CREDIT
Earned Income Tax Credit
IRC §32
Refundable credit for low-to-moderate income workers. Varies by income and children.
Eligibility
Low income; investment income <$11,950
Frequently Asked Questions
Who is eligible for the Earned Income Tax Credit?
Low income; investment income <$11,950
How does the Earned Income Tax Credit work?
Refundable credit for low-to-moderate income workers. Varies by income and children.
What law authorizes the Earned Income Tax Credit?
The Earned Income Tax Credit is authorized under IRC §32 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §32
Source: Internal Revenue Code, Title 26, United States Code
§ 32. Earned income(a) Allowance of credit(1) In generalIn the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount.
(2) LimitationThe amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of—(A) the credit percentage of the earned income amount, over
(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.
(b) Percentages and amountsFor purposes of subsection (a)—(1) PercentagesThe credit percentage and the phaseout percentage shall be determined as follows:
In the case of an eligible individual with:The credit percentage is:Thephaseoutpercentageis:
1 qualifying child3415.98
2 qualifying children4021.06
3 or more qualifying children4521.06
No qualifying children7.65 7.65
(2) Amounts(A) In generalSubject to subparagraph (B), the earned income amount and the phaseout amount shall be determined as follows:
In the case of an eligible individual with:The earned income amount is:Thephaseoutamount is:
1 qualifying child$6,330$11,610
2 or more qualifying children$8,890$11,610
No qualifying children$4,220 $5,280
(B) Joint returnsIn the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000.
(c) Definitions and special rulesFor purposes of this section—(1) Eligible individual(A) In generalThe term “eligible individual” means—(i) any individual who has a qualifying child for the taxable year, or
(ii) any other individual who does not have a qualifying child for the taxable year, if—(I) such individual’s principal place of abode is in the United States for more than one-half of such taxable year,
(II) such individual (or, if the individual is married, either the individual or the individual’s spouse) has attained age 25 but not attained age 65 before the close of the taxable year, and
(III) such individual is not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.
(B) Qualifying child ineligibleIf an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.
(C) Exception for individual claiming benefits under section 911The term “eligible individual” does not include any individual who claims the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year.
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