Earned Income Tax Credit
The earned income tax credit (EITC) is intended to help low to moderate income individuals and families and provide an incentive to work. The earned income tax credit is refundable, which means that even if the credit is more than the tax owed, you can still get a refund.
Earned Income Tax Credit Requirements
The maximum 2008 income for the EITC is as follows:
- More than one qualifying child: You must earn less than $37,783 ($39,783 if married filing jointly).
- One qualifying child: You must earn less than $33,241 ($35,241 if married filing jointly).
- No qualifying children: You must earn less than $12,590 ($14,590 if married filing jointly).
Qualifying children must meet relationship, age, and residency tests. If you don’t have children, you must be age 25 – 64 to qualify for the earned income credit.
Other EITC requirements:
To get the earned income tax credit, you must have earned income and file a tax return. You cannot claim foreign earned income and your investment income must be $2,900 or less.
In addition, you must have a SSN and be a U.S. citizen or resident alien all year. You cannot file as married filing separate.
More information is available in Publication 596.
My two kids are full time college students and both earned enough in part time jobs last year that I stopped giving them money each month for their support. They also both have scholarships that pay for tuition, books, room and board and a small stipend each semester.
The portion that is not for tuition is taxable. Last year they had about half the scholarship money they do this year and I ended up owing a significant amount more on my taxes because I still had to claim them as dependents.
I have their 2008 1099s. Both kids have several thousand dollars in taxable scholarship dollars, so I’m trying to figure out if this is the year it would be better for them to file individually and me to stop claiming them as dependents. I’m hoping that the total taxes for all three of us will be lower if they pay taxes on the scholarship money at their lower tax rates. Also, they may still be eligible for the EIC and one of the tuition tax credits, but all the tax information I’ve seen regarding how this money affects the EIC or the various education tax credits is unclear.
Do you have any advice on how taxable scholarship money is counted towards the earned income tax credit or the education tax credits?
February 8th, 2009 at 3:13 pm
@ Amanda O: I have a guess, but let me forward it to my contact at the IRS for clarification.
February 19th, 2009 at 3:30 pm
I only worked a month and a half this year. However, I am a full time student and I have a two year old. Will I get a refund?
December 17th, 2009 at 11:16 pm