The Earned Income Credit (EIC) is a refundable tax credit for taxpayers who meet certain requirements and file a tax return. Taxpayers with or without a qualifying child may claim the EIC. The maximum credit depends on whether the taxpayer has no qualifying children, one qualifying child, or more than one qualifying child. Additionally, the maximum credit possible changes each year due to inflationary adjustments.
Rules for all taxpayers
To be eligible to claim EIC, certain rules apply to all taxpayers:
- The taxpayer's adjusted gross income (AGI) must fall below the maximum allowable for their filing status.
- The taxpayer must have a valid Social Security Number.
- The taxpayer's filing status cannot be Married Filing Separately.
- The taxpayer must be (a) a U.S. citizen or resident alien (b) for the entire year.
- The tax return cannot include Form 2555 (relating to foreign earned income).
- The taxpayer's investment income must fall below the maximum allowable amount.
- The taxpayer must have earned income.
Rules for a return with qualifying child
The child must meet several tests:
- relationship - son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them.
- age - (a) Under age 19 at the end of the tax year and younger than the primary taxpayer, or (b) under age 24 at the end of the tax year, a student, and younger than the primary taxpayer, or (c) permanently and totally disabled, regardless of age.
- residency - Must have (a) lived with the taxpayer (b) in the United States (c) for more than half of the tax year.
- joint return test - The child cannot file a joint tax return for the year (unless filing a joint return only to claim a refund of tax withheld or estimated tax paid).
Additional rules for the child:
- A qualifying child cannot be used by more than one person to claim the EIC.
- The taxpayer cannot be a qualifying child of another person.
- A qualifying child must have a valid Social Security Number.
- A child must be younger than the taxpayer unless the child is permanently and totally disabled.
- If the parents of a child can claim the child as a qualifying child but elect not to claim the child, no one else can claim the child as a qualifying child unless that person's AGI is higher than the highest AGI of either of the child's parents.
Rules for a return without a qualifying child
- The taxpayer must be at least age 25 but under age 65 at the end of the tax year (For MFJ returns, either the taxpayer or the spouse must be at least age 25 but under age 65 at the end of the tax year.)
- The taxpayer cannot be the dependent of another person.
- The taxpayer cannot be the qualifying child of another person.
- The taxpayer must have lived in the United States more than half of the year.
Generating the EIC in TaxSlayer Pro
TaxSlayer Pro will automatically calculate EIC based on the information entered in the return. You will also be prompted to answer the Paid Preparer Due Diligence questions as well as questions that may qualify or disqualify the taxpayer from claiming the credit.
Due Diligence Questions
If you previously answered EIC qualifying questions and need to re-answer them, from the Main Menu of the tax return (Form 1040) select:
- Payments, Estimates & EIC
- Earned Income Credit
- Complete Schedule EIC
If you previously answered paid preparer due diligence questions and need to re-answer them, from the Main Menu of the tax return (Form 1040) select:
- Preparer Due Diligence
EIC not calculating?
To find out why EIC is not calculating in a tax return, from the Main Menu of the return (Form 1040) select:
- View Results
- Why No EIC Calculated