Tax Notes

Tax Notes - The Earned Income Credit (EIC) is a refundable...

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The Earned Income Credit (EIC) is a refundable tax credit available to eligible taxpayers who do not earn high incomes. The purpose of the EIC is to reduce the tax burden and supplement the wages of working families whose earnings are less than the maximum for their filing status. Taxpayers who qualify for this credit can receive a refund even if they have no filing requirement, owe no tax, and had no income tax withheld. The EIC is a valuable credit that is adjusted for inflation every year. In 2011, the maximum earned income credit for families with three or more children is $5,751. Part A: Rules for Everyone Must have a valid social security number. Filing status cannot be "Married Filing Separately." Must be a U.S. citizen or resident alien all year. Cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Investment income must be $3,150 or less. Cannot be a qualifying child of another person Part B: Rules If You Have a Qualifying Child Child must meet the relationship, age, and residency tests. Qualifying child cannot be used by more than one person to claim the EIC
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