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 Federal Credits
What is the Earned Income Tax Credit?
The Earned Income Tax Credit (EITC) is a refundable federal tax credit for eligible taxpayers who work, but don’t earn high incomes. The EITC delivers billions of dollars to millions of low-income taxpayers—many of whom rely on the credit to lift them above the poverty line. To qualify, a taxpayer must meet certain rules and file a tax return, even if the taxpayer doesn’t owe any tax or didn’t earn enough money to require filing a return. If the taxpayer qualifies and claims the credit, they could pay less federal tax, no tax, or even get a tax refund.
Filers must meet the following federal requirements:
- You 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:
o Be age 25 but under 65 at the end of the year
o Live in the United States for more than half the year, and
o Not quality as a dependent of another person
- Some other special rules may apply
Filers must meet the following income limits. Earned income and adjusted gross income (AGI) must be less than:
- $38,646 ($41,646 married filing jointly) with two or more qualifying children
- $33,995 ($36,995 married filing jointly) with one qualifying child
- $12,880 ($15,880 married filing jointly) with no qualifying children
Investment Income Limit = $2,950
Child Tax Credit is up to $1,000 per qualifying child. The Additional Child Tax Earnings Threshold is $12,050 in 2008.
How much credit could a filer receive if they qualify for the EITC?
- $4,824 with two or more qualifying children;
- $2,917 with one qualifying child;
- $438 with no qualifying children.
What is the federal Child Tax Credit?
The federal Child Tax Credit is for taxpayers raising dependent children under age 17. This federal tax credit can give a worker back some or all of any additional income tax still owed at the end of the year.
What is the Federal Child and Dependent Care Credit?
The Child and Dependent Care Credit is a federal tax benefit designed to assist families with the cost of care for children or other dependent relatives.
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