Get the maximum earned income credit

The maximum earned income credit for year 2012 is:

  • $5,891 with three or more qualifying children
  • $5,236 with two qualifying children
  • $3,169 with one qualifying child
  • $475 with no qualifying children

I'm sure you want to get as much as possible.

Well, there are no magic tricks that will help you get the maximum EIC since it depends a lot on facts.

For example, if you have 3 qualifying children and have earned income between $13,090- and $22,300- ($17,090- if not MFJ) you will get the maximum earned income credit possible. And if you don’t, you have fewer children or you earn less or more than those numbers above? You simply won’t get the maximum, you’ll still very likely get the earned income credit, but less than the maximum.

Is there anything you can do about it now?

If you earned too much, then you at least have the money you earned which is more than the credit you lost.

If you earned too little, it depends, is it before the end of the year you still have a chance to earn more, put in more hours, get a side job etc. If it is after December 31 you can’t do anything about it except for trying to earn more next year so that you can get the maximum earned income credit next year.

You can make the maximum earned income credit according to your income by claiming children for your EITC.

If you are a parent of the children living with you, you automatically know that you can claim them for the EIC. But did you know that you can even claim children that are not either your son or daughter?

  1. Adopted, foster, and step children are also eligible for EIC if they live with you. Adopted and foster children have to be legally placed with you.
  2. Other children that you can claim for earned income credit are your grandchildren, sisters and brothers, nieces and nephews that lived with you. However there are some special rules when claiming these children.
  3. If a parent of the child lives with the child, too, you can only claim the child if you have a higher AGI than the child’s parent. When calculating the AGI on married filing joint returns each spouse’s AGI is half of the total even though one spouse earned more than the other (or even if only one spouse worked).

    This is very useful if the parents are filing married filing joint and you as a single.

    Suppose your father earns $20000- and you earn $13000-. Your parents file jointly even though your mother didn’t work this year. Each parent’s AGI is $10000- which is less than your $13000- making you eligible to claim your brother.
  4. A child can only appear once on any tax return in any given year. This means that if you are not the only person eligible to claim the child, you must decide with the other eligible people, who will claim the child.

    If more than one person claims a child, the IRS has special tie-breaker rules which give priority first to the child’s parents, next to the person with whom the child lived the longest, and next to the person with the highest AGI. Note: The only time a child can appear in more than one tax return is in the case of divorced or separated parents where the custodial parent claims earned income credit and head of household the noncustodial claims the child for a dependent and child tax credit .

Why would a parent agree to give up the EIC of their child to you?

  1. The IRS gives the maximum earned income credit for three children. More than that does not increase the credit, so if they have more than three children, child number 4 and above will not increase their credit. They have no loss by allowing you to claim those children.
  2. Even if they have less than three children, you can sometimes gain more than the child’s parent.

    The parent has a very low income. Your higher income will bring in more money.
    The credit for one child is 34% of the income,two children 40%, three children 45%. If two children are claimed on two separate tax returns each person who claims the child gets a credit of 34% for a total of 68% credit verses one person claiming both for a 40% credit.

    Please note: Parents who are married and live together must file together to qualify for the earned income credit. They cannot split up their children on two separate tax returns and still qualify for the EIC.

See also:

Who can be claimed as a qualifying child?

Earned income credit table

Earned Income Credit Calculator

Schedule EIC

Updated November 15, 2012

› Maximum EIC

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