The Earned Income Tax Credit (EITC) is a federal benefit for low- to moderate-income working individuals that takes the form of a refundable tax credit. If you qualify, it reduces the amount of tax you owe to the IRS, dollar-for-dollar. If the amount you owe is less than the amount of the credit, you will receive a refund.
If you, like many other Americans, have been impacted financially by the COVID-19 crisis, this credit can help ease the financial burden should you qualify and claim it for the 2020 tax year.
How do I check if I qualify?
Check out the IRS’s EITC Assistant tool to see if you’re eligible. Qualification is based on where you stand on each of the four factors below:
- Adjusted gross income (AGI): This is the money you earned through wages, tips, and any other source of income, minus either the standard deduction or your itemized deductions.
- Investment income: In other words, how much you made from interest payments, dividends, capital gains, or other profit made through an investment vehicle.
- Filing status: You can file as single, married filing jointly, married filing separately, head of household, or qualifying widow.
- Number of qualifying children: More on how children qualify below.
For detailed information about filing for the EITC, and for the most up-to-date information, see Publication 596.
What is the qualifying criteria for each factor?
COVID-19 Tax Relief Measures for Every StateFinances and Taxes
In order for a child to qualify for EITC purposes, they must pass four tests:
- Relationship: The child must be your biological child, adopted child, step child, foster child, or a descendent of any of them (such as a grandchild). They may also be your biological sibling, your half sibling, step sibling, or a descendent of any of them (such as a niece or nephew).
- Age: At the end of the filing year, your child qualifies if they were:
- younger than you or your spouse, and younger than 19
- younger than you or your spouse, younger than 24, and a full-time student
- any age and have a permanent disability*
- Residency: The child must have the same main home as you or your spouse, in the United States, for more than half of the tax year.
- Joint Return: The child cannot file a joint return for the year, unless they filed the return only to claim a refund and were not required to file.
Adjusted gross income and filing status
Depending on how many qualifying children (QC) you have and what your filing status is, you cannot claim the credit if your AGI is above a certain amount. For the 2020 tax year (for which you will typically file in April 2021), those cap AGI amounts are:
|Filing status||Zero QC*||One QC||Two QC||Three or more QC|
|Single, Head of Household, or Widowed||$15,820||$41,756||$47,440||$50,954|
|Married Filing Jointly||$21,710||$47,646||$53,330||$56,844|
*QC = qualifying children
You cannot claim the EITC if you file as “married filing separately,” or if your AGI is over $56,844.
Maximum Investment Income
You must have less than $3,651 of investment income for the year.
How much is the credit worth?
Depending on how many qualifying children you claim on your return, the maximum amount of the credit for tax year 2020 is:
- $6,660 with three or more qualifying children
- $5,920 with two qualifying children
- $3,584 with one qualifying child
- $538 with no qualifying children
How do I claim the credit?
To claim the credit, you must file a tax return, even if you are not required to file or owe no tax. Here’s a list of what forms and info you should have ready:
- Social Security cards, a Social Security number verification letter, or other US government document verification for everyone on your return
- Birth dates for everyone on your return
- Copies of last year’s federal and state returns, if you have them
- All your income statements, including Forms W-2 and 1099, Social Security, unemployment, and any other statements that record your income
- All records of your expenses, including tuition, mortgage interest, real estate taxes, or business expenses
- All information reporting forms, like the 1095-A, 1095-B, or 1095-C
- Your bank routing numbers and account numbers, so you can direct deposit any refund
- Dependent child care information, like the name and address of paid caretakers and either their Social Security number or other tax identification number
If you are eligible for the EITC, you will also be eligible to participate in the IRS Free File program to e-file your federal return for free. For more information on the Free File program, visit the IRS’ Free File information page.
Could I still be eligible for Free File, even if I don’t qualify for the EITC?
Yes. If your 2020 AGI was $72,000 or less, you will be eligible for free federal tax filing. Go to the Free File lookup page to learn more about how to file for free.