Tax credits can really make a difference for your refund at tax time. Refundable tax credits are even better, as they can offer you money back even if your tax liability is reduced to zero. One of the most popular refundable tax credits you may be eligible to claim is the Earned Income Tax Credit.
The Earned Income Tax Credit was enacted in 1975 to replenish the pockets of low to moderate income families. As the name suggests, to be eligible for the credit, taxpayers must have earned income either through self-employment or as an employee of another. Additionally, you must have less than $3,450 in investment income to qualify to claim the credit. Other requirements include:
- Taxpayer must be between the ages of 25 and 65 years old.
- Taxpayer must have lived for a minimum of six months in the United States during the tax year.
- Taxpayer can’t be claimed by another as a dependent.
- Married taxpayers must file jointly.
The amount of the credit depends on your yearly income and the number of people you claim as dependents. The more dependents, the higher your credit will be; however, you can still claim the credit even without any children. You’ll need to fall under the income threshold as well. With the lowest amount of income and three or more dependents, the Earned Income Tax Credit can be worth up to $6,318.