Earned Income Tax Credit Eligibility
You must be eligible for, and claim, the federal earned income tax credit on your federal tax return to qualify for Indiana’s EITC. Most of the rules for Indiana’s credit follow the rules for the federal credit. You must have earned income, either from an employer or from working in your own business, and the income source can’t be foreign. You must also have a valid Social Security number and be a U.S. citizen or a resident alien throughout the entire year. A nonresident alien can qualify for the tax credit if they’re married to a U.S. citizen or a resident alien, and if the couple file a joint married return. Filing a separate married return prevents you from claiming the federal EITC. You can’t claim the Indiana credit if you’re the qualifying child dependent of another taxpayer, and someone (such as your parent) claims you as a dependent.
Income Requirements
Your federal adjusted gross income (AGI) and your modified adjusted gross income (MAGI) must be less than certain limits to qualify you for Indiana’s earned income tax credit. The following thresholds applied to the 2021 tax year, the return you’ll filed in 2022:
$47,900 if you have two qualifying children$42,100 if you have one qualifying child$15,900 if you have no qualifying children
Rules for Qualifying Children
The first three rules for qualifying children are the same as for the federal EITC. A qualifying child must be younger than age 19 on the last day of the tax year, or age 24 if they’re a full-time student. They also must be younger than you, or younger than both you and your spouse if you’re married and are filing a joint return. Qualifying children must have lived with you for more than half the tax year, but time spent away at college or other temporary absences isn’t considered living away from home if the child intends to return to your residence. A qualifying child could be your child, stepchild, grandchild, or great-grandchild. Certain dependents may also count toward your EITC eligibility, such as your sibling, half-sibling, or step-sibling, or a descendant of one of these relatives, such as a niece or nephew. A child who’s married cannot have filed a joint return with their spouse unless it was only to claim a tax refund.
Special Rules for Foster Children
For purposes of the state EITC, Indiana’s definition of a foster child includes your sibling or step-sibling, or a descendant of your sibling or step-sibling, if you cared for the child in your home just as you would your own child. A foster child can also be an unrelated child who was placed with you by a state agency, and they must live with you all year.
The Amount of the Credit
Indiana’s credit can’t exceed 9% of your federal EITC, and it can be reduced by 9% of any alternative minimum tax you might owe.
