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Claiming the Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a tax credit for people who work and whose earned income is within a certain range.

You must meet certain eligibility rules to claim and receive the credit. These rules, discussed below, include filing a tax return even if you generally don’t have to, having income within a certain range, your filing status, and whether you’re claiming a qualifying child. The amount of the credit depends on your income, filing status, and number of children.

There have been many recent changes to EITC eligibility. Many of these changes are temporary and so it is critical to make sure you are following the correct rules for the tax year of the return.

Note: If your earned income was higher in 2019 than in 2021, you can use the 2019 amount to figure your EITC for 2021. If you choose to use the 2019 amount for the EITC, it has no effect on any of your other 2021 federal income tax calculations. This temporary relief is provided through the American Rescue Plan Act of 2021.

What do I need to know?

The American Rescue Plan Act of 2021 made several changes to the Earned Income Tax Credit. Some of these changes are temporary for the 2021 tax year only others are permanent.

For 2021 only, more childless workers and couples can qualify for the Earned Income Tax Credit (EITC). The maximum credit is nearly tripled for these taxpayers and is made available to both younger workers and senior citizens. The age limit for “childless EITC,” which had been 25 to 64, is now lowered to 19 (age 24 for specified students) with no upper limit. Qualified former foster youth or a qualified homeless youth may now qualify at age 18.

In 2021, the maximum EITC for those with no dependents is $1,502, up from $538 in 2020 and is available to filers with an AGI below $27,380 in 2021.

Another change is available to both childless workers and families with dependents. For 2021, it allows them to choose to figure the EITC using their previous tax year’s income, as long as it was higher than their 2021 income. In some instances, this option will give them a larger credit.

Changes expanding EITC for 2021 and future years

There are several changes that expand the EITC for 2021 and future years:

  • Singles and couples who have Social Security numbers can claim the credit, even if their children don’t have SSNs. In this instance, they would get the smaller credit available to childless workers. In the past, these filers didn’t qualify for the credit.
  • More workers and working families who also have investment income can get the credit. Starting in 2021, the limit on investment income is increased to $10,000. After 2021, the $10,000 limit is indexed for inflation. The current limit is $3,650.
  • Married but separated spouses can choose to be treated as not married for EITC purposes in expanded ways. First, the spouse claiming the credit cannot file jointly with the other spouse, cannot have the same principal residence as the other spouse for at last six months out of the year, and must have a qualifying child living with them for more than half the year. Or, a second way is now allowed if the taxpayer has a decree, document, or agreement (not a divorce agreement) and is not in the same household as the spouse by the end of the taxable year.

NOTE:

If you qualify for the EITC, you may also qualify for other refundable federal, state, and local tax credits, such as the Child Tax Credit (CTC) or education tax credits. Some states also offer a version of the EITC for state and local taxes.

While the IRS is asking for additional information, it will hold your refund (Credit)

Any refund you receive because of the EITC isn’t counted as income in determining whether you are eligible for federal or federally funded public benefits or assistance.

For tax years beginning after December 31, 1996, you’re banned from claiming the credit for two years if you improperly claimed the credit due to reckless or intentional disregard of rules or regulations and for ten years if you claimed the credit due to fraud. Thus, filing a tax return with an error on your EITC may cause the EITC to be disallowed in subsequent years. See Consequences of Errors on Your EITC Returns.

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What should I do?

Find out if you qualify

The easiest way to find out if you qualify is to use the IRS’s Earned Income Tax Credit (EITC) Assistant Tool. The tool is available in English and Spanish. It will ask you questions about yourself and other family members to see if you qualify for the credit, and if so, it will estimate the amount.

NOTE: When you look at the rules to qualify for EITC, be sure you have the information for the correct tax year — each tax year has different limits on your earned income.

Qualifications

About YOU

You and any other family members claimed, such as your spouse or qualifying child must have a valid Social Security number SSN. Remember, singles and couples who have Social Security numbers can claim the credit, even if their children don’t have SSNs.

Married but Separated spouses can choose to be treated as not married for EITC purposes. To qualify, the spouse claiming the credit cannot file jointly with the other spouse, cannot have the same principal residence as the other spouse for the lastsix months out of the year and must have a qualifying child living with them for more than half the year or has an decree, document, or agreement (not a divorce agreement) and is not in the same household as the spouse by the end of the taxable year.

You must be a U.S. citizen or resident alien all year.

About YOUR MONEY

You must have earned income. This includes:

    • Earned Income: Taxable wages, salaries, tips and other pay from your employer.
      • Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, isn’t earned income. However, if you’re in the military, there’s an exception for nontaxable combat pay, which you can include as earned income.
    • Net earnings from self-employment.
    • Gross income received as an independent contractor or statutory employee.
      • Certain employees who receive income for work performed as independent contractors may see Box 13 of their IRS Form W-2 checked as “Statutory employee.”
    • If you retire on disability, taxable benefits you receive under your employer’s disability retirement plan are earned income until you reach minimum retirement age.
    • The ARPA expanded the limits for investment income, you can have up to $10,000 of disqualified income without losing out on the EITC for 2021. For 2022 and later years, the $10,000 limit will be adjusted for inflation.

You can’t claim the EITC if you need to file IRS Form 2555.

About YOUR FAMILY

Generally, if you aren’t claiming a qualifying child, you must meet these rules (please see below for temporary changes):

  • You must be at least age 25, but under 65;
  • You can’t be the dependent of another person;
  • You can’t be a qualifying child of another person; and
  • You must have lived in the United States more than half of the year.

If you have children but they don’t qualify for EITC purposes, you can still claim the EITC without children.

NOTE: The American Rescue Plan Act of 2021 temporarily (for 2021 only) reduces the minimum age of eligibility from 25 to 19 for most workers with no upper age limit. For students who are attending school at least part-time, the age limit is temporarily reduced from 25 to 24. For the first time, former foster children and youth who are homeless, the minimum age is 18.

If you are claiming a qualifying child:

  • You can’t be a qualifying child of another person;
  • The child generally can’t be married;
  • Your qualifying child can’t be used by more than one person to claim the EITC; and
  • The child must pass relationship, age, residency, and joint return tests.

Relationship Test

The child must be related to you.

Many different relationships qualify for EITC, including:

  • Son or daughter (whether by blood or adoption), stepchild, qualified foster child, or their descendants (grandchild or great-grandchild), or
  • Full, half and step siblings or their descendants (niece or nephew), or
  • This means some relationships aren’t covered. For instance, you can’t claim the child of your boyfriend/girlfriend, a neighbor, or a cousin even if you provide care for that child.

Age Test

The child must be:

  • Younger than the taxpayer, or
  • Under age 19 at the end of the tax year and younger than you (or your spouse, if filing jointly), or
  • Under age 24 at the end of the tax year, a student, and younger than you (or your spouse, if filing jointly), or
  • Permanently and totally disabled at any time during the year, regardless of age.

Residency Test

The child must have lived with you in the United States for more than half of the tax year. This doesn’t mean six months in a row. For example: If your child lives with you during the school year but spends summers elsewhere.

You may need to show the IRS that you’re entitled to the EITC.

The IRS may ask you to provide documents to show you’re entitled to claim the credit. The notice you get will tell you the documents you need to send to claim the credit (birth certificates, school records, etc.).

You may use these templates to get the requested information from the school, healthcare provider, or childcare provider to verify your qualifying child’s residency.

School

Healthcare Providers

Childcare Providers

Sometimes you may not have the specific types of documents requested by the IRS. IRS Form 886-H-EIC, Documents You Need to Send to Claim the Earned Income Tax Credit on the Basis of a Qualifying Child or Children, lists many options, but remember that different combinations may also be acceptable. The IRS has developed a toolkit to help you identify what documents you might provide to the IRS to determine if your child is a qualifying child.

Let’s say the IRS wants medical records to show the child lived with you during the year in question, and you can’t get those, or your child didn’t go to the doctor. There may be other records that show your child lived with you, such as social service records, childcare provider records, or official mail addressed to the child. You may want to check to see if there’s an agency that has a record of your address and any additional information that shows the child lived with you. If so, it may be able to give you a signed letter on their official letterhead showing these details.

A certain document alone generally doesn’t show you are entitled to receive the credit, but in combination with other records, it can demonstrate what the IRS needs

Special Rules

There are special EITC rules for members of the military, ministers, members of the clergy, those receiving disability benefits, and those impacted by disasters. If you fall into any of these categories, please visit the IRS Special EITC Rules page.

The PATH Act prevents you from filing retroactive returns or amended returns claiming EITC, ACTC, or the American Opportunity Tax Credit (AOTC) if the reason you are filing is because you now have the type of valid Taxpayer Identification Number (TIN) required for each credit but didn’t have such TIN before the due date of the return.

If for any reason you or one of your family members didn’t receive a valid “taxpayer identification number” by the due date of the tax return (including extensions), you cannot file a past due return or an amended return to claim any of these credits. A valid taxpayer identification number could be an SSN, Individual Taxpayer Identification Number (ITIN), or Adopted Taxpayer Identification Number (ATIN) depending on the requirement for each credit.

You can’t file a past due return or an amended return to claim the EITC for anyone on the return without an SSN that’s valid for employment by the due date of the return including a valid extension.

To claim the credit, file your tax return

To claim the credit, if eligible, you must file a tax return – whether you normally need to file or not. You need to complete an IRS Form Schedule EIC, Earned Income Credit and file it with your return, if you’re claiming a qualifying child. If you don’t have a qualifying child, you claim the credit on your tax return.

If you need free help preparing your tax returns, type “Free Tax Prep” in the search box on www.IRS.gov and use the Volunteer Income Tax Assistance (VITA) locator tool to find a volunteer site near you. You can also prepare and electronically file your own tax return with professional software using the IRS’s Free File program.


Note: If you get school records to verify one or more of the tests, remember a school “year” really is just part of the calendar year. You’d need to ask for two school years to cover one calendar year. You might have to get the school to write a letter, rather than provide just the transcripts, to show the child’s guardian during the calendar year and the address on record during that time.

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Wait, I still need help.

I haven’t gotten my refund of the EITC yet. Visit our I Don’t Have My Refund page for possible reasons why a refund may be delayed and what to do about it.

I need face-to-face help to figure and claim the EITC. If you are eligible for EITC according to the basic income information above, you may also qualify for free tax return preparation assistance at a VITA site. There they can also help you determine what other credits you may be eligible for.

Browse common tax issues and situations at Get Help.

If your IRS problem is causing you financial hardship, you’ve tried repeatedly and aren’t receiving a response from the IRS, or you feel your taxpayer rights aren’t being respected, consider contacting Taxpayer Advocate Service (TAS).

You may be eligible for representation from an attorney, certified public accountant (CPA), or enrolled agent (EA) associated with a Low Income Taxpayer Clinic (LITC). LITCs also provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language.

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