Updated for the 2016 tax year.
New for 2017: The IRS will delay issuing refunds for returns that include the Earned Income Tax Credit or the refundable portion of the Child Tax Credit until February 15, 2017. This change is intended to enable income verification and to avoid identity theft.
What is the Earned Income Tax Credit?
The Earned Income Tax Credit (EIC) is a special tax benefit for people who earn low or moderate incomes. It lowers their taxes, supplements their wages, and makes work more attractive and affordable. Qualifying persons who file federal tax returns get back some or all of the federal income tax withheld from their pay during the year. Even workers whose earnings were too small to have taxes withheld can get the EIC. Families with children who claim the federal EIC are automatically eligible for the Wisconsin Earned Income Credit.
Who can get the EIC?
The EIC is available to workers with low to moderate incomes. The income limit depends on the number of ‘qualifying children’ and on whether the tax filer is married or unmarried.
- The limit for families with no children is $14,880 ($20,430 if married);
- The limit for families with one child is $39,296 ($44,846 if married);
- The limit for families with two children is $44,648 ($50,198 if married);
- And the limit for families with three or more children is $47,955 ($53,505 if married)
More detail on eligibility rules, including information about qualifying children
How much can individuals and families get back from the EIC?
The amount of the credit depends on earnings and on adjusted gross income. As income increases, the value of the credit increases, until the maximum credit is reached. As income increases further, the value of the credit gradually decreases. Use this simple online calculator for an estimate of your potential EIC, based on your earnings, marital status, and number of qualifying children: eitcoutreach.org.
Will getting the EIC affect eligibility for welfare benefits?
The EIC — and other tax credits — do not count as income in determining eligibility for benefits such as W-2, Medicaid, Food Stamps, SSI, or public or subsidized housing.
Claiming the federal EIC
What is the procedure for claiming the federal EIC?
Claimants must file a tax return to receive the EIC, even if they do not owe taxes;
- File Form 1040 or 1040A, along with Schedule EIC. Those without qualifying children can file Form 1040EZ instead of 1040 or 1040A.
- Claimants need to know the Social Security numbers for all family members.
- The instructions for determining eligibility, and the amount of the credit, are found in the instruction booklets accompanying the tax forms. (instructions for Form 1040; instructions for Form 1040A; instructions for Form 1040EZ ). These instructions refer certain filers with more complicated situations to Publication 596 to determine their eligibility and benefit amount.
- Two amounts are needed to determine eligibility: total earned income, and adjusted gross income (AGI). The instructions clearly indicate how to calculate these amounts.
- If the tax return shows that taxes are owed, subtract the EIC credit and you will owe less or get money back. If you owe no taxes, but qualify for the EIC, you will get a refund check for your EIC amount.
Can a worker get the EIC for prior years, if she/he was eligible but didn’t claim it?
The EIC can be claimed for up to three previous years, if a claimant was eligible.
What additional rules apply to workers who applied, but were denied the credit, in past years?
- Eligible workers who claimed the EIC in error in a previous year, and who were denied the credit by the IRS, should file Form 8862, “Information to Claim Earned Income Credit After Disallowance,” along with their tax return.
- Form 8862 is not required if the EIC was denied due to a math or clerical error.
Where can workers get help filing for the EIC?
- The Volunteer Income Tax Assistance (VITA) program provides free tax assistance in counties throughout Wisconsin.
- Taxpayer Counseling for the Elderly (TCE) provides free tax assistance for the elderly, as well as for persons eligible for the Earned Income Credit or the Homestead Credit.
- Follow this link for information on VITA and site locations and hours. Information on TCE site locations is also available from this link or from the AARP at 1-888-227-7669. **The links to tax preparation information are to external websites that may not yet be updated; read those sites carefully to be sure the information is current.**
Further information on the EIC
- Detailed information about EIC eligibility and benefits
- Frequently Asked Questions on the EIC (2015 tax year)
- Outreach materials on the EIC
Download tax forms and publications
- Form 1040 — (1040 Instructions)
- Form 1040A — (1040A Instructions)
- Form 1040EZ — If no qualifying children (1040EZ Instructions)
- Schedule EIC — file with Form 1040 or 1040A)
- Form 8862: Information to claim EIC after Disallowance (8862 Instructions) 2003 most recent version
- Form 1040X: Amended U.S. Individual Income Tax Return (1040X Instructions)
- Publication 596: Earned Income Credit — Includes detailed information about eligibility and benefits
- Publication 596 — Spanish
This website is an educational resource only. For specific tax questions, seek professional tax assistance or contact the IRS hotline at 1-800-tax-1040.
Last modified on 1/4/2017