Claim All the Tax Credits You Earned: What the Earned Income Credit Can Do for You at Tax Time!
Authored By: Iowa Legal Aid
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What the Earned Income Credit Can Do for You at Tax Time!
How Much Can I Get?
If you have qualifying children, you can get up to $6,660 in the Earned Income Credit (EIC) for tax year 2020 (on the return you will file in 2021).If you are a worker without children, you can get up to $538.
The Internal Revenue Service has a tool on their website to help you calculate how much you would get from the Earned Income Credit based on your income and family size. The calculator is available for tax years 2017-2019 but will still give you a pretty good idea about what your 2020 EIC could be when you file your tax year 2020 return (filed in 2021).
Find the EIC Calculator on the IRS website at https://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/Use-the-EITC-Assistant OR:
Go to iowalegalaid.org,
Type EIC Calculator in the search box and click GO, then
Select EIC Calculator from the list of the website’s tax issues resources.
What Children Qualify?
- Adopted children, as long as they lived with you for more than six months during the tax year; and
- Foster children who are placed with you by an authorized government or private placement agency
- Brothers, sisters, stepbrothers and stepsisters - and the children of any of these relatives - qualify if they were with you for more than six months during the tax year.
- The children must be under age 19, or under age 24 if they are full-time students.
- Totally and permanently disabled children of any age are also qualifying children.
Social Security numbers valid for employment are required for the taxpayer and the children claimed for the earned income credit.
If you are not the parent of the qualifying child, you must be older than the child unless the child is totally and permanently disabled. If you live with the child and his or her parent(s), you can only claim the child if you have the required relationship, the parent chooses not to claim the child, and your adjusted gross income is higher than the parent with the highest adjusted gross income.
How Do I Get the Earned Income Credit?
You must file a tax return. If you were raising children, you need to file a Federal 1040 or 1040SR income tax return. If you are a married couple, you must file a joint return. (See exception for separated parents below.) A qualifying widow or widower with a dependent child may use this status to file and claim the EIC. An unmarried parent who does not pay more than half of the costs for maintaining the family home can file as single and still claim the Earned Income Credit for a qualifying child who lived with him or her for more than six months of the year. You must also file a form called the Schedule EIC with your tax return. If you do not file the Schedule EIC, you will not get the Earned Income Credit. If you were not raising children, you do not have to file a Schedule EIC.
What if I Am Self-Employed?
You are eligible for the EIC, but you must fill out a special series of forms:
Schedule C, Schedule SE, Form 1040 or 1040SR, and Schedule EIC (if you were raising children in your home). Call the IRS to get the forms or go online. You need to carefully include all income and expenses for your business. Gather all business related receipts, bank statements and mileage records to accurately fill out these forms.
What If I Am a Permanent Resident Alien Who Is Working in the U.S.?
The EIC is available to taxpayers who have a Social Security number and have a child who has a Social Security number.All Social Security numbers must be valid for work. The taxpayer must have been a U.S. resident alien for tax purposes the entire year, and the child must have lived with the taxpayer for more than six months in the United States. If the taxpayer is married and lives with his or her spouse, the spouse must also have a Social Security number.
What If the Parents Are Divorced or Separated?
The parent with whom the child lived for more than six months can file for the EIC, even if the other parent can claim the child as a dependent. The parent not living with the child may be able to get a smaller EIC for workers without qualifying children.
There is one instance where a married person may be considered non-married for tax purposes, and still can claim the EIC. A parent who is still married but has lived apart from his or her spouse for the last 6 months of the year may be able to claim head of household status. If the parent is allowed to use the head of household status when filing his or her tax return, and meets all the other rules for claiming the EIC, that parent may claim the credit.
If the Parents Live Together But Are Not Married, Who Gets the Credit?
Either parent may claim the Earned Income Credit. If both parents claim the credit, the IRS will give the credit to the parent with whom the child lived the most time during the tax year. If both parents lived with the child the same amount of time, the credit will go to the parent with the highest adjusted gross income. The parents may want to discuss how to claim the earned income credit to make sure the family gets the biggest credit permitted by the laws.
What If I Have Not Filed in the Past?
- You also can get EIC payments for up to the last three years, even if you did not file a tax return by the regular due date for the year in question.
- This is in addition to the credit you may be eligible for in the current tax year.
- To get a refund you must:
Meet all the EIC Eligibility Requirements
File a proper 1040 or 1040SR for the year in question; and
File before the refund expires
- The deadline for filing a request for refund is normally within three years of the original due date of the return.
- The original due date for any given tax year is generally the 15th of April of the following year.
- Any tax returns filed after the three-year deadline for refunds has passed will not be granted refunds, even if a refund is due.
- There is a small exception to the deadline:
- If the deadline for filing or taking an action falls on a Saturday, Sunday or holiday recognized in the District of Columbia, it is considered timely if the action is taken or the filing is mailed/delivered the next business day.
What if I filed my return in the past but didn’t know about the Credit?
If you filed taxes in 2017, 2018, and 2019 and did not claim the earned income credit but you have learned you were eligible, you can file amended returns so long as you do so within the three years from the original due date.
Where Can I Get Forms for a Prior Year?
You can get the forms you need by contacting the IRS:
- By Telephone: Call 1-800-829-3676
- On the Internet: Go the IRS website at irs.gov
- Select the gray tab Forms and Pubs
- Click Prior Year Forms & Pubs
- Put the number of the form you need in the Find box and click the Find button.
Can I Get the EIC with Electronic Filing?
Electronic filing with direct deposit is the fastest way to get your refund. You can get it in as little as 10-15 days although returns seeking the EIC are delayed until mid February. Lower-income taxpayers may go a local free tax assistance site to get this service for free. Some sites can even file prior year returns electronically.
Does the EIC Affect Public Assistance?
EIC payments are not income for the purposes of FIP (AFDC), Medicaid (Title 19), SNAP (food stamps), SSI or public/subsidized housing in the month received. That means the Earned Income Credit will almost never affect your eligibility for these programs or the amount of benefits you get. Money from the EIC may be counted as a resource in the following months, depending on rules for the individual program.
Where Can I Get Free Help to Prepare My Taxes?
To find out about free tax preparation at a local Volunteer Income Tax Assistance (VITA) site or AARP Tax Counseling for the Elderly site:
- Call the IRS at at 800-906-9887.
- In most areas, starting in mid-January, you are also able to get the same information by dialing 211. (in some locations you will be able to schedule an appointment).
To apply for help from Iowa Legal Aid: