Geared primarily towards low-to-middle income, working individuals and families, the Earned Income Tax Credit (EITC) is a federal benefit able to provide relief to those who meet specific criteria, by reducing the amount of tax owed and by increasing the amount of tax monies refunded, as determined after filing. Both single and married people can benefit from EITC, regardless of whether or not they have children or other dependents.
Who Is Eligible For EITC?
Income level is not the sole determinant for EITC eligibility. Specific EITC guidelines are in place and pertain to single individuals and to couples filling a joint return, with no wiggle room. If you are not a U.S. Citizen, you must be able to prove that you are either a resident alien who has lived in the U.S. for the entire duration of the tax year and are filing a joint return, or are a nonresident alien married to a U.S. citizen.
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Additional EITC Requirements
First, you must have proof of earned income and a social security number which is valid for employment. A valid for employment social security number is a standard requirement pertaining to all of your dependents as listed on the Earned Income Tax Credit form, no matter what their age. You yourself cannot be claimed as anyone else’s qualifying child on a separate tax return and if you are married, you will not be able to claim married filing separately status when you file.
There will be specific income limits you must have adhered to during the tax year. These include earned income, adjusted gross income (AGI) and investment income. It’s important to note that the amounts and combined amounts allowed vary from year to year so don’t use last year’s income tax form as a guide for this year. IRS guidelines for 2014 rates can be accessed here. Also make sure you do not attempt to file tax forms 2555 or 2555 EZ, which are related to the acquisition of foreign earned income, as these are not qualifiable for EITC.
In addition to meeting these standard guidelines, filers must also meet one of two additional criteria in order to be eligible. These include either having a qualifying child or personally being between the ages of 25 and under 65 by the end of the tax year. Qualifying child rules can be found here.
A Word About Prior EITC Refusal By The IRS
Individuals who were turned down for EITC in previous tax years can reapply if their eligibility status has changed. When you reapply, make sure to include a completed Form 8862, Information to Claim Earned Income Credit After Disallowance with your next tax return.
You will not be able to claim EITC for up to two years after an IRS determination of reckless or intentional disregard of EITC rules and for up to 10 years after a final, IRS determination of fraud.
Corey Whelan is a freelance writer in New York. Her work can be found at Examiner.com.