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kmarie434
New Member

Why did i get back less in earned income than i did last year

 
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Accepted Solutions
Hal_Al
Level 15

Why did i get back less in earned income than i did last year

The basic EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between $ $14,040 and $18,340 (Single with 2 or 3 children 2016)  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 your EIC.  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://apps.irs.gov/app/vita/content/globalmedia/earned_income_credit_table_1040i.pdf

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1 Reply
Hal_Al
Level 15

Why did i get back less in earned income than i did last year

The basic EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between $ $14,040 and $18,340 (Single with 2 or 3 children 2016)  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 your EIC.  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://apps.irs.gov/app/vita/content/globalmedia/earned_income_credit_table_1040i.pdf

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