In general, you most likely have received the Earned Income Tax Credit (EITC) in the past if you:

(1) Earn money from working

(2) Have an income amount that is considered “low income”, and

(3) Usually receive a tax refund that is more than $2000.

Sometimes the refund can be  as much as $5,600 or more!  No wonder so many tax payers and tax preparers alike do unscrupulous tax returns so they can both enjoy the benefits this kind of “free money” can bring.

BUT beware. The IRS is on to you; and they know the only way to stop people from illegally receiving the EITC is to increase the pressure on tax preparers to do the right thing.  Starting with the 2011 tax returns, tax preparers must personally provide more proof that their clients actually are entitled to receive this credit.  

So, what in general are the rules? Who can receive the Earned Income Tax Credit?

Here’s the skinny:

First, to qualify  IF you are legally married you and your spouse must file a joint tax return.  Let’s say, you and your spouse are currently separated but DID NOT get a writ of legal separation, the IRS considers you to be married. – There’s no filing Head of Household or single for either of you. The IRS is watching out for this one.

Second, you must have a  Social Security Number.

Third, you must have some  of  earned income from employment, self-employment or another source. This does not include monies you’ve received but did not work for (for example unemployment benefits or social security payments). Also, any investment income must be $3,150 or less for the year

Fourth, you must meet the  income requirements for the 2011 Tax Year

Earned Income and adjusted gross income (AGI) must each be less than:

$43,998 ($49,078 married filing jointly) with three or more qualifying children
$40,964 ($46,044 married filing jointly) with two qualifying children
$36,052 ($41,132 married filing jointly) with one qualifying child
$13,660 ($18,740 married filing jointly) with no qualifying children

For the Tax Year 2011 maximum credit amount is:

$5,751 with three or more qualifying children
$5,112 with two qualifying children
$3,094 with one qualifying child
$464 with no qualifying children

Who is a Qualifying Child?  This is the requirement many unscrupulous  tax preparers use to fudge the numbers; and this is exactly where the IRS is aiming it’s guns.

A Qualifying Child…

Must have a valid Social Security Number

Must be your biological son or daughter, your legally adopted child, your stepchild, your legally placed foster child or a descendent of any of them such as your grandchild. He/she may also be your biological brother or sister, your stepbrother, stepsister or a descendant of any of them such as a niece or nephew.

Must be within the required age which is:

  • Younger than you (or your spouse if married filing jointly) and
  • younger than 19, or younger than 24 and a full-time student , or
  • Any age if permanently and totally disabled

Here’s a video that does a great job at explaining this credit:


Fifth, you must meet the residency requirementThe child must live with you in the United States  for more than half of the year.

Seeing how much money is at stake, and knowing how outrageous our nation’s national debt level is, I recommend everyone just stick to the rules on this one.

I’m Michelle Walker-Wade, and you heard it here on My Walk Tax Time!


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