Income Tax Preparation & Small Business Accounting

What is Earned Income Credit?

The Earned Income Tax Credit or the EITC is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they do not have a filing requirement.

Do I qualify for Earned Income Credit?

To qualify for Earned Income Tax Credit or EITC or simply called EIC, you must have earned income from employment, self-employment or another source and meet certain rules. In addition, you must either meet the additional rules for Workers without a Qualifying Child or have a child that meets all the Qualifying Child Rules for you. Find out more about the basic qualification rules for EITC here.

Find out if you are eligible for the EITC by answering a few questions and providing basic income information, using the IRS' online EITC Assistant web tool. It's available in English and Spanish.

 

What are the earned income credit income limits?

New limits for Tax Year 2011

Income Limit Ranges:

For Married Filing Jointly Returns...
Earned and adjusted gross income (AGI) must be less than:

  • $49,078 - with three or more qualifying children
  • $46,044 - with two qualifying children
  • $41,132 - with one qualifying child
  • $18,740 - with no qualifying children

For Single, Head of Household or Qualifying Child Returns...
Earned and adjusted gross income (AGI) must be less than:

  • $43,998 - with three or more qualifying children
  • $40,964 - with two qualifying children
  • $36,052 - with one qualifying child
  • $13,660 - with no qualifying children

Maximum credit:

  • $5,751 with three or more qualifying children
  • $5,112 with two qualifying children
  • $3,094 with one qualifying child
  • $464 with no qualifying children


Earned Income Credit Illinois

If you qualify to claim EITC on your federal income tax return, you also may be eligible for a similar credit on your state or local income tax return.

Illinois, Indiana, Iowa and Wisconsin are all states which offer an Earned Income Credit.

 







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