Key Terms

Earned Income Tax Credit and Family Credits

The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for low to moderate income-earning individuals and families. If you qualify, the credit could be a maximum amount of up to $6,143 in 2014. This means you could pay less or no federal tax or even get a refund.

The EITC is based on your earned income and whether or not there are qualifying children in your household. You must file a tax return to claim the EITC and if you have children, they must meet the relationship, age and residency requirements.

What is the EITC?

The Earned Income Tax Credit, sometimes called EIC or EITC, is a tax credit to help you keep more of what you earned. To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file.

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Who is eligible for the EITC?

If you were employed for at least part of 2014, you may be eligible for the EITC based on these general requirements.Your adjusted gross income (AGI) must be less than:

  • $46,997 ($52,427 married filing jointly) with three or more qualifying children 
  • $43,756 ($49,186 married filing jointly) with two qualifying children 
  • $38,511 ($43,941 married filing jointly) with one qualifying child 
  • $14,590 ($20,020 married filing jointly) with no qualifying children 
In addition, you must meet a few basic rules:
  • You must have a valid Social Security number.
  • You must have earned income from employment or from self-employment.
  • Your filing status cannot be married, filing separately.
  • You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
  • You cannot be a qualifying child of another person.
  • If you do not have a qualifying child, you must: be age 25 but under 65 at the end of the year, live in the United States for more than half the year, and not qualify as a dependent of another person.
  • You cannot file Form 2555 or 2555-EZ (related to foreign earn income).
  • Your investment income must be $3,350 or less.

There are Special EITC Rules for:

  • A member of the military,
  • A minister or member of the clergy,
  • Impacted by disasters, or
  • Receiving disability benefits or have a qualifying child with a disability.

Tax Year 2014 Maximum Credit

  • $6,143 with three or more qualifying children 
  • $5,460 with two qualifying children 
  • $3,305 with one qualifying child 
  • $496 with no qualifying children 

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Does my child qualify for the EITC?

To determine if your child is a qualifying child, review the relationship, age and residency qualifications listed below:

Relationship
To be your qualifying child, a child must be your:

  • Son, daughter, adopted child, stepchild, eligible foster child, or a descendant of any of them, or
  • Brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew).

Definitions to clarify the relationship test

  • Adopted child: An adopted child is always treated as your own child. The term "adopted child" includes a child who was lawfully placed with you for legal adoption.
  • Eligible Foster Child: A person is your eligible foster child if the child is placed with you by an authorized placement agency or by judgment, decree or other court order.

Age
Your child must be:

  • Under age 19 at the end of 2014,  or
  • A full-time student under age 24 at the end of 2014, or
  • At the end of the filing year, you child was permanently and totally disabled, regardless of age.
  • To be a qualifying child for tax year 2014, the child must be younger than you.

Joint Return
Your child must not file a joint return for 2014 or is filing a joint return for 2014 only as a claim for refund.

Residency
Your child must have lived with you in the United States for more than half of 2014.

Note: There are certain restrictions if more than one person qualifies for the EITC using the same child or if your qualifying child is married. Publication 596, Earned Income Tax Credit, explains these special circumstances.
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Additional Tax Credits

  • Child and Dependent Care Credit – If you paid someone to care for a child or a dependent so you could work, you may be able to reduce your federal income tax. See Publication 503, Child and Dependent Care Expenses.
  • Child Tax Credit – You may qualify for this credit if your child meets the criteria outlined in Publication 972, Child Tax Credit.

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