Federal EIC: Eligibility and Benefits

 

Updated for the 2017 tax year.

 

Eligibility

What are the eligibility criteria for the EIC?

The EIC is available to workers with low to moderate incomes. Claimants must meet the following criteria:

  1. Must have earned income
  2. Adjusted gross income’ must be below a certain level, which depends on family size
  3. Investment income must be less than $3,450
  4. Must have a social security number
  5. Tax filing status must NOT be ‘married filing separately’
  6. Must be a citizen or ‘resident alien for tax purposes’ for the whole year
  7. Must have lived in the country for at least half of the year

There are additional rules for workers with qualifying children and for workers without children.

Which children qualify for the EIC?

Income limits and benefit amounts depend on the number of qualifying children (0, 1, 2, or 3+). A qualifying child for the EIC must be under 19 years old, or under 24 if a full-time student, or any age if disabled. In addition, the child must meet one of the following criteria:

  1. The child is a son, daughter, stepchild, grandchild, or adopted child, and has lived with the family for at least six months in 2017, OR
  2. The child is a brother, sister, stepbrother or stepsister — or a descendant of these relatives — who lived with the family for at least six months in 2017, OR
  3. The child is a foster child placed with the taxpayer by an authorized agency who lived with the family for at least six months in 2017.

A taxpayer does NOT have to claim the child as a dependent on his/her tax return in order for the child to be a qualifying child for the EIC.

What if there is more than one taxpayer in the household who could claim the same child for the EIC?

Two people cannot claim the same child for the EIC. Some households — such as three-generation households — have more than one adult who could be eligible to claim the same child and who file taxes separately. In these cases, the eligible adults can decide who will claim each qualifying child for the EIC.  If the eligible adults cannot agree, the tie-breaker rule applies (see below).

When parents live apart, who can claim the EIC for their child(ren)?

Only one parent can claim the EIC for a given child. The parent with whom the child lived for more than half the year is entitled to file for the EIC, even if the other parent claims the child as a dependent on his or her tax return. If both parents lived with the child for more than six months, the parents can decide who will claim each qualifying child for the EIC.  If the parents cannot agree, the tie-breaker rule applies (see below).

What is the tie-breaker rule?

The tie-breaker rule determines which adult may claim the EIC, if there is more than one adult who meets the eligibility criteria and the eligible adults are unable to agree which of them should claim the credit.  According to the tie-breaker rule, a parent has priority over a non-parent.  If there are two eligible parents, the parent with whom the child lived for the longest period of the year has priority.  If the child lived with both parents for the same amount of time, the parent with the highest adjusted gross income (AGI) has priority.  Finally, if none of the eligible persons is the child’s parent, the person with the highest AGI has priority.

What additional rules are there for workers without children?

A worker without qualifying children must be age 25-64 to claim the EIC. He/she cannot be the dependent or the ‘qualifying child’ of someone else.

What counts as earned income?

You need to have earned income to qualify for the EIC. Income that counts as earned income includes: salary, wages, self-employment, military pay, strike benefits, long-term private disability pay, and cash wages. Earnings from a W-2 trial job count as earned income for the EIC.

Income that does NOT count as earned income includes: SSI, Food Stamps, low-income housing payments, child support, alimony, social security benefits, worker’s compensation, and payments from a W-2 transitional grant or a W-2 community service job.

What are the income limits for 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 $15,010 ($20,600 if married);
  • The limit for families with one child is $39,617 ($45,207 if married);
  • The limit for families with two children is $45,007 ($50,597 if married);
  • And the limit for families with three or more children is $48,340 ($53,930 if married)

 

Can immigrant workers get the EIC?

Many legal immigrants who are employed can get the EIC. To be eligible, an immigrant must be a “resident alien for tax purposes”. They also must have their children living with them in the United States for more than six months of the tax year. The U.S. must be their main home, and they must have a Social Security number that permits them to work legally in the United States.  More information is available in IRS Publication 519, U.S. Tax Guide for Aliens.

Benefits

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.

 

  • Workers without children can get up to $510;
  • Working families with one child can get up to $3,400;
  • Working families with two children can get up to $5,616;
  • Working families with three or more children can get up to $6,318.

 

Detailed information for calculating the amount of the credit is provided in the instructions to the tax forms.

Download tax forms

 


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 2/1/2018