The earned income tax credit (EITC) is a refundable tax credit for low-income earners and couples, with or without qualifying children. The filer must have earned income from an employer or self employment, a valid Social Security Number, and be a US citizen or resident alien. A non-resident alien may claim the EITC if married to a US citizen or resident alien. The filer cannot himself be the qualifying child of another filer.
Applicants without qualifying children must be between the ages of 25 and 64 by the end of the tax year, and have lived in the United States for more than half the year. If claiming a qualifying child, that child must also have lived with you in the United States for more than half the year.The filer may not have claimed any foreign-earned income during the tax year. The filer also may not be claimed as a dependent by any other filer.
In the 2010 tax year, applicants without qualifying children who file singly cannot have an adjusted gross income (AGI) of more than $13,460. WIth qualifying children, the cutoff rises to $35,535 for a single child, $40, 363 for 2 qualifying children, and $43,352 for 3 or more qualifying children.
In addition to wages and salaries, earned income includes tips, union strike benefits, long-term disability benefits received prior to minimum retirement age, and any net earnings form self-employment. Combat pay is considered nontaxable, but you can include it in earned income for the earned income credit.
For married applicants who are filing jointly and have no qualifying children, the cutoff AGI is $18,470. With qualifying children, the cutoff rises to $40,545 for a single child, $45,373 for 2 qualifying children, and $48,362 for 3 or more qualifying children.
The qualifying child can be a son, daughter, stepchild, adopted child, grandchild, sister, brother, half-silbling, or other close family relative. Even foster children count, provided they are related to you or have been officially placed with you by an agency or court. You must be at least 1 year older than the qualifying child, unless that child is classified as permanently and totally disabled. The EITC can be claimed until your child reaches the age of 19, or 24 if your child is registered as a full-time student.
In the 2010 tax year, the maximum EITC for a person or couple without qualifying children is $457. With a single qualifying child, the maximum EITC is $3,050. With 2 qualifying children, the maximum EITC is $5,036. With 3 or more qualifying children, the maximum EITC is $5,666.