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Caregivers, FYI, Money and Finances, seniors, taxes, Tips

Earned Income Tax Credit (EITC): Grandparents Caring for Grandchildren

By Darling Garcia, Director of Community Services at Elder Law of Michigan 

The Earned Income Tax Credit (EITC) is a benefit for low to moderate income earners where the amount of tax owed is reduced and earners may receive an EITC refund.

In a nutshell, to qualify for the EITC, individuals must earn income from working for someone or from self-employment and meet basic rules. There are additional rules that must be met for individuals/workers without a Qualifying Child or rules for individuals/workers who have a Qualifying Child.

The Internal Revenue Service (IRS) has created the very handy EITC Assistant portal to allow individuals to enter basic income information on the portal and find out if they are eligible for credit and obtain an estimate of the amount of the credit.

The EITC is a refundable tax credit, which means those who qualify for and claim the EITC credit, could get a tax refund, pay fewer federal taxes, or pay no federal taxes. The EITC is claimed by filing a tax return.

For Tax Year 2018, investment income must be less than $3,500 and the EITC income limits and maximum credit amounts are as follows:

Income limits if filing:                       

  • Single, Head of Household or Widowed
    • No Qualifying Children claimed = $15,270    
    • 1 Qualifying Child claimed = $40,320
    • 2 Qualifying Children claimed = $45,802       
    • 3 or more Qualifying Children claimed = $49,194
  • Married, Filing Jointly                                     
    • No Qualifying Children claimed = $20,950    
    • 1 Qualifying Child claimed = $46,010
    • 2 Qualifying Children claimed = $51,492       
    • 3 or more Qualifying Children claimed = $54,884

The maximum amount of credit for Tax Year 2018 is:

  • $6,431 with three or more Qualifying Children
  • $5,716 with two Qualifying Children
  • $3,461 with one Qualifying Child
  • $519 with no Qualifying Children

An IRS Tax Tip encourages grandparents who work and are raising grandchildren to find out if they are eligible for the credit. In particular, the IRS notes that often, grandparents who are caring and raising grandchildren are not aware that they could claim these children for the EITC.

2018 Tax season is upon us and if you would like to learn more about EITC, please read the IRS’s EITC and Publication 596.

Darling Garcia is the Director of Community Services at Elder Law of Michigan and has been a member of the Elder Law of Michigan team since September 2013. As the Director of Community Services, Darling oversees the MiCAFE program and other Elder Law of Michigan initiatives intended to help low-income Michigan seniors achieve and preserve their economic security.