Tax Credits You Should Know About

To claim the EIC, you must pass these tests:

• You must have earned income.* (See below to find out what counts and what does not count as earned income.)
• For 2021, your earned income must have been less than:
  • $21,430 if you do not have a qualifying child ($27,380 if married filing jointly)
  • $42,158 if you have one qualifying child ($48,108 if married filing jointly)
  • $47,915 if you have two qualifying children ($53,865 if married filing jointly)
  • $51,464 if you have three or more qualifying children ($57,414 if married filing jointly)
  • Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
• For 2022, your earned income must have been less than:
  • $16,480 if you do not have a qualifying child ($22,610 if married filing jointly)
  • $43,492 if you have one qualifying child ($49,622 if married filing jointly)
  • $49,399 if you have two qualifying children ($55,529 if married filing jointly)
  • $53,057 if you have three or more qualifying children ($59,187 if married filing jointly)
  • Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
• You must have a valid Social Security number that allows you to work.
• Your filing status cannot be “married filing separately.”
• You must be a U.S. citizen or resident alien all year.
• You cannot file form 2555 or form 2555-EZ (relating to foreign earned income).
• Your investment income must be $10,000 or less.

If you have a qualifying child, you can get a bigger credit. A qualifying child:

• must meet the age, relationship, and residency tests (see below)
• cannot be used by more than one person to claim the EIC. However, the parent the child lives with for more than half of the year can claim the EIC even if the other parent can claim the child as a dependent.
• cannot be a qualifying child of another person

Relationship test

The child must be your child, brother, sister, stepbrother, stepsister, or a descendant of one of these relatives (niece, nephew, grandchild). Child includes your children by blood, marriage, and court order. Adopted children and foster children are included in the definition of "child."

Age test

Your child must be:

• Under age 19 at the end of the year, or
• Under age 24 at the end of the year, if a full-time student or
• Any age, if permanently and totally disabled 

Residency test

Your child must have lived with you in the United States for more than half of the year. "In the United States" means in one of the 50 states or the District of Columbia. Your child must have a valid Social Security number.

Individuals who have very low incomes and who do not have a qualifying child may be able to get EIC. To get EIC, you:

• must be a least age 25 and under age 65
• cannot be the dependent of another person
• cannot be a qualifying child of another person
• must have lived in the United States more than half of the year.

The EIC depends on your adjusted gross income and how many qualifying children you have.

For tax year 2021, the maximum amounts of the EIC are:

• $1,502 for a taxpayer with no qualifying child
• $3,618 for a taxpayer with one qualifying child
• $5,980 for a taxpayer with two qualifying children
• $6,728 for a taxpayer with three or more qualifying children

For tax year 2022, the maximum amounts of the EIC are:

• $560 for a taxpayer with no qualifying child
• $3,733 for a taxpayer with one qualifying child
• $6,164 for a taxpayer with two qualifying children
• $6,935 for a taxpayer with three or more qualifying children

How much EIC am I eligible for?

Get an estimate of the amount you could get from the Earned Income Credit now! It's easy.

We often hear these questions:

• My children live with me, but their other parent claims them for the EIC. The person who did my taxes says that I can't claim the EIC. Is this true?
  
  No, it is not true. You can and should claim the EIC. Only the parent who has "primary residence" of the children may claim them as qualifying children for EIC.
  
  Even if the other parent pays child support and claims the children as dependents, the other parent cannot claim the children for EIC if they live with you most of the time.
  
  Claiming the EIC when the other parent claims it will lead to an audit of your tax return. The audit will give you the chance to prove that you are eligible to claim the EIC.
  
  Contact us for help with your audit. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.
• My children live with me, but I've agreed that their other parent can claim the EIC every other year. Is this a problem?
  
  Yes. Only the parent with whom the children live for more than one-half the year may claim the EIC for those children.
  
  Federal law does not allow parents to "take turns" claiming the EIC unless the child actually changes where they live each year. When a non-custodial parent (the parent the children don’t live with) claims the EIC for “household with children,” that parent may face big penalties and may have to pay back all EIC amounts that shouldn’t have been claimed.
  
  If you agree that the other parent can claim the EIC, even though the children live mainly with you, you are helping the other parent to violate the tax code. You may also face IRS penalties.
  
  

If you qualify for and receive an EIC from the IRS, you will also qualify for a Vermont Earned Income Tax Credit.

Many families who get the EIC automatically qualify for 3SquaresVT (food stamps). You just have to apply.

For help, call the Department for Children and Families at 1-800-479-6151.

Call 2-1-1 to find a free volunteer income tax preparer. Visit our Tax Filing Help page to learn about your options for free help.

The IRS can audit your tax return for up to three years from the date you originally filed the return. The IRS usually does this by sending you a letter that asks you send them proof that you were eligible to claim the EIC.

Generally they ask you to prove that you are related to the child (relationship test), and also prove the child lived with you for over half of the year (residency). The best way to prove this is to provide copies of the child’s birth certificates or formal adoption papers. Also provide a letter from the child’s school and doctor’s office stating the address that they have on record for the child in the year in question.

If you get a letter from the IRS asking you to prove an EIC claim, contact us for help with your audit. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.

Visit these web pages to get more information:

• Find Free Help Filing Your Tax Return
• More Tax Credit Information
• Taxpayer Advocate Service: Claiming the EITC

For more information about EIC, watch the video below. Vermont Legal Aid Staff Attorney Zachary Lees led a panel presentation about the Earned Income Tax Credit in January 2019. You can watch the video on YouTube.