Who Qualifies for the Earned Income Credit on Their Taxes?

The earned income credit is a tax break for low-income working taxpayers who qualify for it by meeting income limits and other criterion. As a tax credit, the EIC reduces your tax bill for 2012 by $475 if childless, on up to $5,891 with three or more children. It is a refundable credit, meaning the IRS will pay it to you even if your tax bill is zero; but you must file a tax return to claim it.

Income Limits

To qualify for the EIC, your total adjusted gross income for 2012 from all sources must be less than $13,980 if single with no dependent children or under $19,190 if married filing jointly with no dependent children. If you have one dependent child, the income limit rises by $22,940. The limit rises by another $5,032 for a second child and by another $3,108 for three or more children, to a maximum income of $45,060 for a single parent with three or more children or $50,270 for a married couple with three or more children.

Other Income Qualifiers

Your total adjusted gross income must include taxable wages, salary, tips and any other income you earned by working for an employer, or taxable net income you earned from self-employment. If you are married filing jointly and only one of you has earned income, you still meet this rule. There is no specific earned-income minimum you must meet. But you cannot have any earned income from a foreign country. Income earned in Puerto Rico, U.S. Virgin Islands and other U.S. territories overseas counts as U.S. income. Your investment income from interest, dividends and capital gains must be less than $3,200.

Residency & SSN

You, and your spouse if filing jointly, must be a U.S. citizen or legal resident alien for the entire tax year to qualify for the EIC. You, your spouse and your dependent children each must have a Social Security number. If you’ve applied for an SSN for a family member who lacks one and the number hasn’t been assigned by the tax return deadline, you can file for an automatic 6-month extension and wait for the absent SSN. You can also file your return without claiming the EIC. After receiving the absent SSN, you can file an amended return on Form 1040X to claim the EIC.

Filing Status & Dependency

To claim the EIC, you must file as single, as an unmarried head of a household or as married filing jointly. Married spouses filing separate returns are automatically disqualified from claiming the EIC. You, and your spouse if married, cannot be claimed as a dependent child or dependent relative by another taxpayer. Your children must meet all the IRS qualification tests to be your dependents and cannot be claimed as dependent children by another taxpayer. If you have no children, you must be at least age 25 to claim the EIC.