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Earned Income Tax Credit

The 2021 Earned Income Tax Credit provides more money to more Americans.

What is the Earned Income Tax Credit?

The Earned Income Tax Credit puts thousands of dollars in workers’ pockets

The Earned Income Tax Credit is a tax credit that provides a tax break for low-income workers and families based on their wages, salaries, tips, and other pay, as well as earnings from self-employment.

The EITC has existed for decades but the IRS estimates that 1 out of 5 eligible Americans do not claim the credit. This year, thanks to President Biden’s American Rescue plan, the credit is more generous and open to more workers than ever.

The Earned Income Tax Credit lowers your taxes and is refundable

If you are eligible to receive the Earned Income Tax Credit, it will lower the amount of federal income taxes you are required to pay. If the credit you receive is worth more than the taxes you owe, you will get the rest of the money back through your federal income tax refund.

The Earned Income Tax Credit has no effect on federal benefits

The Earned Income Tax Credit is not considered income for any family or worker. Receiving the Earned Income Tax Credit will not change the amount you receive from any other Federal benefits, including unemployment insurance, Medicaid, SNAP (formerly food stamps), SSI, SSDI, TANF, WIC, Section 8, or Public Housing.

To learn more about whether the EITC applies to you, the IRS has a question and answer tool that can help you determine your eligibility: IRS EITC Assistant.

The 2021 Earned Income Tax Credit provides more money to more Americans

This year, more workers without dependent children can claim the credit and can receive up to three times more money than in 2020

Before the American Rescue Plan, people with no dependent children (who are called qualifying children) were eligible for the Earned Income Tax Credit only if they were age 25 to 64 – and they could receive only up to $538. The maximum amount of Earned Income Tax Credit is nearly tripled for these taxpayers – up to $1,502.

In addition, the American Rescue Plan made new workers eligible for the Earned Income Tax Credit:

  • If you are 19 or older, you could be eligible to claim the Earned Income Tax Credit.
  • If you are 18 years old and were formerly in foster care or are experiencing homelessness, you could be eligible for the credit.
  • Certain full-time students age 24 and older can qualify.
  • There is no upper age limit for claiming the credit if you have earned income.
  • Singles and couples who have Social Security numbers (SSNs) can claim the credit, even if their children don’t have SSNs.
  • More workers and working families who have income from retirement accounts or other investments can still get the credit. The limit on investment income is now $10,000 and will now rise every year with inflation.

Who is eligible for the 2021 Earned Income Tax Credit?

There are basic eligibility rules that apply to most everyone

Generally, to be eligible for the Earned Income Tax Credit, you must:

The IRS provides helpful eligibility information on their “Who Qualifies for the Earned Income Tax Credit (EITC)” webpage.

Getting a Social Security number: If you (or your spouse, if filing a joint return) don’t have a Social Security number, you can apply for one by filing Form SS-5 with the Social Security Administration (SSA). You can get Form SS-5 online at SSA.gov/forms/ss-5.pdf, from your local SSA office, or by calling the SSA at 800-772-1213.

You do not need to have a child to be eligible to claim the Earned Income Tax Credit

Most workers can claim the Earned Income Tax Credit if your earned income is less than $21,430 ($27,380 if married filing jointly) and you are:

There also are special rules for certain individuals and their families.

There are special credit eligibility rules for:

Many types of eligible individuals and families miss out on the Earned Income Tax Credit – simply because they do not claim it

Individuals most at risk of missing out on the Earned Income Tax Credit include people:

  • Without children;
  • Living in non-traditional families, such as a grandparent raising a grandchild;
  • Whose earnings declined or whose marital or parental status changed;
  • With limited English language skills;
  • Who are members of the Armed Forces;
  • Who live in rural areas;
  • Who are Native Americans; or
  • With disabilities or who provide care for a dependent (who can be a qualifying child regardless of age) who is disabled.

How much is the 2021 Earned Income Tax Credit?

Your credit amount depends partly on how many qualifying children you have and your income

For 2021, here are the maximum amounts of Earned Income Tax Credit:

  • No qualifying children: $1,502
  • One qualifying child: $3,618
  • Two qualifying children: $5,980
  • Three or more qualifying children: $6,728

Your credit also depends on how much income you earn. For more information check out the IRS’s 2021 Earned Income Tax Table.

Under the American Rescue Plan, you can use your 2019 earned income instead of your 2021 earned income to get a larger credit

For 2021, you can elect to use your 2019 earned income to determine your 2021 Earned Income Tax Credit if your 2019 earned income gives you a higher tax credit. You may fall into that category if you earned less in 2021 or received unemployment income in 2021 instead of regular wages.

Who is a 'qualifying child' for purposes of the Earned Income Tax Credit?

A “qualifying child” can be any age

People of any age can be a qualifying child for the Earned Income Tax Credit. This means that a parent or guardian is eligible to claim children over 18 years old to receive a larger credit.

How to tell if someone is a “qualifying child”

To be a qualifying child for the purpose of claiming them under the Earned Income Tax Credit, your child must:

  • Be your own child, adopted child, stepchild, or foster child. You can also claim a sibling, step-sibling, half-sibling, or a descendent of any of them (including a niece, nephew, or grandchild); and
  • Have lived with you for more than half of 2021.
  • Have a valid Social Security number;
  • Meet one of the following age requirements:
    • Born before January 1, 2003;
    • Born before January 1, 1998, and a full-time student for at least 5 months during 2021; or
    • Any age and permanently and totally disabled at any time during 2021;

The IRS provides detailed information on other, less common factors that may impact whether a child is a qualifying child for the Earned Income Tax Credit.

What is earned income?

Includes all taxable income and wages you get from working for someone else, yourself, or from a business or farm you own

Here are common types of earned income:

  • Wages, salary, or tips where federal income taxes are withheld (on Form W-2, box 1);
  • Income from a job where your employer didn’t withhold tax (like gig work), including:
    • Driving a car for booked rides or deliveries;
    • Running errands or doing tasks;
    • Selling goods online;
    • Providing creative or professional services; and
    • Providing other temporary, on-demand, or freelance work;
  • Money made from self-employment;
  • Certain disability benefits you got before you were the minimum retirement age; and
  • Nontaxable Combat Pay.

The IRS provides detailed information on types of income that count as earned income for purposes of the Earned Income Tax Credit.

Doesn’t include certain types of income

There are a few types of income that do not count as earned income for the Earned Income Tax Credit:

  • Social Security;
  • Unemployment benefits;
  • Alimony;
  • Child support;
  • Interest and dividends; and
  • Pensions or annuities.

The IRS provides detailed information on types of income that do not count as earned income for purposes of the Earned Income Tax Credit.

You must file a tax return to get the Earned Income Tax Credit

Why you should consider filing a 2021 tax return

If you haven’t filed a tax return before, or don’t file every year and are eligible for the Earned Income Tax Credit, be sure to file to receive the EITC this year.

You can file a 2021 tax return and potentially receive thousands of additional dollars in tax credits when you file. These additional credits include:

Free resources to help you file

If you are new to tax filing, or even if you’ve filed before but would like some help this year, there are places located across the country that can support you as you file your tax return. Many of these organizations offer both in-person and virtual support.

Get Free Filing Options

Additionally, many individuals file their tax returns with an accountant or tax preparer for a fee and you can search for an authorized IRS e-file Provider to find support near you. The above are all no-cost solutions.

Remember to claim your State or local Earned Income Tax Credit as well

When you claim the Earned Income Tax Credit on your federal income tax return, you may be able to get a similar credit on your State or local income tax return.

Check to see if your State or local government has an Earned Income Tax Credit.

You can check your refund online, through an IRS app, or over the phone

Here are ways to check on the status of your refund.