An Earned Income Tax Credit calculator works by assessing filing status, income and other criteria to see if a taxpayer qualifies for the Earned Income Tax Credit and how much the credit is, reports Bankrate. The EITC benefits low-income working people by reducing their taxes, states the Internal Revenue Service.Continue Reading
On an EITC calculator, taxpayers indicate their filing status of married filing jointly, married filing separately, qualified widow or widower, head of household or single, explains Bankrate. Those with a filing status of married filing separately are not eligible for the EITC, notes the IRS. Qualifying dependents for EITC purposes are sons, daughters, grandchildren and siblings who are either disabled or younger than the age of 19 in most cases. Qualifying dependents must be less than 24 years of age if still in school.
In the calculator, taxpayers include earned income and any other form of income, although military personnel can choose whether or not to include non-taxable combat pay, according to Bankrate. Taxpayers eligible for the EITC must have lived in the United States for over six months during the previous tax year and not qualify as a dependent of someone else.
To receive the EITC, taxpayers must meet the earned income, investment income and adjusted gross income limits for the tax year, points out the IRS. Taxpayers eligible for the EITC may qualify not only for a reduction in taxes but also a tax refund.Learn more about Income Tax