The Earned Income Credit affords tax relief to over 21 million low-income workers, but nearly 25% of those eligible aren’t claiming it. Because the EIC is a refundable credit, it can reduce or eliminate tax liabilities for eligible wage earners with and without children. Liberty Tax reminds you that receiving the Earned Income Credit doesn’t affect welfare benefits, food stamps and low income housing eligibility. The maximum earned income amount is $4,716 for filing a 2007 tax return.
The adjusted gross income (AGI) limits for the earned income credit for 2007 are:
- $37,783 for taxpayers with two or more qualifying children, ($39,783 for Married Filing Jointly)
- $33,241 for taxpayers with one qualifying child, ($35,241 for Married Filing Jointly)
- $12,590 for taxpayers with no qualifying children, ($14,590 for Married Filing Jointly)
Active duty military who served in a combat zone during 2007, may elect to include combat pay in earned income to figure the earned income credit, if this increases their benefit. This does not make combat pay taxable.
To claim children for the purposes of claiming EIC, the child must be your child, stepchild, eligible foster child, adopted child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew) who has lived with you for over half the year and meets certain age qualifications. A child of a live-in boyfriend/girlfriend is not a qualifying child for EIC.
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