A Stimulus Boost for Some Earned Income Tax Filers
- More married couples now qualify for the maximum credit in 2012 because the income levels at which the credit begins to phase out have been increased: $19,190 for married couples with no kids, and $42,130 for married couples with one qualifying child, $47,162 for married with two qualifying children, and $50,270 for married with three or more qualifying children. Since the squeeze on the size of the credit starts at higher income levels, married recipients will enjoy a slightly increased credit. And because income thresholds are indexed for inflation each year, it’s possible that still more married couples will qualify for the full credit in 2013.
- Families with three or more qualifying children can qualify for a bigger tax credit. Under prior law, those families could receive a credit worth 40 percent of the first $12,570 of earned income. That percentage was increased to 45 percent for 2009 and 2010. For 2012, those families can get a maximum credit of $5,891. As indexing continues to increase the threshold, families could receive an even larger maximum credit next year.
When you file your 2012 tax return, TurboTax will decide for you whether you qualify for one of these increases. Keep in mind that the new law doesn’t change the basic rules that limit who can qualify for the Earned Income Credit. For example, you must be a U.S. citizen (and any qualifying children must also be U.S. citizens), have earned income, and for 2012 not receive more than $3,200 in interest or dividends from rentals, royalties or stock and other assets during the year.