Written by a TurboTax Expert • Reviewed by a TurboTax CPAUpdated for Tax Year 2023 • March 21, 2024 3:24 PM
OVERVIEW
While millions of households already claim this special break for workers with modest incomes, the IRS says many more are eligible for the credit but fail to take it. The rules were recently liberalized, so more households are eligible. Take a few minutes to make sure you don't miss out on a credit that could bring you a refund check.
Key Takeaways
- If you earned less than $63,398 (if Married Filing Jointly) or $56,838 (if filing as an individual, surviving spouse or Head of Household) in tax year 2023, you may qualify for the Earned Income Credit (EIC). These amounts increase to $66,819 and $59,899, respectively, for 2024.
- If you received more than $11,000 in investment income or income from rentals, royalties, or stock and other asset sales during 2023, you can't qualify for the EIC. This amount increases to $11,600 in 2024.
- You have to be 25 or older but under 65 to qualify for the EIC. You also have to have lived in the United States for more than half of the year and can't be a dependent of another person.
- In 2023, you can earn up to $17,640 ($24,210 if married and filing a joint) with no qualifying children. For 2024, these amounts increase to $18,591 and $25,511, respectively.
You may have heard about a possible change to the Child Tax Credit, but don’t worry. TurboTax has you covered. We are up to date with the latest tax laws so you can file your taxes with confidence and accurately claim the Child Tax Credit, if you are eligible. There is no need to delay. File now to get your max refund as soon as possible.
If lawmakers expand the Child Tax Credit, the IRS has stated that they will automatically adjust your return and notify you of the update, including any additional refund. No extra steps are required on your part.
Can I claim the Earned Income Credit?
If you were married filing jointly and earned less than $63,398 ($56,838 for individuals, surviving spouses or heads of household) in 2023, you may qualify for this tax credit, or even for a refund check. It's complicated, but the Earned Income Credit (EIC) is worth exploring if you or someone you know has modest earnings. These thresholds increase in 2024 to $66,819 for those filing as Married Filing Jointly and $59,899 for other filing statuses.
- The credit reduces any federal incometax you owe, dollar-for-dollar.
- If the credit completely eliminates your tax bill, and some credit is still left over, you canactually get a cash refund for the remaining amount.
To help you find out if you qualify, TurboTax asks simple questions so you can get thelargest possible credit.
Tests for qualifying
First you have to qualify. Then your income has to be within stated limits. Finally, if you have one or more kids, they have to qualify too for you to receive a larger credit. If you pass all these tests, you could get a credit of as much as $7,430 for 2023, or $7,830 for 2024, depending on your income and the number of children you have.
Once you determine that you qualify for the credit, use the Earned Income Credit table found in the instructions for Form 1040 to look up your income and find out the amount of credit you're entitled to.
You typically qualify if:
- You have income from earnings (for example, from a job, your own business, union strike benefits, certain long-term disability benefits).
- You did not receive more than $11,000 in investment income such as interest or dividends, or income from rentals, royalties or stock and other asset sales during 2023. This increases to $11,600 for 2024.
- You are single or, if married, do not use the Married Filing Separate status (there is an exception for 2021 for married couple filing separately).
- You, your spouse and children, if applicable, all have Social Security numbers.
- You and your spouse are not considered as a qualifying child of someone else.
- You are not excluding any income you earned in a foreign country on your return.
- You are a citizen or resident of the United States.
- You have dependents, or if you don't, you are at least 25 or older but under 65, not qualify as a dependent of another person and lived in the United States for more than half of the year.
How much can I earn and still qualify?
This credit is targeted at households with modest incomes, so if you earn "too much" you may not qualify. Just how much can you earn and still qualify? It depends on how many qualifying children you have (we'll define this in a moment). Those with the lowest income qualify for the biggest credits. Those with incomes above the phase-out threshold qualify for lower credits until they reach the point where the credit is eliminated completely. The rules have been liberalized to result in higher credits for many households, especially those with three or more qualifying children.
The following table shows the 2023 income limits for receiving credits and the maximum 2023 credit amounts.
| If you have: | Your earned income (and adjusted gross income) has to be less than these amounts to receive any credit: | Your maximum credit will be: |
|---|---|---|
| No qualifying children | $17,640 ($24,210 if married and filing a joint return) | $600 |
| 1 qualifying child | $46,560 ($53,120 if married and filing a joint return) | $3,995 |
| 2 or more qualifying children | $52,918 ($59,478 if married and filing a joint return) | $6,604 |
| 3 or more qualifying children | $56,838 ($63,398 if married and filing a joint return) | $7,430 |
The following table shows the 2024 income limits for receiving credits and the maximum 2024 credit amounts.
| If you have: | Your earned income (and adjusted gross income) has to be less than these amounts to receive any credit: | Your maximum credit will be: |
|---|---|---|
| No qualifying children | $18,591 ($25,511 if married and filing a joint return) | $632 |
| 1 qualifying child | $49,084 ($56,004 if married and filing a joint return) | $4,213 |
| 2 or more qualifying children | $55,768 ($62,688 if married and filing a joint return) | $6,960 |
| 3 or more qualifying children | $59,899 ($66,819 if married and filing a joint return) | $7,830 |
TurboTax Tip:
Qualifying children can include your son, daughter, stepchild, adopted child or a descendant, foster child, brother, sister, stepbrother, stepsister or a descendant of one of these, provided they are age 18 or younger as of the end of the year (or 23 or young if the child is a full-time student). A person who's permanently and totally disabled at any time during the year qualifies, no matter how old.
Special rules for tax years 2020 and 2021
The Consolidated Appropriations Act (CAA) was signed into law on December 27, 2020 as a stimulus measure to provide relief to those affected by the pandemic. For tax year 2020, the CAA allows taxpayers to use their 2019 earned income if it was higher than their 2020 earned income in calculating the Additional Child Tax Credit (ACTC) as well as the Earned Income Credit (EIC). For 2021, you are allowed to use your 2019 or 2021 earned income based on whichever one gives you the highest credit.
Does my child qualify?
To qualify, the child has to be:
- Your son, daughter, stepchild, adopted child or a descendant.
- Your foster child, placed with you by an authorized agency or court order.
- Your brother, sister, stepbrother, stepsister or a descendant of one of these.
- Age 18 or younger as of the end of the year (unless the child is a full-time student, in which case the student has to be 23 or younger). Exception: A person who is permanently and totally disabled at any time during the year qualifies, no matter how old.
- A resident with you in the United States for more than half of the year.
Example:
You and your sister live together. You are 30 and your sister is 15. When your parents died two years ago, you took over the care of your sister, but you did not adopt her. She is considered a qualifying child because she lived with you more than half of the year.
Who is an eligible foster child?
For the Earned Income Credit, a foster child is defined as an individual who is placed with you by an authorized placement agency or court order. The child is required to have lived with you for more than half of the year.
What about my welfare benefits?
The Earned Income Credit has no effect on certain welfare benefits. Any refund you receive because of the EIC generally will not be considered income when determining whether you are eligible for, or how much you can receive from, the following benefit programs:
- Temporary Assistance for Needy Families (TANF)
- Medicaid and Supplemental Security Income (SSI)
- Food stamps
- Low-income housing
For more information on whether you qualify for the credit, use the TurboTax program. An overview is also available in Publication 962: Possible Federal Tax Refund Due to the Earned Income Credit.
For complete details, see IRS Publication 596: Earned Income Credit (EIC).
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