Tab I Earned Income Credit (EIC graph)

  • EITC is the "big kahuna" of refundable tax credits! 

  • Difference between living above and below poverty line for single parent of two kids earning minimum wage!

  • NYS has a "piggyback" EITC which adds 30% of the federal EITC to the state tax refund!

  • A lot of money at stake for vulnerable taxpayers
    • Audit rates are high

  • Errors are common-- Key to getting it right:
    • Correct number of Qualifying Children (QC)
      • QC for dependent exemption NOT exactly same as QC for EITC

      • Support test for QC:  
                    Yes for QC dependent exemption but No for EITC

      • Residence test for QC:
                     Usually for QC dependency exemption but ALWAYS for EITC

    • Accurate figures for Earned Income and Unearned Income
      • (Graph above does not apply if income is not entirely earned!)
      • "Earned Income" is wages plus self-employment income