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?
- Adopted, foster, and step children are also eligible for EIC if they
live with you. Adopted and foster children have to be legally placed
- 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.
- 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.
- 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?
- 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.
- 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.
Who can be claimed as a qualifying child?
Earned income credit table
Earned Income Credit Calculator
Updated November 15, 2012
Earned Income Credit
› Maximum EIC