Earned Income Tax Credit (EITC) Questions and Answers
A1. The earned income credit (EITC) is a tax credit for certain people who work and have low wages. 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.
A2. To claim the EITC on your tax return, you must meet all of the following rules:
A3. If your EITC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862, Information to Claim Earned Income Credit After Disallowance, to your next tax return to claim the EITC. You must also qualify to claim the EIC by meeting all the rules described in Publication 596.
However, do not file Form 8862 if either (1) or (2) below is true.
1. After your EITC was reduced or disallowed in the earlier year:
2. You are taking the EITC without a qualifying child and the only reason your EITC was reduced or disallowed in the earlier year was because the IRS determined that a child listed on Schedule EITC was not your qualifying child.
Also, do not file Form 8862 or take the EITC for:
A4. Your child is a qualifying child if your child meets all of the following tests:
To be your qualifying child, a child must be your:
Definitions to clarify the relationship test.
Adopted child. An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.
Eligible Foster Child. A person is your eligible foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
Your child must be:
Your child must have lived with you in the United States for more than half of the year.
Q5. Who is an eligible foster child?
A5. An eligible foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
A6. Earned income includes all the taxable income and wages you get from working.
There are two ways to get earned income:
Taxable earned income also includes:
A7. After you know you qualify for the EITC, you need to know how to figure the amount of the credit. You have two choices of how to figure the credit:
For more information, see Chapter 4, Figuring and Claiming the EITC, in Publication 596.
A8. Yes. If you receive the Advance EITC or AEITC, you must file a tax return. The Form W-2 provided by your employer will show the amount of the AEITC you received. This amount must be reported on your tax return. You will also be able to claim any additional credit to which you may be entitled.
If you received advance payments of EITC, you must file Form 1040 or Form 1040A to report the payments. Your Form W-2, box 9, will show the amount you received. Note: The Education Jobs and Medicaid Assistance Act of 2010 signed into law August 10, 2010 repealed the Advance EITC or AEITC. It will not be available to workers after December 31, 2010.
A9. If your EITC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EITC rules, then you cannot claim the EITC for the next 2 years. If your error was due to fraud, then you cannot claim the EITC for the next 10 years. The date on which your EITC was denied and the date on which you file your tax return affects the years for which you are prohibited from claiming the EITC.
A10. Find out if you are eligible for the Earned Income Tax Credit (EITC) by answering some questions and providing basic income information in our EITC Assistant application. Click here for the English Version of the EITC Assistant or o haga click aquí para seleccionar la Versión en Español del Asistente EITC.