EIC (Earned Income Credit)
The Earned Income Credit (EIC) is a tax credit for certain people who earned income. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EITC may also give you a refund. In order to claim this credit, you must file an income tax return and qualify by meeting certain rules.
* Must have a valid Social Security Number(for you, spouse and qualifying children)
* Must have earned income from employment or from self-employment
* Filling status cannot be married, filling separately
* You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
* You cannot be a qualifying child of another person.
* You cannot file Form 2555 or Form 2555-EZ (which excludes foreign earned income)
* Your investment income must be $3,150 or less for tax year 2012.
* IF YOU DO NOT HAVE A QUALIFYING CHILD, YOU MUST:
- Be age 25 but under 65 at the end of the year,
- Live in the United States for more than half the year, and
- Not qualify as a dependent of another person
A CREDIT CAN BE AS MUCH AS:
$475 for earned income and adjusted gross income (AGI) less than $13,980 with no children ($19,190 if married filing jointly)
$3,169 for earned income and AGI less than $36,920 and one qualifying child ($42,130 if married filing jointly)
$5,236 for earned income and AGI less than $41,952 and two qualifying children ($47,162 if married filing jointly).
$5,891for earned income and AGI less than $45,060 and three or more qualifying children ($50,270 if married filing jointly).
Who is a Qualifying child?
For EIC purposes a qualifying child must meet the following:
To be your qualifying child, a child must be your:
* Son, daughter, stepchild, eligible foster child, adopted child or a descendant (for example, your grandchild) of any of them, or
* Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew).
An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.
Eligible Foster Child. A person is your eligible foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.
Your child must be:
*Under age 19 at the end of the year and younger than you or your spouse if you file a joint return,
* A full-time student under age 24 at the end of the year and younger than you or your spouse if you file a joint return, or
* Permanently and totally disabled at any time during the year, regardless of age.
3.- Residency test
Your child must have lived with you in the United States for more than half of the year.
Please note the above credit(EITC) is not a standard credit and it varies. The credit is based on your total adjusted gross income and your total qualifying children