The Earned Income Tax Credit

This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

Millions of Americans forfeit critical tax relief each year by failing to claim the Earned Income Tax Credit, a federal tax credit for low-to-moderate income individuals who work. Taxpayers who qualify and claim the credit could owe less federal tax, owe no tax or even receive a refund.

In 2004, more than 21 million taxpayers received approximately $39 billion in EITC. However, the IRS estimates 25 percent of people who qualify for the credit do not claim it. At the same time, there are millions of Americans who have claimed the credit in error, many of whom simply don’t understand the criteria.

This year it’s even easier to determine whether you qualify for the EITC. The EITC Assistant, an interactive tool available on IRS.gov, removes the guesswork from eligibility rules. Just answer a few simple questions about yourself, your children, your living situation and your income to find out if you qualify and estimate the amount of your EITC. You will see the results of your responses right away. Taxpayers, tax professionals, employers, community groups and public service organizations are encouraged to use the EITC assistant which is available in both English and Spanish.

The EITC is based on the amount of your earned income and whether or not there are qualifying children in your household. If you have children, they must meet the relationship, age and residency requirements. Additionally, you must file a tax return to claim the credit.

If you were employed for at least part of 2005 and at least age 25, but under age 65, you may be eligible for the EITC based on these general requirements:

• You earned less than $11,750 ($13,750 if married filing jointly) and did not have an any qualifying children
• You earned less than $31,030 ($33,030 if married filing jointly) and have one qualifying child
• You earned less than $35,263 ($37,263 if married filing jointly) and have more than one qualifying child

For more information about the EITC, go to IRS.gov or see Publication 596, Earned Income Credit, which contains eligibility criteria and instructions for claiming the tax credit. Copies of the publication are available in English and Spanish and can be found on IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).