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Earned Income Tax Credit (EITC)

The earned income credit (EITC) is a tax credit for certain people who work and have low wages. Based on the information you enter into our software, if you are entitled to the EITC credit, it will be calculated and entered on your return.

A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EITC may also give you a refund.

To claim the EITC on your tax return, you must meet all of the following rules:

  • Must have a valid Social Security Number
  • You must have earned income from employment or from self-employment.
  • Your filing status cannot be married, filing separately.
  • You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
  • You cannot be a qualifying child of another person.
  • If you do not have a qualifying child, you must:
    • be age 25 but under 65 at the end of the year,
    • live in the United States for more than half the year, and
    • not qualify as a dependent of another person
  • Cannot file Form 2555 or 2555-EZ (related to foreign earn income)
  • You must meet these EITC Thresholds and Limitations

What is Earned Income?

Earned income includes all the taxable income and wages you get from working.

There are two ways to get earned income:

  1. You work for someone who pays you, or;
  2. You work in a business you own.

Taxable earned income includes:

  • Wages, salaries, and tips;
  • Union strike benefits;
  • Long-term disability benefits received prior to minimum retirement age;
  • Net earnings from self-employment.

Combat Pay

Nontaxable combat pay election. You can elect to have your nontaxable combat pay included in earned income for the earned income credit. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q.