Top 5 things to know about the earned income credit (EIC) on EIC Awareness Day

Each year, Jan. 27 is celebrated as annual EIC Awareness Day as a way to bring attention to the refundable earned income tax credit, which is severely underutilized by many taxpayers during filing season.

Around 20% of taxpayers eligible to claim and get the earned income tax credit (EIC) don’t apply it to their returns. The EIC is a financial boost for low- to moderate-income taxpayers that can help with everything from food and housing to building a saving’s account.

Here are five things you should know about the EIC in order to claim the credit:

1. There are six basic qualifications to be eligible for the EIC:

   • Have worked and earned income under $59,187
   • Have investment income below $10,300 in the tax year 2022
   • Have a valid Social Security number by the due date of your 2022 return (including extensions)
   • Be a U.S. citizen or a resident alien all year
   • Not file Form 2555, Foreign Earned Income
   • Meet certain rules if you are separated from your spouse and not filing a joint tax return

2. You don’t have to have a child to qualify for the EIC if you meet the following criteria. You (and your spouse if filing a joint return) must:

   • Meet the EIC basic qualifying rules (above)
   • Have your main home in the United States for more than half the tax year
     • The United States includes the 50 states, the District of Columbia and U.S. military bases. It does not include U.S. possessions such as Guam, the Virgin Islands or Puerto Rico
   • Not be claimed as a qualifying child on anyone else’s tax return
   • Be at least age 25 but under age 65 (at least one spouse must meet the age rule)

3. If you qualify for the EIC, you probably qualify for other credits, including:

   • Child Tax Credit and the Credit for Other Dependents
   • Child and Dependent Care Credit
   • Education Credits

4. Most EIC-related refunds are available in taxpayer bank accounts or on debit cards by March 1, if they choose direct deposit and there are no other issues.

5. If you qualify for EIC, you must file a federal income tax return and claim the credit to get it, even if you owe no tax or aren’t required to file a return.

Claiming the EIC on a return is an important step for many taxpayers each year. If you’re a preparer, make sure you know the ins-and-outs of this credit to avoid an audit. Taxpayers, work with a qualified preparer to maximize your refund amount and claim all the credits applicable to your financial situation.