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Earned Income TAX Credit and Child TAX Credit Question?

What's the difference between Earned Income TAX Credit & Child TAX Credit?

Can a married couple filing jointly both worked, with 3 children get both? In the state of CA what are the guidelines to qualify? Is it one or the other one or both?

I might have already asked this before but did not get any answers not sure if my question is visible to everyone.

5 Answers

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  • Anonymous
    9 years ago
    Favorite Answer

    Yes, you can get both credits on the same tax return.

    Child tax credit is $1000 per qualifying child up to your tax liability. So with 3 children (assuming they all qualify), you'll get a $3000 tax credit. If your tax liability is less than $3000 before the credit then it will reduce your tax liability to $0. In that case you might also qualify for some or all of the difference as a refundable credit called the "additional child tax credit (ACTC)." This allows you to get the extra amount of the credit refunded to you even if its more than your tax liability. In other words, if your tax liability is only $2500 then the extra $500 of credit could actually be paid to you as part of your refund through the ACTC.

    The Earned Income Credit (EIC or EITC) is a refundable credit which means it first reduces your tax liability. If the credit is bigger than your tax liability (which is often the case) then the extra amount is refunded to you. Think of the EIC like a big hill. You start on one side with $0 income. As your income goes up the amount of your credit goes up until it eventually reaches the plateau at the top. Then, as your income continues to increase the credit is phased out meaning it slowly goes away (climbing down the other side of the hill), If your income is high enough the credit is completely phased out and you don't qualify for it. The EIC is basically a reward for working. It phases in so people can't just work one day earn $50 and get a $4000 tax credit, then it phases out so that higher income people don't get a credit that is intended to help the working poor. The exact amount of the credit is computed based on your filling status and number of qualifying children (maxes out at 3 children).

    The fact that you're in CA has no impact. These are both federal tax credits for your federal taxes so the rules are the same for all 50 states.

  • 9 years ago

    The Child Tax Credit only reduces your tax liability, currently by $1,000 per child who is under age 17 as of the end of the year. If phases out on a joint return once your income hits $110,000. It can only reduce your tax liability to $0, however any unused CTC may be recovered with the refundable Additional Child Tax Credit. That is 15% of your earned income above $3,000, up to $1,000 per child under age 17 as of the end of the year, reduced by any CTC that was used.

    The EIC is a refundable credit, which means that unused credit may be refunded to you. It's based upon your earned income primarily but unearned income may reduce or eliminate it entirely. See IRS Pub 596 for a full discussion of the complex rules and calculations. It's a federal credit so the rules are uniform nationwide.

    If you are eligible you can claim all three.

    CA may have a similar credit to the EIC. See the FTB website for more information.

  • tro
    Lv 7
    9 years ago

    the child tax credit is $1000 for each child in the household under the age of 17

    this applies to your income tax liability(will reduce it) and is NOT a refund

    the EIC is earned income credit and is based on your earned income

    people with low income are eligible without children if they are 25 and have not exceeded the upper limit

    people with children have additional refund based on their earned income and up to three children under 17 in the household, this is a refund

    the child tax credit not used up previously is now available for additional child credit and also is a refund

    Calif. has neither credit, you are eligible for an exemption for your child, like you have an exemption for yourself

    this reduces your taxable income, is NOT a refund

  • Judy
    Lv 7
    9 years ago

    They're two totally different credits, and yes it's possible to get both for the same child.

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  • 9 years ago

    You can get any that you are entitled to. Both if you are entitled to. State doesn't matter, it's a federal credit.

    EIC doesn't require children.

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