Earned Income Credit

Updated for Tax Year 2017


OVERVIEW

While millions of households already claim this special break for workers with modest incomes, the IRS says many more are eligible for the credit but fail to take it. The rules were recently liberalized, so more households are eligible. Take a few minutes to make sure you don't miss out on a credit that could bring you a refund check.


Can I take the Earned Income Tax Credit?

If you were married filing jointly and earned less than $53,930 ($48,340 for individuals, surviving spouses or heads of household) in 2017, you may qualify for this tax credit, or even for a refund check. It's complicated, but the Earned Income Tax Credit (EITC) is worth exploring if you or someone you know has modest earnings.

  • The credit reduces any federal income tax you owe, dollar-for-dollar.
  • If the credit completely eliminates your tax bill, and some credit is still left over, you can actually get a cash refund for the remaining  amount.

To help you find out if you qualify, TurboTax asks simple questions so you can get the largest possible credit.

Tests for qualifying

First you have to qualify. Then your income has to be within stated limits. Finally, if you have one or more kids, they have to qualify too for you to receive a larger credit. If you pass all these tests, you could get a credit of as much as $6,318 for 2017 depending on your income and the number of children you have.

Once you determine that you qualify for the credit, use the Earned Income Credit table found in the instructions for Form 1040 (or Forms 1040A or 1040EZ) to look up your income and find out the amount of credit you're entitled to.

You qualify if:

  • You have income from earnings (for example, from a job, your own business, union strike benefits, certain long-term disability benefits).
  • You did not receive more than $3,450 in interest or dividends, or income from rentals, royalties or stock and other asset sales during 2017.
  • You are single or, if married, do not use the Married Filing Separate status.
  • You, your spouse and children, if applicable, all have Social Security numbers.
  • You and your spouse are not being considered as a child on someone else's tax return for purposes of the earned income credit.
  • You are not excluding any income you earned in a foreign country on your return.
  • You are a citizen or resident of the United States.
  • You have dependents.
  • You do not have a qualifying child, but you and your spouse are between 25 and 65, not the dependents of anyone else, and you have lived in the United States for more than half of the year.

How much can I earn and still qualify?

This credit is targeted at households with modest incomes, so if you earn "too much" you may not qualify. Just how much can you earn and still qualify? It depends on how many qualifying children you have (we'll define this in a moment). Those with the lowest income qualify for the biggest credits. Those with incomes above the phase-out threshold qualify for lower credits until they reach the point where the credit is eliminated completely. The rules have been liberalized to result in higher credits for many households, especially those with three or more qualifying children. The following table shows the 2017 income limits for receiving credits and the maximum 2017 credit amounts.

If you have:

Your earned income (and adjusted gross income) must be less than:

Your maximum credit will be:

No qualifying children $15,010 ($20,600 if married and filing a joint return) $510
1 qualifying child $39,617 ($45,207 if married and filing a joint return) $3,400
2 or more qualifying children $45,007 ($50,597 if married and filing a joint return) $5,616
3 or more qualifying children $48,340 ($53,930 if married and filing a joint return) $6,318

Does my child qualify?

To qualify, the child must be:

  • Your son, daughter, stepchild, adopted child or a descendant.
  • Your foster child, placed with you by an authorized agency or court order.
  • Your brother, sister, stepbrother, stepsister or a descendant of one of these.
  • Age 18 or younger as of the end of the year (unless he or she is a full-time student, in which case the student must be 23 or younger). Exception: A person who is permanently and totally disabled at any time during the year qualifies, no matter how old.
  • A resident with you in the United States for more than half of the year.

Example:

You and your sister live together. You are 30 and your sister is 15. When your parents died two years ago, you took over the care of your sister, but you did not adopt her. She is considered a qualifying child because she lived with you more than half of the year.

Who is an eligible foster child?

For the Earned Income Credit, a foster child is defined as an individual who is placed with you by an authorized placement agency or court order. The child must have lived with you for more than half of the year.

What about my welfare benefits?

The Earned Income Tax Credit has no effect on certain welfare benefits. Any refund you receive because of the EITC will not be considered income when determining whether you are eligible for, or how much you can receive from, the following benefit programs:

  • Temporary Assistance for Needy Families (TANF)
  • Medicaid and Supplemental Security Income (SSI)
  • Food stamps
  • Low-income housing

For more information on whether you qualify for the credit, use the TurboTax program. An overview is also available in Publication 962: Possible Federal Tax Refund Due to the Earned Income Credit.

For complete details, see IRS Publication 596: Earned Income Tax Credit (EITC).

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Sign In

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • TURBOTAX ONLINE/MOBILE

  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Absolute Zero $0 federal (1040EZ/1040A) + $0 state offer only available with TurboTax Federal Free Edition; offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected in March. Special discount offers may not be valid for mobile in-app purchases.
  • QuickBooks Self-Employed Offer with TurboTax Self-Employed: File your 2016 TurboTax Self-Employed return between 4/19/17 and 10/16/17 to receive your complimentary subscription to QuickBooks Self-Employed until 10/31/18. Activation by 12/31/17 required. Sign in to QuickBooks Self-Employed via mobile app or at https://selfemployed.intuit.com/turbotax; e-mail address used for activation and sign-in. Offer valid only for new QuickBooks Self-Employed customers. See QuickBooks.com for price comparison.
    • When you use TurboTax Self-Employed to file your 2017 taxes, you will have the option to renew your QuickBooks Self-Employed subscription. If you do not purchase TurboTax Self-Employed by 10/15/18, you will have the option of renewing your QuickBooks Self-Employed subscription by 10/31/18 for another year at the then-current annual subscription rate. You may cancel your subscription at any time from within the QuickBooks Self-Employed billing section.
  • Pays for itself (TurboTax Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15%) for tax year 2016. Actual results will vary based on your tax situation.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice.
  • TurboTax Expert Help, Tax Advice and SmartLook: Included with Deluxe, Premier and Self-Employed (via phone or on-screen); not included with Federal Free Edition (but available for purchase with the Plus bundle). SmartLook on-screen help is available on a PC, laptop or the TurboTax mobile app. TurboTax experts provide general advice, customer service and product help; tax advice provided only by credentialed CPAs, enrolled agents and tax attorneys. Feature availability varies by device. State tax advice is free. Service, area of expertise, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice.
  • Tax Return Access, My Docs and My Analysis & Advice features: Access to all tax-related documents we have on file for you is available until you file your 2017 tax return or through 10/31/2018, whichever comes first. Terms and conditions may vary and are subject to change without notice.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2015 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.
  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees.
  • #1 rated online tax prep provider: Based on independent comparison of the best online tax software by TopTenReviews.com March 13, 2017.
  • TURBOTAX CD/DOWNLOAD SOFTWARE

  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected in March. Prices subject to change without notice.
  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary.
  • Pay for TurboTax out of your federal refund: $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except TurboTax Business.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice via phone is included with Premier and Home & Business; fees apply for Basic and Deluxe customers. State tax advice is free. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2016 TurboTax products.
  • Data Import: Imports financial data from participating companies; may require a free Intuit online account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2016 and higher) and QuickBooks Desktop (2012 and higher); both Windows only. Quicken import not available for TurboTax Business. Quicken products provided by Quicken Inc., Quicken import subject to change.