Tax Laws for Earned Income Credit

The Earned Income Tax Credit (EITC) is a tax credit put into place in 1975 as a way to offset Social Security taxes while also providing an incentive for people to work. The EITC is designed specifically to help low- and moderate-income individuals or families who earned their income through a job or self-employment. To receive the credit, individuals or families must claim the credit and meet certain qualifications.

Earned Income

Since the EITC was designed as an incentive for people to work, only those who have earned income from working at a job or being self-employed can qualify to take the tax credit. Investment income does not disqualify you for the credit, as long as it's not above a specific amount. Investment income could not be more than $3,100 for the year in 2009, for example.

Income Amounts

The EITC is meant to help moderate- and low-income wage earners, so each year there is a maximum earnings limit based on your filing status and family size. In 2009, for example, a married couple filing jointly with three or more qualifying children could take the EITC if they earned less than $48,279, according to the Internal Revenue Service. A single person without children could take the credit if she earned less than $13,440.

Qualifying Children

Most people qualify for the EITC because they have one or more children living in their home who meet the criteria of a qualifying child. Generally, qualifying children are not yet 18 and living at home. Children with disabilities and adopted children can fall under the definition of a qualifying child as well.

Childless Adults

People who earn their income through wages or self-employment, are between the ages of 25 and 65 and do not have children can still qualify for the EITC if their income is below a specific level. The IRS provides a brief worksheet with questions and answers to help you determine if you're eligible to take the credit.