FAQs for Indian tribal governments regarding individuals - Earned Income Tax Credit issues


These frequently asked questions and answers are provided for general information only and should not be cited as any type of legal authority. They are designed to provide the user with information required to respond to general inquiries. Due to the uniqueness and complexities of Indian law and federal tax law, it is imperative to ensure a full understanding of the specific question presented, and to perform the requisite research to ensure a correct response is provided.

What is the Earned Income Tax Credit?

The Earned Income Tax Credit (EITC) is a refundable credit for workers who meet certain requirements and file a tax return. Persons with or without a qualifying child may claim the EITC. The maximum credit you can get will depend on your filing status and whether you have no qualifying children, one qualifying child, or more than one qualifying child. Additionally, the maximum credit possible can change each year due to inflationary adjustments. See Publication 596, Earned Income CreditPDF, to find the maximum credit available.

What income is considered earned income?

To claim the Earned Income Tax Credit, you must have earned income. For the year you are filing, earned income includes all income from employment, but only if it is includable in gross income. Examples of earned income are: wages; salaries; tips; and other taxable employee compensation. Earned income also includes net earnings from self-employment. Earned income does not include amounts such as pensions and annuities, welfare benefits, unemployment compensation, worker's compensation benefits, or social security benefits. For tax years after 2003, members of the military who receive excludable combat zone compensation may elect to include it in earned income.

When I file my Federal income tax return, my filing status is single. Do I still qualify for Earned Income Tax Credit?

To claim the Earned Income Tax Credit (EITC), your filing status must be single, head of household, qualifying widow or widower, or married filing jointly. You cannot claim the EITC if your filing status is married filing separately.

How do I compute the Earned Income Tax Credit? 

You must use Worksheet A or Worksheet B in the Form 1040 InstructionsPDF to figure this credit, or the IRS can figure the credit for you. If you want the IRS to figure the credit, carefully follow the steps in the instructions for your tax return or refer to Publication 596PDF. This publication is also a valuable source for information on the earned income credit in general. If you file your return electronically, the credit will be figured for you. For more information about filing electronically, visit The Electronic IRS.