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Kiamichi Tax Center

January 6th, 2010 at 2:34 pm

2010 .::. Earned Income Credit Changes

Simplified Explanation

Earned Income Credit is the refundable credit that you receive on two qualifying children on your return.  If your earned income is within the limits and you have qualifying children, you qualify for this credit. If your earned income is within the limits and you have no children, you may also still qualify for this credit.

Publication 596 : Earned Income Credit
Publication 501 : Exemptions, Standard Deductions, and Filing Information

Current Year Changes

Temporarily, the IRS will be using three qualifying children for this credit.  The maximum amount of EIC that can be claimed for three children is $5657.

The beginning point off the phaseout range for the credit for all married couples filing a joint return regardless of the number of children has increased. 

These two changes apply to 2009, 2010 tax returns. 

Explanation by the IRS.

PhaseOut Limits

The EIC credit works on a curve.  Starting at 0, your credit begins to rise with your income.  As you reach the highest amount of credit allowed and your income continues to rise, you begin the phaseout.  This means the credit decreases as your income continues to increase.  Below are the changes made for Married Filing Joint returns.

Situation : Beginning of Phaseout Amount (Max Credit) : Ending of Phaseout (0 Credit)

Married (0 Children) : $12,470 : $18,440
Married (1 Child) : $21,420 : $40,463
Married (2 Children) : $21,420 : $45,295
Married (3 Children) : $21,420 : $48,279

Examples :

Mary & Max are married filing joint with

  • 1 child and make $23040 total earned income for the year.  Their credit will be just under the maximum amount of credit allowed.
  • 1 child and make $41,463 total earned income for the year.  Their EIC amount would be 0 because they make over the limits.
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