What is the Earned Income Credit?
The Earned Income Credit (EIC) is an income tax credit for people who work full or part time and earn below a certain income level. If you qualify, you'll owe less in taxes and may even get cash back.

To be eligible, you must have worked full or part time at some point in 2006 You must file a tax return and meet one of the following:

• Were raising more than one qualifying child in their home and earned an income of less than $36,348 (or $38,348 for married workers) in 2006, you can get a credit of up to $4,536, OR
• Were raising one qualifying child in their home and earned an income of less than $32,001 (or $34,001 for married workers) in 2006, you can get a credit of up to $2,747, OR
• Were not raising children in their home, earned an income of less than $12,120 ($14,120 for married workers) in 2006 and are between 25 and 64 years old on December 31, 2006, you can get a credit of up to $412.

"Earned income" includes wages, salaries, and tips, but not bank interest, social security or welfare benefits, child support, alimony or unemployment compensation. "Qualifying children" must live with the worker for more than half of the year. They must be under age 19, or under age 24 if they are full-time students. Totally and permanently disabled children of any age also may be qualified children. Valid social security numbers are required for qualifying children born before December 31, 2006.

I Don't Owe Any Tax. Can I Still Get the EIC?
YES! You can still receive this tax credit even if you do not owe any federal income tax or did not have any income tax withheld from your paychecks, but you must file a federal income tax form.

How Do I Apply for the Credit?
If you are not claiming a qualifying child, you may file any federal tax return (Forms 1040EZ, 1040A or 1040).

If you are claiming a qualifying child, you must file either a Form 1040A or 1040 (you may not file a form 1040EZ) AND you must file a Schedule EIC (pdf) form. Children listed on the tax return who were born before December 31, 2006 must have a valid social security number.

These tax forms are available at your local library or Post Office, as well as online at the IRS website.

In addition to the Federal EIC, you may also qualify for the Child Tax Credit and the Child and Dependent Care Credit. You can claim all three credits if you meet the requirements for each credit. The Child Tax and Child and Dependent care credits do not reduce benefits earned from the EIC.

Get Your EIC Refund All Year Long
Most taxpayers get their EIC benefits in one large check from the IRS after they file a tax return. If you are entitled to an EIC credit and have at least one "qualifying" child, you may choose to have part of your advance EIC benefits for 2007 added to your paycheck throughout the coming year, with the remainder refunded after filing a tax return.

To choose this option, you need to file a W-5 Form with your employer. This form, called the Earned Income Credit Advance Payment Certificate, can be obtained directly from your employer or by calling the IRS toll-free at 1-800-TAX-1040. You can file the W-5 any time during the year, but a new W-5 form must be filed at the beginning of each calendar year to continue getting payments. To get the balance, you will need to file a tax return with a "Schedule EIC" form after the end of the year. (W-5 Form for Advance 2007 payments.)

Additional EIC Resources
Information on this page is from the About Tax Credits for Working Families Book (which includes versions in other languages) by the Center on Budget and Policy Priorities. Download your own free copy of their Make Tax Time Pay Toolkit.

EIC Overview page on IRS site

IRS EIC Publication - This publication includes overview, detailed eligibility information, instructions for filing forms, worksheets, checklists and more. (Available as a PDF)

Federal Tax Forms - Download copies of any Federal tax form and instruction packet from the IRS site.

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