Earned Income Tax Credit

Low-to-moderate-income workers can reduce their tax bill and increase tax refund by claiming the earned income tax credit. The EITC amount depends on the number of children you have and the income you earn. For 2020, the maximum EITC you can claim as a single filer is $538 if you have no qualifying children. If you have one, the maximum is $3,584 and it is $5,920 for two. For three or more qualifying children, the maximum EITC amount is $6,660.

Since this tax credit can basically make you pay zero taxes and contribute to your tax refund, the eligibility requirements are tough. If you’re single with no qualifying children, your annual income—not taxable income—must be lower than $37,870. Depending on the number of qualifying children you have, this annual income limit can be as high as $51,567.

Refundable EITC

The earned income tax credit is refundable just like the child tax credit. While only a portion of the child tax credit is refundable, this isn’t the case with the earned income tax credit. The refundable amount of the earned income tax credit is dollar for dollar. If you can claim it, you will reduce taxable income and boost your tax refund.

To claim earned income tax credit on your tax refund you will need the following documents.

  • Income statements; Forms 1099 and W-2 etc.
  • Health Insurance Marketplace Statement if health coverage purchased through Health Insurance Marketplace
  • Expense records
  • Bank account number(s) and bank routing number(s) for the tax refund
  • Dependent information; Social Security Number and name and address of the paid caretakers

Basically, the information you need to provide to claim the earned income tax credit is the same as any other tax credits. You simply need to prove your income and give information about the qualifying children(s).

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