EARNED INCOME CREDIT

The earned income credit (EIC) is a tax credit for certain people who work and have less than $39,783 of earned income. A tax credit usually means more money in your pocket. It reduces the amount of tax you owe. The EIC may also give you a refund.

How do you get the earned income credit? To claim the EIC, you must:

Qualify by meeting certain rules,(see below Table for rules) and
File a tax return, even if you:
1. Do not owe any tax,
2. Did not earn enough money to file a return, or
3. Did not have income taxes withheld from your pay.

EARNED INCOME CREDIT RULES:
First, you must meet all the rules in this column.	Second, you must meet all the rules in one of these columns, whichever applies.		Third, you must meet the rule in this column.
Part A. Rules for Everyone	Part B. Rules If You Have a Qualifying Child	Part C. Rules If You Do Not Have a Qualifying Child	Part D. Figuring and Claiming the EIC
1. Your adjusted gross income (AGI) must be less than: •$37,783 ($39,783 for married filing jointly) if you have more than one qualifying child, •$33,241 ($35,241 for married filing jointly) if you have one qualifying child, or •$12,590 ($14,590 for married filing jointly) if you do not have a qualifying child. 2. You must have a valid social security number. 3. Your filing status cannot be “ Married filing separately. ” 4. You must be a U.S. citizen or resident alien all year. 5. You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). 6. Your investment income must be $2,900 or less. 7. You must have earned income.	8. Your child must meet the relationship, age, and residency tests. 9. Your qualifying child cannot be used by more than one person to claim the EIC. 10. You cannot be a qualifying child of another person.	11. You must be at least age 25 but under age 65. 12. You cannot be the dependent of another person. 13. You cannot be a qualifying child of another person. 14. You must have lived in the United States more than half of the year.	15. Your earned income must be less than: •$37,783 ($39,783 for married filing jointly) if you have more than one qualifying child, •$33,241 ($35,241 for married filing jointly) if you have one qualifying child, or •$12,590 ($14,590 for married filing jointly) if you do not have a qualifying child.

The following paragraphs explain the changes to the credit for 2007.

Amount of credit increased. The maximum amount of the credit has increased. The most you can get is:

$2,853 if you have one qualifying child,
$4,716 if you have more than one qualifying child, or
$428 if you do not have a qualifying child.

Earned income amount increased. The maximum amount of income you can earn and still get the credit has increased for 2007. You may be able to take the credit if:

You have more than one qualifying child and you earn less than $37,783 ($39,783 if married filing jointly),
You have one qualifying child and you earn less than $33,241 ($35,241 if married filing jointly), or
You do not have a qualifying child and you earn less than $12,590 ($14,590 if married filing jointly).

The maximum amount of adjusted gross income (AGI) you can have and still get the credit also has increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.

Investment income amount increased. The maximum amount of investment income you can have and still get the credit has increased to $2,900 for 2007.

Advance payment of the credit. If you get advance payments of the credit from your employer with your pay, the total advance payments you get during 2007 can be as much as $1,712.