The Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a credit for people who earn money during the year from a job or other source, but do not earn a lot of money. It is a refundable tax credit. Being refundable means that it could give you a tax refund. If it lowers the amount of taxes you owe to zero and there is still some left, you will get a tax refund for that amount.

There is a federal EITC and a state EITC. If you qualify for the federal EITC you will also qualify for the state EITC. Michigan’s EITC is 6% of the federal EITC.

Qualifying for EITC

Not everyone gets the EITC. To qualify, you must:

• Have a valid Social Security number
• Earn income below the limits listed later in this article
• File jointly if you are married
• Be a U.S. citizen or resident
• Have a qualifying child or qualify without one
• Not be a qualifying child

If you are married, you and your spouse both need to qualify to get the EITC.

Earned Income

To get the EITC, you must have earned income. Earned income is money you get from working or from some kinds of disability insurance. For the EITC, it includes:

• Wages, salaries, tips, and other taxable employee pay
• Income from a job where your employer did not withhold taxes, such as gig economy work like driving a car for booked rides or deliveries, running errands or doing tasks, and providing other temporary, on-demand or freelance work
• Union strike benefits
• Disability retirement benefits from an employer's disability retirement plan received before minimum retirement age
• Nontaxable Combat Pay (Form, W-2, box 12 with code Q)
• Earnings from self-employment, including if:
  • You own or operate a business or a farm
  • You are a minister or member of a religious order, or
  • You are a statutory employee (if you get a W-2 form and box 13, the “Statutory employee” box, is checked)

The following things do not count as earned income:

• Pay received for work while an inmate in a jail or prison
• Interest and dividends
• Retirement income
• Social security payments, such as SSI and SSDI
• Unemployment benefits
• Spousal support (sometimes called alimony)
• Child support

If you get any of these kinds of income, you could still qualify for the EITC if you (or your spouse) have other earned income.

For more information on disability benefits and the EITC, read the Internal Revenue Service (IRS) publication Disability and the Earned Income Tax Credit.

Limits on How Much You Can Earn

To get the EITC for the 2023 tax year (for tax returns filed in early 2024), your income has to be below the following levels:

• $56,838 ($63,398 if married filing jointly) with three or more qualifying children
• $52,918 ($59,478 if married filing jointly) with two qualifying children
• $46,560 ($53,120 if married filing jointly) with one qualifying child
• $17,640 ($24,210 if married filing jointly) with no qualifying children

You also cannot get the EITC if you have $11,000 or more in investment income for the 2023 tax year.

U.S. Citizen or Resident

To get the EITC, you must be a U.S. citizen or resident alien. If you are a nonresident alien, you can get the EITC if you are filing jointly with your spouse and your spouse is a U.S. citizen or a resident alien who lived in the U.S. for at least six months the tax year and has a valid Social Security number.

Qualifying Child

To be a qualifying child, your child must have a valid Social Security number and pass four tests: relationship, age, residency, and joint return.

A child can only be claimed by one person or a married couple filing jointly. To learn more about who can claim a child, read the IRS publication Qualifying Child Rules.

Relationship

A qualifying child can be your:

• Legal child (natural born or adopted son or daughter)
• Stepchild
• Foster child
• Brother, half-brother, step-brother
• Sister, half-sister, step-sister
• Grandchild, niece of nephew

Age

At the end of the tax year, the qualifying child must be younger than you or your spouse (if filing jointly), and be one of the following:

• Younger than 19 years old
• A full-time student who’s younger than 24 years old
• A permanently and totally disabled child of any age

To qualify as disabled, the child's physical or mental condition must make it impossible for the child to do any substantial gainful activity. A doctor must determine the condition has lasted or is expected to last at least one year or lead to death.

Residency

The child must live more than half the year in the U.S. with you or your spouse if you are filing jointly.

Joint return

The child cannot file a joint return with the child's spouse for the year, unless it is to claim a refund and there is no separate filing requirement.

Qualifying Without a Child

If you do not have a qualifying child, you can still get the EITC if all of the following are true:

• You and your spouse (if you’re filing a joint return) must have lived in the United States for more than half the tax year;
• Either you or your spouse (if filing a joint return) must be at least age 25 but under age 65; and
• Neither you nor your spouse (if you’re filing a joint return) can qualify as a dependent of another person.

The Maximum Credit

How much you get for the EITC depends on your income. For the 2022 tax year, the maximum credit is:

• $7,430 with three or more qualifying children
• $6,604 with two qualifying children
• $3,995 with one qualifying child
• $600 with no qualifying children

The Michigan EITC

If you qualify for the federal EITC, you also qualify for Michigan’s EITC. Michigan's EITC is 6% of the federal EITC. You will get a credit if you apply for it on your state tax return.

How to Get the EITC

You must file a tax return to get the EITC. This is true even if you do not owe any tax or are not required to file because you had too little income. To learn more about getting help with your taxes, read Getting Your Taxes Done for Free.

To Learn More

The IRS's EITC Assistant web tool can tell you if you are eligible for the EITC after you answer a few questions and provide basic income information.