Earned Income Tax Credit (ETIC)
For tax year 2010, a claimant with one qualifying child can receive a maximum credit of $3,050, a claimant with two qualifying children a maximum of $5,036, and a claimant with three or more qualifying children can receive a maximum credit of $5,666. The United States Federal Earned Income Tax Credit or Earned Income Credit (EITC or EIC) is a refundable tax credit for low-and middle-income persons and couples, primarily for those with children.
Grandparents, aunts, uncles, and siblings can also claim a child as their qualifying child provided they shared residence with the child for more than six months of the tax year. However, in tiebreaker situations in which more than one filer actually claims the same child, priority will be given to the parent. A foster child also counts, either if a member of one's extended family (see below) or if officially placed by an agency or court. There is a much more modest EIC for persons and couples without children that reach a maximum of $457.
A qualifying child can be as old as the age of 18 at the end of the tax year, and as old as the age of 23 if classified as a full-time student for at least one long semester. A qualifying child can be any age if classified as "permanently and totally disabled," although this actually means that a doctor has determined that the condition has lasted or can be expected to last for at least one year.
The EIC phases in over a certain range, travels along a plateau for another range, and then phases out more slowly than it phased in. In 2009, for Married Filing Jointly, whereas the plateau and phase-out is not doubled, its range is increased by $5,000.
Enacted in 1975, the initially modest EIC has been expanded by tax legislation on a number of occasions, including the widely-publicized Reagan Tax Reform Act of 1986, and was further expanded in 1990, 1993, and 2001, regardless of whether the act in general raised taxes (1990, 1993), lowered taxes (2001), or eliminated other deductions and credits (1986). Today, the EITC is one of the largest anti-poverty tools in the United States (despite the fact that most income measures, including the poverty rate, do not account for the credit).
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