Hertsel Shadian, Attorney at Law, LLC

The Expanded Earned Income Tax Credit (EITC)

1 February 2010

As taxpayers prepare to file their individual income tax returns for 2009, the IRS wants to alert many lower income earning families about the expanded Earned Income Tax Credit (EITC).  As advised by the IRS, an expanded EITC means larger families will qualify for a larger credit, offering greater relief for people who struggled through difficult financial times during 2009.

The EITC, which is in its thirty-fifth year, is one of the federal government’s largest benefit programs for working families and individuals. According to the IRS, in 2009, nearly 24 million people received $50 Billion in benefits. The average credit was more than $2,000.

Eligibility for the EITC depends on earned income and family size, among other tests. However, single people and childless workers also are eligible, although for smaller amounts. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category for families with three or more children and expanded the maximum benefit for this category.

To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:

  • $43,279 ($48,279 married filing jointly) with three or more qualifying children
  • $40,295 ($45,295 married filing jointly) with two qualifying children
  • $35,463 ($40,463 married filing jointly) with one qualifying child
  • $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum credit for tax year 2009 is:

  • $5,657 with three or more qualifying children
  • $5,028 with two qualifying children
  • $3,043 with one qualifying child
  • $457 with no qualifying children

The maximum amount of investment income is $3,100 for tax year 2009. For families, there are also certain requirements for child residency and relationship that must be met. For additional eligibility information, consult your professional tax advisor or tax preparer.  Information also is available in FS-2010-12 and on the Web at IRS.gov/EITC.