Earned Income Credit (EITC or EIC)

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If you earn income and make less than $49,194 in 2018 ($54,884 if filing jointly), you may qualify for the earned income credit. This credit is refundable – meaning you may get more money in your refund than you had withheld from your pay. In fact, you may get money back even if you didn't have any income tax withheld from your pay.

The earned income credit can be substantial – up to $6,431.

The income limitations are highest for taxpayers with three or more children. To receive this credit, both your earned income and adjusted gross income must be less than:

  • $49,194 ($54,884 if filing jointly) if you have three or more qualifying children
  • $45,802 ($51,492 if filing jointly) if you have two qualifying children
  • $40,320 ($46,010 if filing jointly) if you have one qualifying child
  • $15,270 ($20,950 if filing jointly) if you have no qualifying children

Qualifying for the Earned Income Credit

To qualify for the earned income credit, you must have a valid Social Security Number (SSN). If your card or your spouse's card (if filing jointly) says Not valid for employment and you received a SSN so you could get a federally funded benefit, you cannot claim the credit.

You must not use the Married Filing Separately filing status. You must be a U.S. citizen or resident all year, unless you file jointly, one spouse is a U.S. citizen or resident alien, and you choose to treat the nonresident spouse as a U.S. resident. You cannot claim the earned income credit if you deduct or exclude foreign income or housing on Form 2555, or if you have investment income of more than $3,500. In addition, you cannot be the qualifying child of another person.

TaxAct calculates your earned income credit based on your wages and other earned income, your adjusted gross income, and the number of qualified children you have living with you.

A common mistake is to forgo claiming a qualifying child for the earned income credit because you have agreed to let the noncustodial parent claim the dependency exemption for that child. The dependency exemption and a qualifying child for the earned income credit are two separate issues. Only the parent with whom the child lives the longest can claim a child for the earned income credit. If the time is equal, the parent with the higher adjusted gross income takes the credit.

You may still qualify for the earned income credit if you do not have a qualifying child. You must be at least age 25, but under age 65. (If you're married, only one of you must meet the age test.) You cannot be the dependent of another person, and you must live in the U.S. more than half the year.

If you may qualify for the credit, TaxAct asks a few questions in the step-by-step interview and does all the calculations for you. If you have a qualifying child, TaxAct calculates the credit on Schedule EIC, Form 1040.


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Upcoming Tax Dates

April 10 — Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.

April 15 — Individuals
File a 2018 income tax return (Form 1040) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040 by October 15.

April 15 — Corporations
File a 2018 calendar year income tax return (Form 1120) and pay any tax due. Details

April 15 — Individuals
If you are not paying your 2019 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2019 estimated tax. Use Form 1040ES.

April 15 — Household Employers
If you paid cash wages of $2,000 or more in 2018 to a household employee, you must file Schedule H Details

April 15 — Corporations
Deposit the first installment of estimated income tax for 2018 Details

April 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 — Household employers
If you paid cash wages of $2,000 or more in 2018 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2017 or 2018 to household employees. Also, report any income tax you withheld for your household employees.

April 30 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until May 10 to file the return.

April 30 — Federal unemployment tax.
Deposit the tax owed through March if more than $500.

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