One widely recognized tax credit is the earned income tax credit, or EITC, made to help low- to middle-income workers and their families.

Individuals with lower to middle incomes with dependent children may be eligible for the Earned Income Tax Credit (EITC). But what about the things that may hinder you from being eligible? Let's discuss it!

Why am I Not Eligible for Earned Income Tax Credit?

First, some forms of investment might make you ineligible for EITC. According to Marca, this encompasses taxable and tax-exempt interest, dividends, income from a child's interest and dividends reported on the return, net rental and royalty income, net capital gains, other portfolio income, and net passive income.

Nevertheless, gains considered long-term capital gains under section 1231(a)(1) of the IRC are not grounds for disqualifying you. Profits from sections 1245, 1250, 1252, 1254, and 1255 are classified as ordinary gains and are not factored into the EIC calculation.

Nevertheless, gains considered long-term capital gains under section 1231(a)(1) of the IRC are not grounds for disqualifying you. Profits from sections 1245, 1250, 1252, 1254, and 1255 are classified as ordinary gains and are not factored into the EIC calculation.

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EITC Eligibility

Typically, individuals are eligible for the EITC if their earned income in 2023 is below $63,398 or below $66,819 in 2024. 

To meet the requirements, it is important to possess a valid Social Security number, be a citizen or resident alien, and refrain from filing Form 2555 for Foreign Earned Income. 

Additionally, the amount of investment income you can have is limited to $11,000 ($11,600 for 2024) or less.

To meet the eligibility criteria, individuals must be between 25 and 65, reside in the United States for at least half of the year, and not be claimed as a dependent by someone else, according to Money.com via MSN.

The rules that apply to individuals in the clergy or the military, those who are separated from their spouse, or those who receive disability benefits may vary.

To claim the EITC, it is necessary to file a federal income tax return, specifically Form 1040.

When filing your taxes, it is important to include the Schedule EIC if you are claiming a child. You are required to provide the names of your qualifying child(ren), along with their Social Security numbers, birth years, and their relationship to you. 

Additionally, you will need to include details on the Schedule EIC regarding the duration of time the child(ren) resided with you, their age, and any disabilities they may have.

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