The Earned Income Tax Credit

There aren’t many refundable tax credits, however they can significantly make your pockets fuller at tax season. The is one of the most popular refundable tax credits.

Introduced in 1975 as part of the Internal Revenue Code, the purpose of this credit is to put more money back into the hands of low to moderate income taxpayers. You need to have actually earned income, either from working for an employer or being self-employed. You can’t qualify for the credit if you have over $3,450 in investment income for the year. You also need to be between the ages of 25 and 65 years old, have lived in the U.S. for at least six full months of the year, and aren’t able to be claimed as a dependent by another taxpayer. Married taxpayers must file a joint return in order to claim the .

The EITC amount is relative to your income and number of dependents. If you earn more than the income threshold, you won’t qualify. The more dependents you have, the greater your credit will be. If you have very low income and three or more dependents, you may be entitled to an Earned Income Tax Credit of up to $6,318.