Earned Income Tax Credit

Resources (EIC)

EARNED INCOME TAX CREDIT
(INDIVIDUAL TAXPAYER IDENTIFICATION NUMBERS)
By Mary Loos
Managing Attorney for Legal Aid of Arkansas, Inc., and
Clinic Director for Legal Aid of Arkansas Low Income Taxpayer Clinic

What is the Earned Income Tax Credit (EITC)?  The EITC is a federal income tax credit for workers who earn low to moderate incomes.  If you qualify, EITC can reduce your tax liability (meaning you pay less in federal taxes) and can result in a refund in certain situations.  It could be worth more than $5,600 for the current tax year.  Could that make a difference in your life?  Of course, it could!  Find out if you are eligible to take the EITC.

The EITC has no effect on certain welfare benefits.  In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.

Do you have to be married to qualify for the EITC?  No, you can be single to qualify.  However, if you are married, you must file a joint tax return.

Do you have to have a child to qualify for the EITC?  No, you do not have to have a child, but you must meet certain IRS requirements.  Read on to see what those requirements are.

How do you know if you are eligible to take this credit?  You must meet certain IRS requirements and file a tax return to claim the credit, even if you did not earn enough money to be legally obligated otherwise to file a tax return. 

To take the credit, you must have earned income from employment or self-employment.  Your earned income and adjusted gross income (AGI) for the current tax year (2009) must be less than:

• 43,279 ($48,279 married filing jointly) with three or more qualifying children;
• $40,295 ($45,295 married filing jointly) with two qualifying children;
• $35,463 ($40,463 married filing jointly) with one qualifying child;
• $13,440 ($18,440 married filing jointly) with no qualifying children

What is the maximum credit for Tax Year 2009?  It is:

• $5,657 with three or more qualifying children;
• $5,028  with two qualifying children;
• $3,043  with one qualifying child;
• $457 with no qualifying children.

Any investment income you receive must be $3,100 or less for the year.
The maximum Advance Earned Income Tax Credit (advance EITC) for Tax Year 2009 the employer is allowed to provide throughout the year with the employee's pay is $1,712.

You must meet the following EITC requirements:

• You must have a valid Social Security Number.
• You must have earned income from employment or from self-employment.
• Your filing status cannot be married, filing separately.
• You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
• You cannot be a qualifying child of another person.
• If you do not have a qualifying child, you must:
  
  • be age 25 but under 65 at the end of the year,
  • live in the United States for more than half the year, and
  • not qualify as a dependent of another person.
• You cannot file Form 2555 or 2555-EZ (related to foreign earned income).

Do your taxes online free (regardless of how much or little money you make).  Click here to access the program and for other information about your tax rights and responsibilities.

If you are a low income taxpayer who cannot afford professional tax assistance or if you speak English as a second language (ESL) and need help understanding your tax rights and responsibilities, you may qualify for help from the Legal Aid of Arkansas Low Income Taxpayer Clinic (LAA LITC).  LAA LITC is not associated with the federal government and services are free to qualifying individuals.  Eligibility for one-on-one consultations is based on income guidelines and other criteria.  Appointments for individual consultations are available.  Applicants may contact the Legal Aid Hotline at 1-800-952-9243 to determine if they qualify for assistance.