, you will receive a $600 refund.
What is the max EIC for 2020?
Tax Year 2020 Income Limits and Range of EITC
| Number of Qualifying Children | For Single/Head of Household or Qualifying Widow(er), Income Must be Less Than | Range of EITC |
|---|---|---|
| No Child | $15,820 | $2 to $538 |
| One Child | $41,756 | $9 to $3,584 |
| Two Children | $47,440 | $10 to $5,920 |
| Three or More Children | $50,954 | $11 to $6,660 |
What is the maximum earned income credit for 2020?
For tax year 2020, the maximum amount of credit that you can claim is $538 (no qualifying children), $3,584 (one qualifying child), $5,920 (two children) and $6,660 (three plus).
What do you need to know about earned income credit?
The earned income credit is a tax credit in the U.S. that benefits certain taxpayers with low incomes from work in a particular tax year. A tax benefit is an allowable deduction on a tax return intended to reduce a taxpayer’s burden while supporting certain types of commercial activity. A tax break is a savings on a taxpayer’s liability.
How does the earned income credit affect your tax bill?
A tax credit reduces the value of a taxpayer’s liability, dollar for dollar. For example, an individual who has a tax bill of $2,900 and can claim a $529 credit will owe $2,900 – $529 = $2,371. That lower amount is the total the taxpayer must pay to the Internal Revenue Service (IRS) for the year.
When did the earned income tax credit start?
January 2, 2018. Earned income credit (EIC), or earned income tax credit (EITC), is a tax benefit for low-income families designed to help them save money each year by reducing the amount of tax they owe.
What do you need to know about tax credits?
Tax Credit. Loading the player… A tax credit is an amount of money that taxpayers can subtract from taxes owed to their government. The value of a tax credit depends on the nature of the credit; certain types of tax credits are granted to individuals or businesses in specific locations, classifications or industries.
