Frequently Asked Questions
What is the Earned Income Tax Credit (EITC)?
The Earned Income Tax Credit (EITC) is a refundable tax credit for low- and moderate-income working families.
Refundable means that it reduces what you pay in taxes and/or gives you money back.
Example: Denise owes $400 in federal income taxes and qualifies for a $1,000 EITC. The EITC will pay the $400 she owes and give her $600 back!
Families can also get the EITC if they do not owe any taxes and do not have to file a tax return based on their income. But, they must file an income tax return in order to get the EITC.
Who is eligible for the EITC?
To be eligible for the EITC an individual needs to meet the following requirements.
- You have earned income from employment or self-employment in 2009.
- If married, you must file jointly. You cannot be married and file separately and qualify for EITC.
- You are a U.S. citizen or an immigrant with resident status, or a nonresident immigrant married to a U.S. citizen, or resident immigrant and filing a joint return.
- Someone else cannot claim you as a child on their taxes.
- If you do not have a qualifying child you must:
- Be age 25 to 64 by December 31, 2009.
- Live in the U.S. for more than half of the year.
- You do not qualify as a dependent of another person.
Are there income guidelines to qualify for the EITC?
Yes. The EITC is for working families that earn less than $48,279 per year. The income and size of the family determines how much of an EITC they may qualify for? New for 2009, families with 3 or more children can qualify for a higher EITC. The chart below shows income and family size guidelines for the EITC.
| Married, With Income Less Than: | Single, With Income Income Less Than: | Number of Children | Maximum Federal EITC |
| $18,440 | $13,440 | 0 | $457 |
| $40,463 | $35,463 | 1 | $3,043 |
| $45,295 | $40,295 | 2 | $5,028 |
| $48,279 | $43,279 | 3 or more | $5,657 |
I have heard something about a Michigan EITC – what is that?
In 2008, Michigan began it’s own EITC. Last year the credit was 10% of a family’s federal EITC. It was supposed to go up to 20%, but because of budget troubles in the state, it will likely not go up. There will still be a Michigan EITC, but at this time it is not clear how much it will be.
Can I get a “rapid refund” if I go to a VITA site or use I-CAN! E-file?
No, VITA and I-CAN do not provide “rapid refunds”, but you can get your money deposited into your checking account within 10 days. If you don’t have a bank account, many VITA sites can help you get signed up for one when you complete taxes.
Please avoid the trap of the “rapid refund”. It is actually a refund anticipation loan (RAL). The fees can be high, and can end up costing a considerable amount of interest.
Example: After getting her taxes done at the local tax place in the strip mall, Cindy finds out she will get a refund of $2,000. She is offered a “rapid refund”. This “rapid refund” will cost her $75 and $40 to electronically file her taxes. This is in addition to the $100 she paid the preparer to do her taxes. All together, she will pay $215 to get her taxes done and for the “rapid refund” – this is over 10% of her tax refund, and the “rapid refund” has an interest rate of 142%. (example adapted from "Don't Pay to Borrow Your Own Money" (pdf) from the National Consumer Law Center)
For more information, contact Tameshia Bridges, Senior Workforce Advocate at tbridges@phinational.org or 517.372.8310.