Earned income credit

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Earned income credit

A tax credit for taxpayers with children.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
The lowest income households continue to receive the federal earned income credit, while households in the highest federal tax brackets find the loss of property tax deductions more costly.
(70) On the other hand, the maximum amount a taxpayer may earn before they are disqualified from the Earned Income Credit has increased to $37,783 if the taxpayer has more than one qualifying child and is a head of household filer and $39,783 if the taxpayer is married filing jointly.
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.
* Form 1040 with Schedule A, B, C-EZ, D, Earned Income Credit, R and SE
Many of their tax returns are complex, and the refunds are increasingly large because of the refundable earned income credit and child tax credit.
Taxpayers must provide correct names and identification numbers to claim personal exemptions or the earned income credit on their tax returns.
Workers with children may use the advance-payment option to receive the credit incrementally by submitting Form W-5, Earned Income Credit (EIC) Advance Payment Certificate, to their employers.
These include: the earned income credit, child and dependent care credit, credits for the elderly and the disabled, education credit and foreign tax credit.
The measure, SB 150, protects the federal earned income credit against most court judgments, including bankruptcy orders but not child or spousal support orders.
The following items are appended: a list of 23 key reports from the studies reviewed; program descriptions; program impacts; and a discussion of why including the federal Earned Income Credit does not substantially change program impacts on income.) (MN)
The earned income credit (EIC) is a tax credit for certain people who work and have "earned" income under $31,152.
Educators also found several other items to be moderately complex: employee business expenses, earned income credit, social security, investment interest expense, education credits, and IRA contributions.