Publication 596: Earned Income Credit Rules Explained

The Earned Income Credit, or EIC, is a refundable tax credit for working individuals and families with low to moderate incomes. IRS Publication 596 provides the official guidance for this credit, outlining the specific rules taxpayers must follow. The credit is intended to supplement earnings and can result in a tax refund even if a taxpayer owes no income tax.

Determining Your Basic Eligibility

To be eligible for the Earned Income Credit, you must meet several foundational requirements. For the 2025 tax year, both your earned income and your adjusted gross income (AGI) must fall below thresholds that vary based on your filing status and number of qualifying children. For example, a married couple filing a joint return with three or more children cannot have income exceeding $69,398, while a single filer with no children must have income below $18,591.

There is also a limit on investment income. For 2025, you cannot claim the EIC if you have more than $11,600 in investment income. This category includes income such as interest from bank accounts, dividends from stocks, and capital gains. This limit ensures the credit is directed toward individuals whose primary financial support is from working.

You, your spouse if filing jointly, and any qualifying child you list must have a Social Security Number (SSN) that is valid for employment. You must use the filing status of Married Filing Jointly, Head of Household, Qualifying Surviving Spouse, or Single.

Taxpayers using the Married Filing Separately status are generally not eligible for the EIC. An exception allows a married person to claim the credit if they did not live with their spouse for the last six months of the tax year, are legally separated, have a qualifying child who lived with them for more than half the year, and meet other requirements.

To qualify for the EIC, you must be a U.S. citizen or a resident alien for the entire tax year. You also cannot file Form 2555, Foreign Earned Income, which is used by taxpayers who live and work abroad.

Qualifying Child Requirements

For many taxpayers, eligibility for a larger EIC amount hinges on having a qualifying child, which requires meeting four specific tests detailed in Publication 596.

• Relationship: The child must be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any of them, such as a grandchild or niece.
• Age: The child must be under age 19 at the end of the tax year and younger than you (or your spouse if filing jointly); a full-time student under the age of 24; or permanently and totally disabled at any time during the year, regardless of their age.
• Residency: The child must have lived with you in the United States for more than half of the tax year.
• Joint Return: A child who files a joint tax return with their spouse for the tax year generally cannot be your qualifying child. An exception exists if the child and their spouse file the joint return only to claim a refund of all income tax withheld.

In situations where a child meets these four tests for more than one person, the IRS has “tie-breaker” rules to determine who can claim the child for the EIC.

Requirements for Filers Without a Qualifying Child

Taxpayers who do not have a qualifying child can still be eligible for the EIC, though the credit amount is smaller and additional rules apply. You must be at least 25 years old but under 65 at the end of the tax year to qualify under these rules.

In addition, you must have your main home in the United States for more than half of the year. You also cannot be claimed as a dependent or a qualifying child on anyone else’s tax return.

Calculating and Claiming Your Credit

The amount of your credit is determined by your earned income, your adjusted gross income, and your number of qualifying children. Earned income is defined as all taxable income and wages from working for someone else or from your own business or farm. This includes wages, salaries, tips, and net earnings from self-employment.

To determine the credit amount, you will use the EIC Tables found within the instructions for Form 1040 or in Publication 596. These tables cross-reference your income with your filing status and the number of children you are claiming. The credit amount increases with earned income up to a certain point and then gradually phases out as income continues to rise.

The final credit amount is entered on the designated line of Form 1040, U.S. Individual Income Tax Return. If you are claiming the EIC with one or more qualifying children, you must also complete and attach Schedule EIC (Form 1040). This schedule is where you provide the name, year of birth, SSN, and relationship for each qualifying child.