What you need to know
The earned income tax credit, or EITC, is a way for the IRS to reward work and offset the burden payroll taxes put on moderate- and low-income workers.
How big a credit you qualify for, if any, depends on three main criteria: your income, your filing status and the number of dependent children you have.
For 2008, income limits for the EITC are:
- Single filers with no children: $12,880.
- Married couples filing jointly with no children: $15,880.
- Single filers with one child: $33,995.
- Married couples filing jointly with one child: $36,995.
- Single filers with two or more children: $38,646.
- Married couples filing jointly with two or more children: $41,646.
In addition to the income test, there are a few other rules for EITC qualification:
- Filers must be at least 25 but younger than 65 by the end of the tax year.
- Filers cannot be claimed as a dependent on someone else’s return
- Children claimed on one tax return cannot be claimed as dependents by anyone else.
- Filers must reside in the U.S. for more than half the year.
The EITC works on a sliding scale determined by income and the number of dependent children you have. The maximum credit you can get on a 2008 tax return is $438 with no children, $2,917 with one child, $4,824 with two children.