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Earned income tax credit AI simulator
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Hub AI
Earned income tax credit AI simulator
(@Earned income tax credit_simulator)
Earned income tax credit
The United States federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children. Low-income adults with no children are eligible. For a person or couple to claim one or more persons as their qualifying child, requirements such as relationship, age, and shared residency must be met.
The earned income tax credit has been part of political debates in the United States over whether raising the minimum wage or increasing EITC is a better idea. In a random survey of 568 members of the American Economic Association in 2011, roughly 60% of economists agreed (31.7%) or agreed with provisos (30.8%) that the earned income tax credit program should be expanded. In 2021, when the survey was done again, the percentage of economists that agreed to expanding the credit increased to 90%.
In 1969, Richard Nixon proposed the Family Assistance Plan, which included a guaranteed minimum income in the form of a negative income tax. The House of Representatives passed this plan, but the Senate did not. During his 1972 Presidential campaign, George McGovern proposed a demogrant of $1,000 for every American. Critics during this time complained about implying people don't have to work for a living, and saw the program as having too little stigma; during this time, Hawaii had an established residency requirement for public aid, which one Hawaii State Senator suggested was necessary to discourage "parasites in paradise".
Proposed by Russell Long and signed into law by President Gerald Ford as part of the Tax Reduction Act of 1975, the EITC provides an income tax credit to certain individuals. Upon enactment, the EITC gave a tax credit to individuals who had at least one dependent, maintained a household, and had earned income of less than $8,000 during the year. The tax credit was $400 for individuals with earned income of less than $4,000. The tax credit was an amount less than $400 for individuals whose income was between $4,000 and $7,999 during the year.
The initial EITC was expanded by tax legislation on a number of occasions, including the widely publicized Tax Reform Act of 1986, and it was further expanded in 1990, 1993, 2001, and 2009, regardless of whether the act in general raised taxes (1990, 1993), lowered taxes (2001), or eliminated other deductions and credits (1986). In 1993, President Clinton tripled the EITC. Today, the EITC is one of the largest anti-poverty tools in the United States, and is mainly used to "promote and support work". Most income measures, including the poverty rate, do not account for the credit.
A qualifying child can be a person's daughter, son, stepchild, or any further descendant (such as grandchild, great grandchild, etc.) or a person's brother, sister, half sister, half brother, stepbrother, stepsister, or any further descendant (such as niece, nephew, great-nephew, great-great-niece, etc.). A qualifying child can also be in the process of being adopted provided he or she has been lawfully placed. Foster children also count provided either the child has been officially placed or is a member of one's extended family. A younger single parent cannot claim EITC if he or she is also claimable as a qualifying child of their parent or another older relative, which can happen in some extended family situations. This restriction does not apply to a married couple who is claiming EITC with a child, even if one or both spouses are under the age of 19.
A person claiming EITC must be older than his or her qualifying child unless the “child” is classified as "permanently and totally disabled" for the tax year (physician states one year or more). A qualifying "child" can be up to and including age 18. A qualifying "child" who is a full-time student (one long semester or equivalent) can be up to and including age 23. And a person classified as "permanently and totally disabled" (one year or more) can be any age and count as one's qualifying "child" provided the other requirements are met. Parents claim their own child(ren) if eligible unless they are waiving this year's credit to an extended family member who has higher adjusted gross income. There is no support test for EITC. There is a six-month plus one day shared residency test.
In the 2009 American Recovery and Reinvestment Act, the EITC was temporarily expanded for two specific groups: married couples and families with three or more children; this expansion was extended through December 2012 by H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Effective for the 2010, 2011, 2012 and 2013 filing seasons, the EITC supported these taxpayers by:
Earned income tax credit
The United States federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children. Low-income adults with no children are eligible. For a person or couple to claim one or more persons as their qualifying child, requirements such as relationship, age, and shared residency must be met.
The earned income tax credit has been part of political debates in the United States over whether raising the minimum wage or increasing EITC is a better idea. In a random survey of 568 members of the American Economic Association in 2011, roughly 60% of economists agreed (31.7%) or agreed with provisos (30.8%) that the earned income tax credit program should be expanded. In 2021, when the survey was done again, the percentage of economists that agreed to expanding the credit increased to 90%.
In 1969, Richard Nixon proposed the Family Assistance Plan, which included a guaranteed minimum income in the form of a negative income tax. The House of Representatives passed this plan, but the Senate did not. During his 1972 Presidential campaign, George McGovern proposed a demogrant of $1,000 for every American. Critics during this time complained about implying people don't have to work for a living, and saw the program as having too little stigma; during this time, Hawaii had an established residency requirement for public aid, which one Hawaii State Senator suggested was necessary to discourage "parasites in paradise".
Proposed by Russell Long and signed into law by President Gerald Ford as part of the Tax Reduction Act of 1975, the EITC provides an income tax credit to certain individuals. Upon enactment, the EITC gave a tax credit to individuals who had at least one dependent, maintained a household, and had earned income of less than $8,000 during the year. The tax credit was $400 for individuals with earned income of less than $4,000. The tax credit was an amount less than $400 for individuals whose income was between $4,000 and $7,999 during the year.
The initial EITC was expanded by tax legislation on a number of occasions, including the widely publicized Tax Reform Act of 1986, and it was further expanded in 1990, 1993, 2001, and 2009, regardless of whether the act in general raised taxes (1990, 1993), lowered taxes (2001), or eliminated other deductions and credits (1986). In 1993, President Clinton tripled the EITC. Today, the EITC is one of the largest anti-poverty tools in the United States, and is mainly used to "promote and support work". Most income measures, including the poverty rate, do not account for the credit.
A qualifying child can be a person's daughter, son, stepchild, or any further descendant (such as grandchild, great grandchild, etc.) or a person's brother, sister, half sister, half brother, stepbrother, stepsister, or any further descendant (such as niece, nephew, great-nephew, great-great-niece, etc.). A qualifying child can also be in the process of being adopted provided he or she has been lawfully placed. Foster children also count provided either the child has been officially placed or is a member of one's extended family. A younger single parent cannot claim EITC if he or she is also claimable as a qualifying child of their parent or another older relative, which can happen in some extended family situations. This restriction does not apply to a married couple who is claiming EITC with a child, even if one or both spouses are under the age of 19.
A person claiming EITC must be older than his or her qualifying child unless the “child” is classified as "permanently and totally disabled" for the tax year (physician states one year or more). A qualifying "child" can be up to and including age 18. A qualifying "child" who is a full-time student (one long semester or equivalent) can be up to and including age 23. And a person classified as "permanently and totally disabled" (one year or more) can be any age and count as one's qualifying "child" provided the other requirements are met. Parents claim their own child(ren) if eligible unless they are waiving this year's credit to an extended family member who has higher adjusted gross income. There is no support test for EITC. There is a six-month plus one day shared residency test.
In the 2009 American Recovery and Reinvestment Act, the EITC was temporarily expanded for two specific groups: married couples and families with three or more children; this expansion was extended through December 2012 by H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Effective for the 2010, 2011, 2012 and 2013 filing seasons, the EITC supported these taxpayers by:
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