Data Source and Methodology
Authoritative data sources:
- IRS Publication 596 — Earned Income Credit (EIC), Tax Year 2024 (Rev. 12-2024). URL: https://www.irs.gov/publications/p596
- IRS Revenue Procedure 2023-34 — Inflation Adjusted Items for 2024 (includes EITC parameters). URL: https://www.irs.gov/irb/2023-48_IRB
- IRS EITC Assistant (official estimator). URL: https://apps.irs.gov/app/eitc
Tutti i calcoli si basano rigorosamente sulle formule e sui dati forniti da questa fonte.
The Formula Explained
Let n be the number of qualifying children (0, 1, 2, 3+). Define:
\( C_{\max}(n) \) = maximum credit, \( r_{\text{in}}(n) \) = phase-in rate, \( r_{\text{out}}(n) \) = phase-out rate, \( b(n,f) \) = phase-out threshold for filing status f, \( E \) = earned income, \( A \) = AGI, \( I \) = investment income.
Preliminary credit (phase-in):
\[ C_{\text{pre}} = \min\!\left( C_{\max}(n),\; r_{\text{in}}(n)\cdot E \right) \]
Phase-out uses the larger of AGI and earned income:
\[ x = \max(E, A) \]
Final credit:
\[ C = \max\!\Big(0,\; C_{\text{pre}} - r_{\text{out}}(n)\cdot \max(0,\, x - b(n,f)) \Big) \]
Non-eligibility guards:
\[ C = 0 \quad \text{if}\quad \text{status} = \text{MFS}\;\; \text{or} \;\; I > I_{\text{limit}} \;\; \text{or (}n=0 \land \text{age}\notin[25,64]\text{)}. \]
Glossary of Variables
- Filing Status: Single, Married Filing Jointly, Head of Household, Qualifying Widow(er), Married Filing Separately (generally ineligible).
- Qualifying Children: Count of children meeting IRS tests for relationship, age, residency, and joint return.
- Earned Income (E): Wages, salaries, and net self-employment income.
- Adjusted Gross Income (AGI, A): Total income after specific adjustments; used in EITC phase-out.
- Investment Income (I): Interest, dividends, capital gains, rental income; must not exceed the IRS limit for the year.
- Preliminary Credit (C_pre): Credit under the phase-in formula before any phase-out reduction.
- Phase-out Threshold b(n,f): Income level where the credit starts to reduce; depends on number of qualifying children and filing status.
- Final Credit (C): EITC after applying any phase-out reduction and eligibility rules.
How It Works: A Step-by-Step Example
Scenario (Tax Year 2024): Head of Household filer, 1 qualifying child, earned income $20,000, AGI $19,500, investment income $200.
- Preliminary credit: 34% × $20,000 = $6,800; capped at $4,213 → C_pre = $4,213.
- Phase-out: x = max($20,000, $19,500) = $20,000. For single/HOH with 1 child, phase-out begins around $22,7k. Since x is below the threshold, phase-out reduction is $0.
- Final EITC: $4,213.
Frequently Asked Questions (FAQ)
Which tax years are included?
2023 and 2024. Parameters are sourced from IRS publications and annual revenue procedures.
Can I qualify if I file Married Filing Separately?
Generally no. EITC is typically not available to MFS filers, with limited exceptions for certain separated spouses. This tool treats MFS as ineligible.
What counts as investment income?
Interest, dividends, capital gains, royalties, and rental income. Your investment income must be at or below the IRS limit for the selected year.
Do I need to be a certain age without children?
Yes. You generally must be at least age 25 and under age 65 by year end to claim childless EITC.
Why do I see a phase-out reduction?
The EITC decreases as your income (using the larger of AGI or earned income) exceeds the phase-out threshold for your filing status and number of children.
Is this calculator an official IRS tool?
No. It is an independent estimator based strictly on IRS formulas and limits. For official guidance, consult IRS Publication 596 or the IRS EITC Assistant.
Will this match my final return exactly?
It is an estimate. Your final EITC may differ based on specific circumstances, additional eligibility rules, or tax software/IRS calculations.