Child Earned Income Credit

The child earned income credit is a loose term for the earned income tax credit for a taxpayer with a qualifying child or qualifying children. Some taxpayers confuse child earned income credit with child tax credit or even child care credit. Child earned income tax credit is an earned income credit or EIC and has nothing to do with child tax credits or child care credits.

If you have a qualifying child for earned income credit

If you have a child to claim the earned income credit or EIC on, your child must meet the following earned income tax credit tests:

1) qualifying child for earned income credit tests which compose of three tests:

• relationship test
• age test, and
• residency test

2) more than one person claiming the child for earned income credit

Your qualifying child or children cannot be used by more than one person to claim the earned income credit. If you and someone else have the same qualifying child, you and the other person or persons can decide who can claim the credit using that qualifying child. The taxpayer claiming the child can take all of the following tax benefits based on the qualifying child.

1. the child's exemption
2. the child tax credit
3. head of household filing status
4. the credit for child and dependent care expenses
5. the exclusion for dependent care benefits
6. the earned income credit

The other person cannot take any of these five tax benefits unless he or she as a different qualifying child.

If you and the other person or persons cannot agree and more than one person claims the earned income credit using the same child, the tie-breaker rule applies. If the other person is your spouse and you file a joint return, this rule does not apply.