Working grandparents who support their grandchildren may qualify for the earned income tax credit, which could reduce the amount they pay in taxes by thousands of dollars, or allow them to receive a refund.
The earned income tax credit is a benefit for working people with low to moderate incomes who have dependents, a category that includes grandparents. (Taxpayers without a dependent may also qualify, but it is more difficult.) To be able to claim the credit, you must be raising a child who:
- is your son, daughter, adopted child, stepchild, foster child, brother, sister, half-brother, half-sister, step-sister or a descendent of any of them, such as a grandchild or niece or nephew;
- is younger than 19 at the end of the year, younger than 24 and a full-time student at the end of the year, or any age and permanently and totally disabled;
- lives with you for more than half the year.
To qualify for the credit your income must be below certain limits, depending on how many dependents you have.
The limits for 2019 are as follows:
- With one child: filing as an individual, your income must be less than $41,094. Filing jointly, your income must be less than $46,884.
- With two children: filing as an individual, your income must be less than $46,703. Filing jointly, your income must be less than $52,493.
- With three or more children: filing as an individual, your income must be less than $50,162. Filing jointly, your income must be less than $55,952.
The maximum amount of the credit depends on how many dependents you have.
In 2019, the maximum credit amount is as follows:
- $6,557 with three or more qualifying children
- $5,828 with two qualifying children
- $3,526 with one qualifying child
For more IRS information about the tax credit, visit https://www.irs.gov/newsroom/grandparents-caring-for-grandchildren-should-check-their-eligibility-for-eitc