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Do You Qualify for the Earned Income Tax Credit?

accountnow prepaid debit cards earned income tax credit qualifications blog 1 of 5 people who qualify for the EITC don’t claim it!

You might have heard about the EITC—or Earned Income Tax Credit (also called EIC). This tax credit benefits working people with low to moderate incomes. If you qualify, you can receive a credit ranging from $2 to $6,143, depending on your situation.  This can be a huge benefit, especially if you have children. And the IRS estimates that one of five people who qualify for the EITC don’t claim it! Don’t let that be you!

With the EITC, you can get a refund even if you don’t owe or pay any federal tax. And it can reduce the tax you do owe down to zero and provide a refund if the credit is large enough. Note that you must file a federal tax return in order to get the credit and refund. Although the credit is for earned income, some disability benefits are considered earned income for this purpose. Unemployment income, however, does not qualify

Do I qualify for the EITC?

In order to qualify for the EITC for the 2014 tax year, your earned income and adjusted gross income must each be less than:

  • $46,997 for a single filer with three or more qualifying children ($52,427 if married, filing jointly)
  • $43,756 for a single filer with two qualifying children ($49,186 if married, filing jointly)
  • $38,511 for a single filer with one qualifying child ($43,941 if married, filing jointly)
  • $14,590 for a single filer with no qualifying children ($20,020 if married, filing jointly)

accountnow prepaid debit cards earned income tax credit single filer children qualifications table

In addition, you must meet these requirements:

  • Both you and your qualifying children must have social security numbers (not Individual Taxpayer Identification Numbers)
  • You must file either as an individual (with a filing status of single, head of household or qualifying widower) or as married filing jointly. You do not qualify if your filing status is married filing separately
  • Your investment income cannot be more than $3,350 for 2014
  • You must have been a U.S. citizen or resident alien for all of 2014; you could also be a nonresident alien who is married to a U.S. citizen
  • If you do not have a qualifying child, you must be between the ages of 25 and 65, have lived in the U.S. for more than half of 2014 and not be the qualifying child of another person.
  • You must have earned income from employment or self-employment.

What is earned income?

Earned income is any money that you were paid for doing work, whether for yourself or for someone else. Here are some examples of earned income:

– salary
– wages
– tips
– commissions
– royalties
– self-employment net earnings
– statutory employee gross pay
– jury duty pay
– union strike benefits
– long-term disability benefits
– nontaxable combat pay

Earned income does not include alimony, child support, worker’s compensation, social security, retirement income, gifts, payments from public assistance programs or gambling winnings.

Most tax preparation software will automatically check to see if you qualify for the EITC.

Of course, if you get a refund through EITC, be sure to use it wisely. One way to preserve your tax refund (and your hard-earned money year-round) is by using an AccountNow prepaid card. Deposit your refund onto your card—it’s fast and easy—and then save it for a rainy day. It will be there when you need to pay a bill, send money to someone, shop online and in stores, or get cash at the ATM. Tax Day is fast approaching – the sooner you file your federal return, the sooner you could receive your refund!