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sparrow87
New Member

Why is my earned income credit so low compared to last years?

 
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4 Replies

Why is my earned income credit so low compared to last years?

We cannot see your tax return.  The amount of EIC you receive is based on the amount of income you earned from working.  Earning a lot more--or earning a lot less would affect the amount of EIC you got.

 

https://ttlc.intuit.com/questions/1899157-what-are-the-qualifications-for-the-earned-income-credit-e...

 

https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
akaplan_98
Returning Member

Why is my earned income credit so low compared to last years?

The most common reason is that you earned more money, which past a threshold starts to lower the credit.  Or you may have earned less money; e.g. if you earned 0, no credit.  After 0, amount of credit increases until threshold, then starts to decrease.   If your family situation changed, or a child got too old, this also impacts credit amount.

Hal_Al
Level 15

Why is my earned income credit so low compared to last years?

The basic EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between $14,000 and $18,350 (Single with 2 or 3 children) and then declining gradually until it phases out altogether. If your income is on the up slope of the EIC curve more earned income will increase your EIC but if your income is on the down slope, more income (of any kind) will reduce you EIC. The “upslope" on the EIC curve is very steep; basically for every $3 you earn, the government gives you another dollar. See the curve (graph) at:

http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm

The earned income credit is first calculated (actually looked up in a table) on your earned income then it is calculated on your total income (AGI). You get the lesser of the two calculated EIC numbers. See the  EIC table at:

https://www.irs.gov/pub/irs-pdf/p596.pdf

Why is my earned income credit so low compared to last years?

did you have less dependents this year vs. last year?  that would also have an impact.

 

otherwise, EIC is dependent on your income.  At very low levels of income, as your income rises, EIC rises.  It then hits a plateau, where increases in come has no impact on EIC. then once beyond the plateau, as income rises, EIC falls. 

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