The earned income tax credit can put money in taxpayers’ pockets

The earned income tax credit benefits working people with low-to-moderate income. Last year, the average credit was $2,445. EITC not only reduces the amount of tax someone owes, but may also give them a refund, even if they don’t owe any tax at all.

Here are a few things people should know about this credit:

Taxpayers may move in and out of eligibility for the credit throughout the year. This may happen after major life events. Because of this, it’s a good idea for people to find out if they qualify.

To qualify, people must meet certain requirements and file a federal tax return. They must file even if they don’t owe any tax or aren’t otherwise required to file.

Taxpayers qualify based on their income, the number of children they have, and the filing status they use on their tax return. For a child to qualify, they must live with the taxpayer for more than six months of the year.

Here’s a quick look at the income limits for the different filing statuses. Those who work and earn less than these amounts may qualify.

Married filing jointly:

Zero children: $21,370 One child: $46,884 Two children: $52,493 Three or more children: $55,952

Head of household and single:

Zero children: $15,570 One child: $41,094 Two children: $46,703 Three or more children: $50,162

The maximum credit amounts are based on the number of children a taxpayer has. They are the same for all filing statuses:

Zero children: $529 One child: $3,526 Two children: $5,828 Three or more children: $6,557

Taxpayers who file using the status married filing separately cannot claim EITC.

This article is for general information only and is not tax or legal advice for your specific situation.

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