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Common questions about the Earned Income Credit

by Intuit• Updated 4 months ago

Below are solutions to frequently asked questions about generating the Earned Income Credit (EIC) in the Individual module of Lacerte. Refer to IRS Pub. 596 for more information about the Earned Income Credit.

Starting in tax year 2022:

  • In order to qualify for any amount of the Earned Income Credit, if the taxpayer doesn’t have a qualifying child, they must be 25-64 years old at the end of the year.
  • If filing MFJ, only one spouse needs to meet the age requirement.
  • Starting in tax year 2021, the rules for Married Filing Separately taxpayers have changed:
    • You can claim the EIC if you are married, not filing a joint return, had a qualifying child who lived with you for more than half of 2021, and either of the following applies:
      • You lived apart from your spouse for the last 6 months of 2021, or
      • You're legally separated according to your state law under a written separation agreement or a decree of separate maintenance, and you didn't live in the same household as your spouse at the end of 2021.
  • Starting in tax year 2021, if the taxpayer is unable to verify the identification requirements for children, the taxpayer is no longer fully disqualified for EIC. The taxpayer and spouse may still be able to claim the childless EIC requirements.
  • Starting in tax year 2021, the Investment Income Limitation has been increased from $3,650 to $10,000 and will be indexed for inflation in future years.
  • For tax year 2021 only: If the taxpayer doesn't have qualifying children, the age requirements have changed:
    • You no longer need to be younger than 65 to claim EIC.
    • In general, the minimum age for EIC is 19; however:
      • If you are a qualified homeless youth, or former foster youth, the minimum age for EIC has been decreased to 18.
      • If you are a specified student, you need to be at least 24.
  • For tax year 2021 only: if the taxpayer has no qualifying children, the amount of EIC and threshold phaseout amounts have increased.
  • Extended for tax year 2021: In the 2021 tax year the taxpayer may elect to use the 2019 earnings instead of the current year earnings to calculate EIC.
  • See IRS Pub. 596for full details​.

Earned Income Credit Allowed When Taxpayer is Claimed as a Dependent

If taxpayer has a qualifying child for EIC, the taxpayer can claim the EIC even if the taxpayer is claimed as a dependent on another's return. See 1040 instructions for taxpayers with and without qualifying children.

However, if the taxpayer is a qualifying child for EIC of another person, then he or she cannot take the EIC. If this is the case:

1. Go to Screen 38.2, EIC, Residential Energy, Other Credits.
2. In the Section list, click on Earned Income Credit.
3. Check the box that states Taxpayer is qualifying child of another. (Code 69)

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