Earned Income Tax Credit Requirements

If you are a low- to moderate-income household, you may be eligible for the Earned Income Tax Credit (EITC). The EITC is a federal and state (if you qualify) credit that is refundable if the level of taxes is exceeded by the credit. In simpler terms, if your credit is more than taxes owed, you will receive a refund. The EITC is available for households with and without children, military, clergy and persons receiving disability. In order to qualify for the credit, the household must be able to meet certain income guidelines and situational rules.

Income

The initial qualifying requirement for the EITC is income. Earned income is defined as monies received from employment that is taxable. Examples of taxable earned income are salaries, tips, (long-term) disability, strike benefits and self-employment pay. Income not considered for the credit is child support, alimony, unemployment benefits and Social Security checks. Those in the armed forces can still qualify for the credit based off nontaxable combat pay.

Households with Children

For those households that have children, there are rules that are used to determine if a child is eligible. A child must be your biological, step or adoptive child or your grandchild. He or she must possess a verified Social Security number and have resided in the U.S. for at least half of the year. By the end of the filing year, the child must be under 19 years of age or 19 years old and attending school full time.

Households without Children

Those that are without any children can still qualify for the credit. You and your spouse (if filing jointly) must have resided in the U.S. for at least half of the year. You and your spouse must be at least 25 years old. Neither of you can be claimed as a dependent on someone else’s taxes.

Special Households

If you are a member of the armed forces or of the clergy, are receiving disability or have been impacted by natural disaster, the Internal Revenue Service has special guidelines that will help determine if you are eligible to receive the EITC. If you are a member of the armed forces, you will need to include your nontaxable combat as part of your earned income. A member of the clergy can include housing as part of his or her earned income since he or she is identified as self-employed. If you have been affected by a natural disaster, your income must be less than during the previous year. If this is the case, you may qualify to use the previous year's income as earned income.

Disability

Disability benefits can be used as earned income until the recipient hits the maximum age, and then they will be considered pension payments. If you are receiving disability payments from insurance, it cannot be considered earned income. If you have a qualifying child who is permanently disabled, he or she can be claimed regardless of age, even if receiving disability payments.