EITC Presentation

8/2/2019 EITC Presentation

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The Earned Income Tax Credit (EITC)

By: Alvin Chang

Texas Tech Low Income

Taxpayer Clinic

Address: 1802 Hartford Ave

Lubbock, TX 79409


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EITC Definition

EITC, the Earned Income Tax Credit, sometimes called

EIC is a tax credit to help you keep more of what you

earned. refundable federal income tax credit for low to

moderate income working individuals and families.

When EITC exceeds the amount of taxes owed, it results

in a tax refund to those who claim and qualify for the

credit.

To qualify, you must meet certain requirements and file

a tax return, even if you do not owe any tax or are not

required to file.


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Eligibility

To qualify for EITC you must have earned income

from employment, self-employment or another

source and meet certain rules. Also, you musteither meet the additional rules for workers

without a qualifying child or have a child that meets

all the qualifying child rules for you.


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What is Earned Income?

Earned income includes all the taxable income andwages you get from working.

There are two ways to get earned income: You work for someone who pays you OR

You work in a business you own or run

Examples of income that is not earned income

Interest and dividends Retirement income

Social security

Unemployment benefits


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Earned Income Limits

Earned Income and adjusted gross income (AGI) musteach be less than:

$43,998 ($49,078 married filing jointly) with three or

more qualifying children $40,964 ($46,044 married filing jointly) with two

qualifying children

$36,052 ($41,132 married filing jointly) with onequalifying child

$13,660 ($18,740 married filing jointly) with no qualifyingchildren

Investment income must be $3,150 or less for the year.


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EITC Rules for Everyone

To qualify for Earned Income Tax Credit or EITC, you andyour spouse if married and filing a joint return, mustmeet all of the following rules:

Have a valid Social Security Number Have earned income

Cannot use the married, filing separate filing status

Must be a US citizen or resident alien all year or anonresident alien married to a US citizen or resident alienand choose to file a joint return

Cannot be the qualifying child of another person

Cannot file Form 2555 (foreign earned income)

Your adjusted gross income and earned income mustmeet certain limits


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Qualifying Child Rules

Your child must have a valid Social Security Number and must pass all of thefollowing tests to be your qualifying child for EITC:

Relationship

Your son, daughter, adopted child1, stepchild, foster child2 or a descendent ofany of them such as your grandchild

Brother, sister, half brother, half sister, step brother, step sister or a descendant ofany of them such as a niece or nephew

Age. At the end of the filing year, your child was:

Younger than you (or your spouse if you file a joint return) and

younger than 19, or

younger than 24 and a full-time student

Any age if permanently and totally disabled3

Residency

Child must live with you (or your spouse if you file a joint return) in the UnitedStates4 for more than half of the year.

Joint Return

The child cannot file a joint return for the year, unless the child and the child's

spouse did not have a filing requirement and filed only to claim a refund.


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Rules for those Without a Qualifying Child

If you do not have a child or do not have a child that meets all fourqualifying child tests and your income is low, you may be able to claimEITC, the Earned Income Tax Credit. We believe this group of workersis the largest group who do not file a return to claim the credit. And,

you must file a return to claim EITC.

After you and your spouse, if you are married and file a joint return,meet the EITC rules for everyone, you must meet these additionalrules if you do not have a qualifying child:

You (and your spouse, if filing a joint return) must have lived in theUnited States for more than half the tax year,

Either you or your spouse, if filing a joint return, must be at least age 25but under age 65,

You (or you spouse, if filing a joint return) cannot qualify as a dependentof another person.


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Special Rules

Special EITC rules for members of the military,

ministers, members of the clergy, those receiving

disability benefits and those impacted by disasters.

Many persons with disabilities or persons having

children with disabilities qualify for the Earned

Income Tax Credit or EITC.


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EITC and the rest of the Tax Code

EITC recipients may also receive the child tax credit

and child care tax credit.

No direct interaction between EITC and these othercredits.

Personal exemptions

Standard deduction

These features are part of an overall patchwork of

tax benefits for families with children


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Questions?

Documents

EITC Presentation