Help Calculating My Earned Income Credit
- The earned income credit is a tax benefit extended to lower income people who work. It can reduce tax due or provide a refund if you do not owe taxes for the year. The amount of earned income credit you're due varies on a number of factors, including your income level and the number of qualified children listed on your return. Generally, the more qualified children, the higher the credit. However, you do not need to have a child in order qualify for the earned income credit.
- You have to meet a few key requirements in order to qualify for the earned income credit. First, you must receive earned wages, which includes working at a job or working as a self-employed individual. You have to be a United States citizen, resident alien, or non-resident alien married to someone who meets these two requirements with a social security number. If you don't have a child who qualifies for purposes of the credit you must be at least 25 but under age 65 in order to take the credit. Your income must also meet certain restrictions --- see IRS Publication 596 (Earned Income Credit) to learn all requirements.
- Once you verify your eligibility for the EIC, you can determine the amount of your credit using the instruction booklet that comes with form 1040. The form lists an EIC table and worksheet that you must fill out in order to determine the amount based on your income and number of qualifying children (if any). You can also use the IRS' EITC Assistant tool to determine the credit for the current tax year.
- Some third-party websites also offer earned income credit calculators that perform the estimation for you automatically. You can find EIC calculation tools at a few websites, including Bankrate and Dinkytown. These tools are handy if you just want to do a preliminary check to see how much of a credit you'll likely receive, but it's still best to use the IRS' official tools when preparing taxes. In many cases, tax preparation software programs also include an EIC tool to automatically calculate the credit.
