If you have or had a job (earned income) last year, and are facing economic challenges, the earned income credit may benefit you.
The earned income credit is based on your earned income up to a threshold, and the number of qualifying children you have.
If you do not have a qualifying child, you are eligible for the credit if
1 the principal residence of the individual is in the US for more than half of the year,
2 the individual or the spouse if married filing jointly is at least 25 years of age and under 65 before the close of the year, and
3 the individua is not a dependent of another taxpayer.
A taxpayer with one or more qualifying children completes schedule EIC to claim the credit.
The amount of the credit is the taxpayer’s earned income up to a designated level multiplied by a credit percentage that depends on whether the taxpayer has one qualifying child, or two or more, or no qualifying children.
For 2019, the maximum earned income amount is $6,920 if the taxpayer has no qualifying child, $10,730 if the taxpayer has one qualifying child, and $14,570 if the taxpayer has two or more qualifying children.
For 2020, the max earned income amounts are $7,030, $10,450, and $14,800.
The credit amount is reduced by multiplying the applicable phaseout percentage by the excess of adjusted gross income or earned income over a phaseout amount.
For 2019, the credit is completely phased out if the taxpayer’s AGI equals or exceeds $15,570 if the taxpayer has no qualifying children ($21,370 if married filing jointly), $41,094 if the taxpayer has one qualifying child ($46,884 if married filing jointly), and $50,162 if the taxpayer has three or more qualifying children ($55,952 if married filing jointly).
The credit and phaseout percentages limit the max amount of credit that may be claimed.
For 2019, the max earned income credit is $529 for a taxpayer with no qualifying children, $3,526 for a taxpayer with one qualifying child, $5,828 for a taxpayer with two qualifying children, and $6,557 for a taxpayer with three or more qualifying children.