Child Tax Credit Vs. Earned Income Credit
The earned income credit and the child tax credit are both deductions that allow taxpayers to reduce their overall tax liability, thereby reducing the amount of tax for which they are responsible for paying.
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Income Limits
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In order to qualify for the child tax credit, a taxpayer's adjusted gross income must not exceed $110,000 if married filing joint; $75,000 if single, head of household or widowed; and $55,000 if widow(er). The earned income credit (EIC) is based on income and the number of qualifying children. Use the EIC Assistant at IRS.gov to determine if you qualify.
Income Type
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To qualify for the earned income credit, you must have earned income. Income from pension, Social Security and dividends does not qualify you for the credit.
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Qualifying Child
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Both the child tax credit and the earned income tax credit allow you to increase your deduction by adding a qualifying child. A qualifying child could be a brother, sister, stepchild, foster child, son, daughter or a descendant of one of these persons.
Considerations
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With the earned income credit, you can also qualify for the credit if you are between the ages of 25 to 65 years and do not exceed the income limits for your filing status.
Refundable vs. Nonrefundable Credits
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The child tax credit is a nonrefundable credit, whereas the earned income credit is a refundable credit. This means that taxpayers who do not have a tax liability cannot claim the child tax credit, but they can claim the earned income credit (if they qualify).
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