The Earned Income Tax Credit (EITC/EIC) is a tax credit aimed to benefit low to moderate income families, especially those with children.
To qualify, the taxpayer typically must have earned income of at least $1 from working for someone or from running their own business and meet the additional rules regarding a “qualifying child”. For tax year 2017, earned income and adjusted gross income must be less than:
- For Single, Head of Household, or Widowed filers: $15,010 with no qualifying child; $39,617 with one qualifying child; $45,007 with two qualifying children; $48,340 for three or more qualifying children
- For Married Filing Jointly filers: $20,600 with no qualifying child; $45,207 with one qualifying child; $50,597 with two qualifying children; $53,930 for three or more qualifying children
- Note: taxpayers can NOT claim the EITC if they choose to file Married Filing Separate
Additionally, to qualify for the EITC, investment income must be $3,450 or less. The maximum amount of credit for tax year 2017 is $6,318 with three or more qualifying children, $5,616 with two qualifying children, $3,400 with one qualifying child, and $510 with no qualifying children.
Specific to this 2017 tax season, the IRS is encouraging victims of last year’s hurricanes to see if they qualify for the EITC. The IRS has released a special computation method available only to those taxpayers who lived in one of the federally declared disaster areas in 2017 to determine whether the taxpayer qualifies for the EITC. If the taxpayer’s income dropped in 2017, they can instead choose to figure their credit using 2016 earned income vs. 2017. Taxpayers affected by last year’s hurricanes should figure the credit both ways to see which will generate a larger credit.
The IRS has also set out this tax season to remind taxpayers with disabilities to be aware of the EITC and to claim it if they qualify. In a recent news release, the IRS stated that many taxpayers with disabilities miss out on this opportunity because they do not file a tax return because they are not otherwise obligated to or because they are concerned with whether filing will affect their benefits. The IRS wants taxpayers with disabilities to know that although people with disabilities are often concerned that a tax refund will impact their eligibility for public benefits, the law is clear. Tax refunds are NOT counted as income for purposes of determining eligibility for benefits such as SSDI, Medicaid, and SNAP. This applies to any federal program and any state or local program financed with federal funds.
Again, keep in mind that to get the EITC, the taxpayer must file a return, even if no tax is due and/or they are not required to file. Also, note that the IRS also holds refunds that claim the EITC until mid-February to ensure taxpayers receive the refund they deserve. The IRS anticipates to begin to issue refunds on 2017 tax returns by February 27, 2018. If you think you are eligible to claim the EITC, contact your tax professional to explore your options, file as soon as you have all the documents you need to prepare your return, and remember, Bryson Law Firm, L.L.C. is here to help!
