The earned income credit (EIC) is a CREDIT which is formed for lower income working families and individuals. A very important feature about this credit is that EIC is a Refundable credit. The most amazing thing about a refundable credit is that not only it reduces your amount of tax due, Dollar-by-Dollar, but also allows you to take refund of any excess credit over the amount of tax due. So, you should always try your best if you can qualify for this credit. The amount of the credit varies depending on your level of income and how many dependents you support.

How to be eligible for Earned Income Credit:
To be eligible for the earned income credit, your earned income and adjusted gross income has to be within certain range. The amount of the tax credit varies based on your earned income and the number of qualifying children you are supporting in your household. The following data is the criteria for eligibility as per income range:

 For the year 2012, to be eligible for EIC, both earned income and adjusted gross income (AGI) must each be less than the following amounts:

• $45,060 ($50,270 married filing jointly) with 3 or more qualifying children
• $41,952 ($47,162 married filing jointly) with 2 qualifying children;
• $36,920 ($42,130 married filing jointly) with 1 qualifying child; or
• $13,980 ($19,190 married filing jointly) with no qualifying children.

For the year 2011, both earned income and adjusted gross income (AGI) must each be less than the following amounts:

• $43,998 ($49,078 married filing jointly) with 3 or more qualifying children
• $40,964 ($46,044 married filing jointly) with 2 qualifying children;
• $36,052 ($41,132 married filing jointly) with 1 qualifying child; or
• $13,660 ($18,740 married filing jointly) with no qualifying children.

Now, let's see what is the amount of credit you can receive from Earned Income Credit:

For the year 2012, the maximum earned income credit is as following:

• $5,891 with three or more qualifying children;
• $5,236 with two qualifying children;
• $3,169 with one qualifying child; and
• $475 with no qualifying children.

For the year 2011, the maximum earned income credit for 2011 is as follows:

• $5,751 with three or more qualifying children;
• $5,112 with two qualifying children;
• $3,094 with one qualifying child; and
• $464 with no qualifying children.

 

So, with all the above information on Earned Income Credit 2011-12, just grab a big refund & keep in mind its a refundable credit!!