Military Considerations for the 2019 Earned Income Tax Credit

By Selena Garrison 

The Earned Income Tax Credit (EITC) can help working people with low to moderate income reduce the amount of tax they owe or even allow them to receive a refund. As a fully refundable tax credit, people who qualify for the EITC can get a refund above and beyond what they paid in income taxes in any given year.

For the 2019 tax year, the maximum EITC credit amount is:

• $6,557 with three or more qualifying children
• $5,828 with two qualifying children
• $3,526 with one qualifying child
• $529 with no qualifying children

In order to be considered a qualifying child for the EITC, the child must:

1. Meet the relationship rule as:
   • The taxpayer’s biological child, adopted child, step-child, foster child, or the descendent of any of them; OR
   • The taxpayer’s sibling, half sibling, step sibling, or a descendent of any of them
2. Meet the age rule:
   • At the end of 2019, child was younger than the taxpayer and/or the taxpayer’s spouse and younger than 19; OR
   • At the end of 2019, taxpayer’s child was younger than the taxpayer and/or the taxpayer’s spouse, younger than 24, and a full-time student; OR
   • At the end of 2019, taxpayer’s child was any age and permanently and totally disabled.
3. Meet the residency rule by residing in the same home as the taxpayer and/or the taxpayer’s spouse in the US for more than half of 2019.

U.S. Air Force photo/ Staff Sgt. Alexandre Montes

In order to qualify for the EITC, the taxpayer must meet a few basic rules:

1. The taxpayer, their spouse, and any qualifying child listed on the taxpayer’s return must have a Social Security number that was issued prior to the filing date.
2. The taxpayer’s filing status must be one of the following: Married Filing Jointly, Head of Household, Qualifying Widow or Widower, or Single. The taxpayer will not be able to claim the EITC if their filing status is Married Filing Separately.
3. The taxpayer must have earned income of at least $1, meaning their income was received for work they completed.
4. The taxpayer must have $3,600 or less in investment income for the 2019 tax year.
5. The taxpayer cannot have filed a form 2555 (Foreign Earned Income) or form 2555-EZ (Foreign Earned Income Exclusion). That said, members of the military on extended active duty outside the Unites States are considered to have their main home in the United States for tax purposes, so these forms wouldn’t be necessary under those circumstances.
6. The taxpayer has to meet certain income guidelines based on their filing status and the number of children claimed. For the 2019 tax season, the taxpayer’s earned income and adjusted gross income must be no more than the following:

Qualifying Children Claimed

Special military considerations for the EITC:

As a member of the Armed Forces, taxpayer’s do not have to report nontaxable income they receive for the purposes of the EITC, however it may benefit them to do so. They and/or their spouse can each choose to have their nontaxable income included in their earned income for EITC, and doing so may or may not decrease the amount of tax they owe (or even give them a larger refund). It is important to calculate the taxpayer’s taxes both with and without the nontaxable combat pay to determine which is best for them.

If a taxpayer doesn’t have a qualifying child, they must meet these additional rules to qualify for the EITC:

• The taxpayer (and their spouse if filing a joint return) have their main home in the United States for more than half of the tax year; AND
• The taxpayer (and their spouse if filing a joint return) cannot be claimed as a dependent or qualifying child on anyone else’s return; AND
• The taxpayer (or their spouse if filing a joint return) must have been at least 25 but under 65 years old at the end of the tax year.

Resources:

Do I Qualify for the EITC?

Earned Income Tax Credit Income Limits and Maximum Credit Amounts

Special EITC Rules