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Question

Earned income credit less than last year

Forum|Forum|7 years ago
June 1, 2019
1 reply
27 views

Almost all of my info on my taxes makes sense this year except my EIC. My Gross income increased by roughly 3,000 dollars. My EIC went down about $500. Why is that? One of the questions posted a table https://apps.irs.gov/app/vita/content/globalmedia/earned_income_credit_table_1040i.pdf
However this tells me I need a number from a worksheet to really use this table. Any help would be appreciated.

TurboTax Free Edition Online

Level 7

The Earned Income Credit is a curve that bases it's calculation on your earned income. The curve starts at zero and goes up for income earned until a point where it "peaks". Eventually this peak starts to decrease until the curve ends back at zero. This happens when the income cap is reached.

Having said that, if your Earned Income Credit went down when you earned more, then you passed the peak and have moved down the slope. The following are the approximate amounts that your refund would have changed by:

No children - $3,000 x 7.65% (phase out rate) = $229.50
1 child - $3,000 x 15.98% (phase out rate) = $479.40
2+ children - $3,000 x 21.06% (phase out rate) = $631.80

Please refer to the link below for more information.

http://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit