Families who make low to moderate income could get refundable tax credit or the Earned Income Tax Credit (EITC). The EITC is intended to help such families as additional incentive to work and help them in their Social Security taxes. If family qualifies for the EITC, they will be able to get reduced taxes and at the same time they may be able to receive the amount in excess of the tax credit minus the taxes they owe.
Who Qualifies for the Credit?
The EITC is for taxpayers who earn below a certain amount of income from working. Investments and social entitlement programs are not included under earned income. In 2012, those with investments above $3,200 do not qualify for the EITC.
The limit for the earned income depends on how many qualifying children the taxpayer has.
The 2012 income limits for the EITC are:
- $45,060 ($50,270 married filing jointly) with three or more qualifying children
- $41,952 ($47,162 married filing jointly) with two qualifying children
- $36,920 ($42,130 married filing jointly) with one qualifying child
- $13,980 ($19,190 married filing jointly) with no qualifying children
The maximum credit amounts for 2012 are:
- $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