Earned Income Tax Credit, otherwise know as EITC, is a benefit introduces to support low-to-moderate income earners. The credit is intended to supplement the income you have earned through working, whether self-employed or employed. The credit can work to reduce your taxes and increase your tax refund.
The credit is claimable on earned income only and there are income limits that are adjusted every year. Therefore, if you did not qualify for the credit in the past you may still qualify in the future. 1 out of 5 people who qualify for EITC do not claim it on their tax returns. For the 2018 tax year, the maximum Earned Income Tax Credit that can be claimed per taxpayer is $6,431. This is for taxpayers with three or more Qualifying children that meet the extensive list of requirements.
There are a number of requirements that you must meet in order to successfully claim EITC on your tax return. Below are some of the requirements summarised:
· You must have earned income from working for someone or from running or owning a business or farm
· You or your spouse if married filing jointly, and any qualifying children you claim for must have a valid Social Security Number.
· Your filing status cannot be married filing separately
· You must be a US citizen or resident alien for the whole year, or nonresident alien married to a US citizen or resident alien and filing a joint return.
· Your qualifying child for the EITC cannot be used by more than one person to claim EITC
· You cannot file Form 2555 or 2555-EZ
· Your investment income for the 2018 tax year must be $3,500 or below