12/01/2025
Tax Tip on For EITC Clients!
(If you claim the Earned Income Tax Credit, READ THIS!)
The Earned Income Tax Credit (EITC) is one of the most valuable tax credits available — but it’s also one of the most commonly delayed or denied by the IRS due to missing information, errors, or lack of documentation.
Here’s what every EITC client should know
1. The EITC Requires Earned Income — Not Just Having Kids
A lot of people believe you only need dependents to qualify.
NOT TRUE.
You must have earned income, which includes:
• W-2 wages
• Self-employment income (even small side jobs)
• Certain disability income
• Some 1099 income
No earned income = no EITC.
2. Your Child MUST Qualify — Not Just Live With You Sometimes
To claim a child for EITC, the IRS requires:
• Relationship test (your child, stepchild, sibling, grandchild, etc.)
• Age test (under 19, under 24 if a student, or disabled)
• Residency test (lived with you over half the year)
• Support test (you must not have been supported by the child)
If these aren’t met, the IRS can deny the credit.
3. You Need Proof — The IRS Checks Everything
To avoid delays, keep documentation like:
• School records
• Medical records
• Lease with your name & child listed
• Daycare statements
• SNAP or Medicaid letters
• Any docs showing your child lived with you over 6 months
The IRS uses these to verify eligibility.
4. You Cannot “Switch” or Trade Dependents
The IRS doesn’t allow:
• Rotating kids every other year
• Letting someone else claim your child
• Letting someone claim your child in exchange for money
This can result in penalties or a 2–10 year EITC ban.
5. If the IRS Denies EITC One Year, You Might Need Form 8862 Next Year
If EITC was disallowed in the past, you must file Form 8862 before claiming it again — or the IRS will automatically reject the credit.
6. EITC Refunds Are Delayed Until Mid-February by Law
Even if you file early, the IRS cannot release EITC/CTC refunds before mid-February.
This is normal — not a problem with your return.
Bottom Line
EITC is powerful, but the IRS pays close attention.
If you want your refund on time, make sure your information is accurate, your dependents qualify, and your documents match your tax return.
Clean paperwork = faster refund.
Messy paperwork = delayed refund.
