Earned Income Tax Credit: All you need to know in 2021

The Earned Income Tax Credit is a federal tax credit that supports low-income people, notably those that are parenting. When you receive it, you'll either get a bigger refund (the money will be returned to you) or pay less governmental taxes. The EITC is regulated by the Internal Revenue Service in the United States. Check out this EIC table to calculate your Earned Income Tax Credit with ease.

How much money is the EITC worth?

Most people who get the EITC get their money back. The biggest refund you can get from the EITC for the 2018 tax year is $ 519 (no child), $ 3,461 (if you have a child), $ 5,716 (two children) or $ 6,431 (for three or more children).

Who can benefit from the EITC?

The EITC is generally aimed at working parents or others such as grandparents, relatives or foster parents who have one or more kids. There are also rules for which children qualify for the EITC. Some people who are not rearing children but work may also receive EITC. Your earned income must be below the limits to be eligible for the EITC. Many of those who can get the EITC don't get it because they don't file their income tax returns. They are losing the money intended for them.

Children who rely on you to receive the EITC are called “qualifying children”. To be an eligible child, a child must be:

1. A son, a daughter, adopted children, foster kids placed by an agency, grandchildren, stepchildren, a brother, a sister, a half-brother, a half-sister (or their descendants) who have lived in your household for at least six months in the past few years.

2. Under 19 or under 24 as a full-time student. Children with complete and permanent disabilities can be counted at any age.

A child must stay with you for at least 6 months a year to be eligible for EITC. If the parents of a child do not live together, only one of them can count (or claim) a child for the EITC. If a child lives with you for six months and another parent or other person lives with you for six months, there is a “tie-breaking rule” that states who can claim the child. This regulation states that if more than one person is entitled to a child but only one of them is the parent of the child, the parents can decide who can claim the child. If both parents live with the child for the same length of time (each six months), the parent with the higher income decides who is entitled to the child. If the children spent part of the every week with one parent and the other part with the other parent, count the days the child spent with each parent.

Can I benefit from the EITC if I am not raising children?

Yes. Couples or single adults who are not raising children but who are working may also receive a smaller EITC. Adults with no children must be at least 25 and under 65 to be eligible for the EITC. The income limits for obtaining the EITC are much lower for those who are not raising children.

How much can I get from EITC?

The credit amount you receive depends on your income, your marital status, and your family 's size. The credit amount increases with earned income until it reaches a maximum amount and then slowly decreases. Families with more children qualify for higher credits.

EITC rules can be difficult to navigate. Special regulations apply to the military, pastors, priests, disability benefit recipients, and people affected by disasters. Certain age restrictions may also apply. Use the EIC table on our website to determine the amount of credit you can claim on your tax return.