We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for .
Editorial Integrity
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
How We Make Money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
The Earned Income Credit (EIC) is a tax benefit for working people with low or moderate incomes. You don’t have to have children to qualify for the credit, but if you do, you generally will get more of a tax benefit. The credit is highest for parents filing jointly, lower for those filing singly, and very low for people without children.
Workers who qualify for the credit and file a federal tax return can get back some or all of the federal income tax that was taken out of their pay during the year. They may even get extra cash back from the IRS.
There also is an advance payment feature that allows employers to put extra money in qualified workers’ pay envelopes. That lets these workers take home the money each pay period a little at a time instead of waiting and getting it in one lump sum when they file their tax returns.
EIC Claims for Tax Year 2004
Earned income tax credit:
Number of returns with credit (millions)
21.9
Amount claimed (billion dollars)
$39.7
Refunds:
Number issued (millions)
18.9
Amount (billion dollars)
$34.6
Source: IRS DataBook
Complaints about credit
While the earned income tax credit is a big help to many filers, it does have its critics. Many taxpayers complain that:
The credit is hard to compute.
Its eligibility tests are cumbersome.
Figuring qualifying income is difficult.
Confusion also arises in cases where custody of a child is shared or in question. In these cases, the IRS has established guidelines to help parents or guardians determine which taxpayer may name the child in connection with the EIC.
Don’t be deterred
But if you think you can benefit from the earned income tax credit, don’t let these concerns stop you from filing for it. For more information, see “How to Figure the Credit Yourself” in part D of IRS Publication 596.
Once you know that you qualify for the EIC, you can figure the amount of the credit by using the Earned Income Credit Worksheet and the Earned Income Credit Table in the instruction booklet for Form 1040, Form 1040A, or Form 1040EZ. Remember, the credit amount is phased out if a taxpayer exceeds earning limits, which usually are adjusted annually.
Share