Question

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Please speculate as to why there is an investment income limit in the tax law.

Answer 1

Answers

The maximum investment income a taxpayer is allowed to have

Earned Income Tax Credit Amounts for the 2017Year

The maximum tax credits for the return you'll file in 2018 for the 2017 tax year are:

$6,318 if you have three or more qualifying children

$5,616 if you have two qualifying children

$3,400 if you have one qualifying child

$510 if you have no qualifying children

The federal government created the earned income tax credit (EITC) to help low-income and some middle-income families and individuals keep more of their money. It's a refundable credit, so if there's any left over after it erases your tax debt, the IRS will give you a refund for the difference. The amount of the credit depends on your income and how many dependents you have.

The earned income tax credit is one of the most valuable credits in the tax laws, helping millions of families save thousands of dollars each year. Yet there are complex rules that govern the credit, and only some taxpayers qualify to take it. Each year, the income limits that restrict the use of the credit and the maximum amount of credit that you can claim change, and there's also a limit on the amount of investment income you're allowed to have. Below, we'll go through these limits for 2018 with an eye toward showing you whether you're likely to qualify for this lucrative tax break.