Earned income credit

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Earned income credit

A tax credit for taxpayers with children.

Earned Income Tax Credit

Also called the EITC. A dollar-for-dollar reduction in the tax liability for lower and middle income persons in the United States. The credit is applied against taxes owed on wages, salaries, tips and other forms of earned income. Investment income is excluded and one may not have more than a certain amount of investment income to be eligible for the credit. Households with children may receive larger credits. The EITC is refundable, meaning if the credit causes one's tax liability to go below zero, one receives the difference from the IRS.

Earned income credit (EIC).

The earned income tax credit (EIC) reduces the income tax that certain low-income taxpayers would otherwise owe. It's a refundable credit, so if the tax that's due is less than the amount of the credit, the difference is paid to the taxpayer as a refund.

To qualify for the EIC, a taxpayer must work, earn less than the government's ceiling for his or her filing status and family situation, meet a set of specific conditions, and file the required IRS schedules and forms.

Earned Income Credit

A refundable tax credit for qualified taxpayers based on earned income, adjusted gross income, and the number of qualifying children. See our Earned Income Tax Credit rate table for the current income limits.
References in periodicals archive ?
For example, a couple who have two qualifying children and file a joint return, could earn up to $46,044 per year and still qualify for an earned income credit.
The federal Earned Income Credit is another refundable federal income tax credit available to qualifying low-income taxpayers.
The credits and head-of-household status are not available to the taxpayer, since the earned income credit and child tax credit are limited to QCs (and the latter further restricted to QCs under age 17 at the end of the tax year).
Those most common to military taxpayers are the Hope and Lifetime Learning Credit, (50) Adoption Credit, (51) Additional Child Tax Credit, (52) and the Earned Income Credit.
To encourage work, the system could also have a $2,000 per worker refundable earned income credit (computed as 20 percent of the first $10,000 of earned income), and there would be no need to phase out of either the personal tax credits or the worker credits.
After 2004, a single definition will apply for the purposes of the dependency exemption, the child tax credit, the earned income credit, the dependent care credit and head of household filing status.
Acknowledging these criticisms, Sunstein nevertheless argues in a somewhat Clintonian mode for smarter programs--for example, he favors the earned income credit over minimum-wage laws.
He notes, for example, "treating an earned income credit as untaxed income in the formula seems very inequitable when you consider that this tax credit is only available to low-income families.
Other issues include earned income credit and estimate payments on behalf of a married couple when filing separately.
Quantifying benefits due to testing is difficult, but IRS's experience in revising and testing Earned Income Credit and Child Tax Credit forms and instructions suggests that benefits of testing in some cases can considerably exceed the cost of testing.
Form 1040A with Schedule 1,2,3 and Earned Income Credit