Earned income maximum credits and earned income thresholds are up slightly from 2019 tax year, allowing some people who would not normally have qualified to claim this credit.
The 2020 max earned income credits are:
- No qualifying children: $538
- 1 qualifying child: $3,584
- 2 qualifying children: $5,920
- 3 or more qualifying children: $6,660
All statuses except married filing separately can claim this credit. Nonresident aliens may not claim this credit.
For a dependent to meet the terms of a qualifying child, they must meet these requirements:
Have a valid ss card with the words Valid for Employment on it
Meet the 4 tests of eligibility: age, relationship, residency, and joint return
Not be claimed as a qualifying child by more than one person
This is a “hot” item with the IRS and frequently audited. If you are claiming the earned income credit, make sure you work with someone who is professionally trained on eligibility so you do not claim in incorrectly.
Written by Laura Fleig
Feb 1, 2021
www.fleigfinancialsllc.com
