Yes, but it would require you to file Form 8862 Information to Claim Certain Credits After Disallowance to start receiving the Earned Income Credit again.
Many times when taxpayers qualify for more than one credit, each credit is reduced. That is because once the tax is reduced to $0 from the credits, only the "refundable" portion of the credits can increase the refund. This is true whether the Earned Income Credit was removed or not.
The IRS rules for most credits provide two components in each credit.
- There is a part that will reduce your taxes owed down to $0, the "non-refundable" portion.
- There is a much smaller portion of the credit that you could still qualify for, even if you did not owe any tax at all, the "refundable" portion. (Sometimes, there are further restrictions on the refundable portion, such as earned income levels)
TurboTax works behind the scenes to provide all calculations according to all the tax laws for the federal and each of the states and U.S. territories.
An Overview for Common Credits:
1. Earned Income Credit is from earned income. See page 31 of the IRS Earned Income Tax Table
2. The Child Tax Credit is calculated in two parts.
- The first part (up to $600 per child) is to bring your taxes owed to $0. If the taxes are already $0, then this part of the credit is $0.
- The second part of the credit (up to $1,400 per child) may not be more than 15% of the amount earned greater than $2,500.
- Children under 17 years old are eligible for a credit of $2,000. Children under 19 years old (under 24 years old for full-time students) are eligible for $500, the Family Tax Credit
3. The Child and Dependent Care Credit starts with $3,000 per child with a maximum of $6,000 in expenses for two or more children. It is correct to enter in the full amount. TurboTax would automatically adjust any excess amount entered. The credit then ranges between 20% - 35% of the maximum dollar amounts. But that maximum could then be affected by further limits if credits are "combining."
