The earned income credit, or EIC, is a refundable credit for workers who meet certain requirements and file a tax return. Persons with or without a qualifying child may claim the EIC. The maximum credit you can get will depend on whether you have no qualifying children, one qualifying child, or more than one qualifying child. Additionally, the maximum credit possible can change each year due to inflationary adjustments.
To be eligible to claim EIC, certain rules apply. These rules are summarized below:
- Your adjusted gross income (AGI) must fall beneath the maximum allowable for your filing status.
- You must have a valid social security number.
- Your filing status cannot be Married Filing Separately.
- You must be a U.S. citizen or resident alien for the entire year.
- You cannot file Form 2555 (relating to foreign earned income).
- Your investment income must fall beneath the maximum allowable for your filing status.
- You must have earned income.
What are the rules for a qualifying child?
Your child must meet several tests:
- relationship (son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them ex: grandchild, niece, or nephew);
- age (under age 19 at the end of the tax year and younger than the primary taxpayer, or under 24 at the end of the tax year, a student, and younger than the primary taxpayer, or permanently and totally disabled, regardless of age)
- residency (must have lived with you in the United States for more than half of the tax year)
- joint return tests (the child cannot file a joint return for the year).
- The qualifying child cannot be used by more than one person to claim the EIC.
- The taxpayer cannot be a qualifying child of another person.
- The 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.
- A child cannot be a qualifying child if he or she files a joint return, unless the return was filed only as a claim for refund.
- 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.
What are the 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 25 but under 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 Earned Income Credit in TaxSlayer Pro
TaxSlayer Pro will automatically calculate the Earned Income Credit based on the information entered in the return. You will be prompted to answer Paid Preparer Due Diligence questions as well as questions that will qualify or disqualify the taxpayer from claiming the credit.
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 EIC-related 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
To find out why EIC is not calculating on a return, from the Main Menu of the tax return (Form 1040) select:
- View Results
- Why No EIC Calculated