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To EITC or Not to EITC. That is the Question. Determining your Eligibility for the Earned Income Tax Credit

One of the things I found quite confusing when I moved to the United States was the concept of the Earned Income Tax Credit.  Frankly, I still find the tax credit a little hard to understand.  Thankfully, the IRS has provided some guidelines on how this credit works that really helps with understanding eligibility and the application of the rules.      The IRS markets the Earned Income Tax Credit (EITC) as “a financial boost for working people adversely impacted by hard economic times”.  Given the current economic climate I’m sure you would not want to miss out on a tax break that will leave some extra spending money in your pocket, right?  Thought so.  Well, keep reading because I have provided 10 tips the IRS wants you to know about so that you can take advantage of this credit.   


1.     Just because you didn’t qualify last year, doesn’t mean you won’t this year. As your financial, marital or parental situations change from year-to-year, you should review the EITC eligibility rules to determine whether you qualify.


2.      If you qualify, it could be worth up to $5,657 this year. EITC not only reduces the federal tax you owe, but could result in a refund. The amount of your EITC is based on the amount of your earned income and whether or not there are qualifying children in your household. New EITC provisions mean more money for larger families.


3.     If you qualify, you must file a federal income tax return and specifically claim the credit in order to get it – even if you are not otherwise required to file.


4.     Your filing status cannot be Married Filing Separately.


5.     You must have a valid Social Security Number. You, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.


6.     You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.


7.     Married couples and single people without kids may qualify. If you do not have qualifying children, you must also meet the age and residency requirements as well as dependency rules.


8.     Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.


9.     It’s easy to determine whether you qualify. The EITC Assistant, an interactive tool available on, removes the guesswork from eligibility rules. Just answer a few simple questions to find out if you qualify and estimate the amount of your EITC.


10.     Free help is available at volunteer assistance sites and IRS Taxpayer Assistance Centers to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software program you use will figure the credit for you. If you qualify for the credit you may also be eligible for Free File. You can access Free File at



Marsha Henry

Tax Quarry 2010


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