Eight Basic Rules to Qualify for the Earned Income Tax Credit

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To qualify for Earned Income Tax Credit or EITC, you and your spouse (if you’re married and filing a joint return) must meet all of the following rules:

  1. You must have a valid Social Security Number. [If you are foreign born and have an ITIN number, you cannot get an earned income credit, but if you become a citizen and obtain a social security number, you may go back up to three years and amend your old returns using your social security number to qualify for EIC.]
  2. You must have earned income from employment, self-employment or another source. [Alimony counts as earned income, child support does not. Social security, pension payments, and veteran’s benefits do not count as earned income.]
  3. You cannot use the married, filing separate status to file your return. [If you are separated and have been living apart for the last six months of the year, you may be able to use the head of household filing status and still qualify for EIC. Do not claim head of household status if you are still living with your spouse. That’s a form of EIC fraud and can get you into big trouble.]
  4. You must either be a U.S. citizen or resident alien all year or a nonresident alien married to a U.S. citizen or resident alien and choose to file a joint return and be treated as a resident alien. [If you are in the US military and stationed out of the country on active duty, you still count as being in the United States for EIC purposes.]
  5. You cannot be the qualifying child of another person. [Let’s say you are a young mother still in school and living with your parents. If your parents can claim you as a dependent on their tax return, then you cannot claim an earned income credit for your child. You will be able to allow your parents to claim your baby as a dependent on their tax return though.]
  6. You cannot file a Form 2555 or 2555-EZ (related to foreign earned income). [Basically, if you’re using this tax form, you’re living and working outside the country so you wouldn’t qualify to claim EIC anyway.]
  7. Your Adjusted Gross Income and earned income must meet the limits shown for 2011:
    Earned Income and adjusted gross income (AGI) must each 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 one qualifying child
    • $13,660 ($18,740 married filing jointly) with no qualifying children
  8. Your investment income must meet or be less than $3,150 for 2011. [Investment income is basically bank interest, capital gains or dividends from stocks. You might have a partnership interest or own a corporation and receive investment income there. These types of income can prevent you from claiming an Earned Income credit.]

Those are the basic rules that everyone must meet to qualify for an Earned Income Credit. If you have children or are self-employed, you have more hoops to jump through.

Other posts that might interest you are Tax Tips for Single Moms: http://robergtaxsolutions.com/2011/01/tax-tips-for-single-moms/

And also My Ex Claimed My Kid: http://robergtaxsolutions.com/2011/01/my-ex-claimed-my-kid-now-what-do-i-do/

2 thoughts on “Eight Basic Rules to Qualify for the Earned Income Tax Credit

  1. Hi George,
    It seems like a new scam turns up every day. I am never surprised at stuff that happens at the IRS. Although you’d think some things would be automatic–like rejecting an ITIN for for EIC–you never know. I haven’t seen that before but I’ve seen some other weird stuff.)
    I wonder if the scam artist is saying they’ll get EIC and then stealing the baby social security numbers to use on fake EIC returns for other people–that one I’ve heard of before.
    It’s frustrating following the rules and watching them be stomped on by “the tax company down the street.”
    But to be honest, I’ve never heard of a paper filed EIC return with an ITIN number being accepted for EIC. Anybody else out there have any experience with this? Now you’ve got me curious.

  2. I’m an enrolled Agent I know you can’t get Eanred Income Credit or Child chlid if you have an ITIN. Where I live in Los Angeles County ther are prepares solicting women with ITIN and that have child born in the USA, with a SSN. There being told that they can get these credits even with a ITIN. I told a lady that was not true she told me its been going here for years and the women get there money. By the way they preparers report false income for either Baby Sitting or House Keeper. The lady told me that the preparer fills out a paper tax return and that the IRS always accepts the return has never rejected a one. I reported this to IRS because it is a growing problem besides being Illegal. There is no way you can do it with sofware. But could this be true about the paper tax form?

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