Earned Income Tax Credit: What Are the Income Limits for the EITC?

In this article, we’ll talk about what you need to know about the Earned Income Tax Credit (EITC), which is a tax credit for working people and low-income families. If they qualify, filers may be able to cut their tax bills by up to $6,935 in 2022 and $7,430 in 2023.

What is Earned Income Tax Credit?

The earned income tax credit (EITC) is a tax credit that can be refunded. It is meant to help to work people with low to middling incomes. In 2022, earned income credits worth a total of about $64 billion were given to 31 million people.

The average credit was $2,043. If you meet the requirements for the credit and are eligible for it, you may even get a tax return. Here is all the information you need.

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How Do Tax Credits for Earned Income Work?

If you qualify for the EITC, you can use the credit to pay your tax bill in full and get the rest of the money in cash. For example, if you owe $2,300 in taxes to the federal government and are eligible for an EITC of $3,733, you will be refunded the leftover $1,433. Since the EITC is a tax credit that can be refunded, you will get this money back when you file your taxes.

You can get the EITC if your adjusted gross income and earned money are high enough. Adjusted gross income is your total income minus certain taxes and tax credits. Earned income is your total income minus:

Tips, wages, and pay
Pay for part-time or freelance work Union strike perks
Nontaxable battle pay
Some disability payments you get before you hit the minimum age for retirement
Net income from working for yourself

Other kinds of money don’t count as “earned.” These things are:

Interest and profits
Pensions or incomes
The Social Security system
Jobless benefits
Alimony
Paying for kids
Pay for work done while in jail.

What Are the Income Limits for the EITC?

Whether you can get an EITC depends on how you file your taxes and how many approved children you claim.

2022 EITC Gross Income Limits Changed

The Number of Children Claimed	Single, Head of Household, or Widowed	Married Filing Jointly
Zero	$16,480	$22,610
1	$43,492	$49,622
2	$49,399	$55,529
3+	$53,057	$59,187

Is It Worth It to Get the Earned Income Tax Credit?

If you meet the standards for the EITC, you should definitely apply for it. This tax credit can either lower your tax bill or give you a return of hundreds or even thousands of dollars. Around 20% of taxpayers are qualified but don’t claim the EITC, so it’s important to find out if you are one of them.

There are a lot of online tax tools that can help you figure out your EITC, and the IRS has an online EITC Assistant and sites where volunteers can help you in person. These sites are called Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).

Keep in mind that if you claim the EITC, your tax return may be delayed because the IRS can’t start giving out refunds to EITC claimants until mid-February.

How Do I Get the Earned Income Tax Credit (EITC)?

The rules for the EITC rely on your filing status and the size of your family. Here’s an overview.

Every Taxpayer

Your earned money and adjusted gross income must be within certain limits (see tables below).
Your money from investments can’t be more than $10,300 in 2022 and $11,000 in 2023.
Your Social Security number is good for you, your partner, and any children who are eligible.
You were a citizen or permanent resident of the United States for the whole tax year.
You haven’t filled out Form 2555, which is about money from abroad.

For Taxpayers Filing Alone

If you don’t have children or don’t have “qualifying children” as stated below, you must meet these other requirements:

At the end of the tax year, you must be older than 25 but younger than 65.
Have been living in the U.S. for more than half the year
Not be someone else’s “qualified child” or “dependent child.”

How Much is the Most EITC I Can Claim?

Again, the size of your tax credit depends on how many people are in your family. For the tax year 2022, this is the most EITC you can get:

$6,935 if you have three or more children who qualify
$6,164 if you have two children who qualify
$3,733 if you have one child who qualifies
$560 if there are no children who qualify
The highest EITC credits will go up as follows in 2023:
$7,430 if you have three or more children who qualify
$6,604 if you have two children who qualify
$3,995 if you have one child who qualifies
$600 if there are no children who qualify

What Does “Qualifying Child” Mean?

The EITC doesn’t require that your “child” be your biological kid. Instead, they must live with you in the U.S. for more than half the year and be related to you in one of the following ways:

a son or a daughter
Stepchild
Adopted by the law
Foster child
Step-, half-, or full-sibling
Anyone who comes from any of the above

Your eligible child must also be younger than you and under 19 at the end of the tax year, or 24 if they are a full-time student. Any age, a child can be totally and forever disabled.

Are There Any More Tax Credits?

In addition to the EITC, people, and families can get a number of other tax payments. People who are eligible for the EITC may also be qualified for the child tax credit (CTC), the additional child tax credit (ACTC), or the credit for other dependents. These credits are for families who meet the same income and other requirements.

The ACTC is partly refundable, which means that if the part of your credits that is refundable is more than your tax bill, you can get the difference back as a refund.

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Conclusion

Getting federal tax credits, like the EITC, may require a little extra work, but most of it is just the same math you do when you file your taxes. Tax credits directly reduce your tax bill by a dollar amount, while tax deductions indirectly reduce your taxable income. When combined with the chance of a tax refund, these tax savings can help you stretch your money further. This is especially helpful if you’re having trouble making ends meet.

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