The earned income tax credit is a way for low and moderate income families to save some money during taxation. The EITC is reimbursable and may reduce taxes owed to families working under certain circumstances to zero. If your income primarily comes from working and not investing, you are eligible. The level of income changes every year, but an expansion was granted until 2018, extending the loan to working families with three or more dependents. The IRS has set guidelines that can help you find out if you are eligible for the credit and how much you get.
2018 Eligibility requirements:
- All income from investments must be less than $ 3,500 for the entire tax year in order to qualify for the EITC.
- The earned income credit applies to working taxpayers that have earned income falling below certain thresholds. The qualification threshold depends on the number of persons in each family. The thresholds in 2018 to qualify for this credit include:
- No Children: earnings must be less than $15,270 or $20,950 if married filing jointly.
- One Child: earnings must be less than $40,320 or $46,010 if married filing jointly.
- Two Children: earnings must be less than $45,802 or $51,492 if married filing jointly.
- Three or More Children: earnings must be less than $49,194 or $54,884 if married filing jointly.
- You can’t be married and file separately, or claim an exclusion for foreign earned income if you want to claim the Earned Income Tax Credit.
In addition, you can not be claimed as dependent on the return of anyone else and you must file a tax return to receive the credit. The eligibility age requirement for taxpayers without a qualifying child is 25 to 64 by the end of the year. Credit amounts The amount you receive depends on your total annual income and the number of qualifying children you claim.
You’re going to save more of your hard cash and less goes to Uncle Sam. Since money is deducted from your earnings before you see it, you can regard the EITC as a way of putting more money back into your check. From social security and Medicare taxes to withholding income taxes from your employer, you have money taken out before you even have the opportunity to spend. Use the EITC to put more money back in your wallet and make tax time for everyone a little less stressful.
