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What is the earned income credit and who qualifies for it?

The earned income credit (EIC) is a refundable tax credit available to certain low-income individuals who have earned income, meet adjusted gross income thresholds, and do not have more than a specified amount of disqualified income (excess investment income). If you file a federal tax return and meet all applicable requirements, your income tax (if any) will be reduced and you might receive a refund.

To qualify for the EIC, you must meet all of the following requirements:

  • Must have earned income
  • Tax return must cover a full 12 months (unless a short period is filed due to taxpayer's death)
  • Filing status cannot be married filing separately
  • Cannot be a qualifying child of another taxpayer
  • Must not have filed forms related to foreign earned income
  • Must have no more than $3,150 of disqualified income

In addition, special rules will apply to taxpayers who have qualifying children and to taxpayers who do not have qualifying children.

If you are eligible to claim the EIC and have at least one qualifying child, you can receive part of your credit in your paycheck during the year, rather than all at once at tax time. This is known as the advance EIC. However, several requirements apply.

For more information, consult a tax professional.