The Internal Revenue Service has specific rules for allowing taxpayers to claim the Earned Income Tax Credit. If you meet these rules, you’ll be eligible to use it to reduce your taxes. However, the IRS allows you to take the EITC only when your income falls below a certain amount. The maximum allowable income amounts depend on your household’s filing status and the total number of qualifying children.
Filing Status Eligibility
The IRS states that if you are married, you must file taxes jointly with your spouse to qualify for the EITC. Single taxpayers who meet all the IRS requirements can qualify, too. If your filing status is widowed or head of household, you are also eligible to use this tax credit.
2020 Maximum Household Income
The IRS sets the 2020 EITC income maximums using the total of your qualifying dependents and your filing status. For eligible taxpayers who file as head of household, single or widowed with no children, the allowable maximum income is $15,820. With one dependent, your maximum income increases to $41,756, and to $47,440 with two dependents. With three dependents, $50,954 is the income maximum.
The maximum income for married taxpayers who file jointly with no qualifying children is $21,710. One qualifying child increases your income maximum to $47,646. With two children, the maximum increases to $53,330. For three children, it is $56,844.
2020 Maximum EITC
Using the EITC to reduce your taxes is beneficial for moderate- and lower-income taxpayers and their families. Your maximum available credit might exceed all the federal tax that was withheld from your paychecks during the year. Otherwise, the maximum credit that the IRS allows for each tax filing category is still a potential tax break.
For 2020, the IRS has set the maximum credit for all eligible taxpayers with no children at $538. With one child, you qualify for a maximum credit of $3,584. Two children qualify you for $5,920, and three children increase your maximum credit to $6,660.
EITC IRS Refund Schedule
When you apply for the EITC, the IRS requires more time to process your refund. By law, they must hold your entire refund until at least the middle of February. Under the most common scenarios, you might receive an electronically deposited refund to your debit card or checking account in early March.
EITC Eligibility Requirements
The EITC’s main eligibility requirement is that you earn income from working for an employer, owning a business or farming. Your maximum income from investments cannot exceed $3,650. Filing for a foreign income tax credit makes you ineligible.
Qualifying children that you claim for an EITC must have a Social Security number when you file your taxes. They also must be less than 19 and live with you more than half the year. The IRS allows you to add your disabled qualifying child of any age and full-time students up to age 24 to your EITC claim.
Filers with no children must not be another taxpayer’s dependent and be 25 years old or older, but younger than 65. You also must live in the U.S. for at least six months during the tax year to meet the residence requirement. See more EITC conditions in the IRS Publication 5334, Do I Qualify for EITC flowchart.
- Internal Revenue Service: Do I Qualify for the EITC?
- Internal Revenue Service: Earned Income Tax Credit Income Limits and Maximum Credit Amounts
- Internal Revenue Service: Refund Timing for Earned Income Tax Credit and Additional Child Tax Credit Filers
- Internal Revenue Service: Publication 5334, Do I Qualify for EITC?
Carol Luther has published feature articles in print magazines, ghostwritten blogs, and produced digital content since 2007. She has published personal finance and small business articles for the Houston Chronicle, Mahalo, the Nest, USA Today, Wahm, and Zacks. Carol has designed, implemented and managed multi-year, multimillion-dollar domestic and international projects services for higher education, nonprofits, and small to medium businesses for more than 20 years.