What is the Earned Income Tax Credit (EITC)?
The EITC is a tax credit for eligible taxpayers who work, but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund beyond the amount of tax withheld.
Qualifications for the EITC:
Earned income and adjusted gross income (AGI) must each be less than:
- $37,783 ($39,783 married filing jointly) with two or more qualifying children;
- $33,241 ($35,241 married filing jointly) with one qualifying child;
- $12,590 ($14,590 married filing jointly) with no qualifying children.
Tax Year 2007 maximum credit:
- $4,716 with two or more qualifying children;
- $2,853 with one qualifying child;
- $428 with no qualifying children.
Investment income must be $2,900 or less for the year.
A “Qualifying Child” - A “qualifying child” may enable a taxpayer to claim several tax benefits, such as head of household filing status, the exemption for a dependent, the child tax credit, the child and dependent care credit, and the earned income tax credit.
For more information about the EITC visit http://www.irs.gov/individuals/article/0,,id=96406,00.html