Earned income

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount. The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of— For purposes of subsection (a)— The credit percentage and the phaseout percentage shall be determined as follows: In the case of an eligible individual with:The credit percentage is:Thephaseoutpercentageis: 1 qualifying child3415.98 2 qualifying children4021.06 3 or more qualifying children4521.06 No qualifying children7.65 7.65 Subject to subparagraph (B), the earned income amount and the phaseout amount shall be determined as follows: In the case of an eligible individual with:The earned income amount is:Thephaseoutamount is: 1 qualifying child$6,330$11,610 2 or more qualifying children$8,890$11,610 No qualifying children$4,220 $5,280 In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000. For purposes of this section— The term “eligible individual” means— any other individual who does not have a qualifying child for the taxable year, if— If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year. The term “eligible individual” does not include any individual who claims the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year. The term “eligible individual” shall not include any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013. No credit shall be allowed under this section to an eligible individual who does not include on the return of tax for the taxable year— The term “earned income” means— For purposes of subparagraph (A)— The term “qualifying child” means a qualifying child of the taxpayer (as defined in section 152(c), determined without regard to paragraph (1)(D) thereof and section 152(e)). The term “qualifying child” shall not include an individual who is married as of the close of the taxpayer’s taxable year unless the taxpayer is entitled to a deduction under section 151 for such taxable year with respect to such individual (or would be so entitled but for section 152(e)). For purposes of subparagraph (A), the requirements of section 152(c)(1)(B) shall be met only if the principal place of abode is in the United States. A qualifying child shall not be taken into account under subsection (b) unless the taxpayer includes the name, age, and TIN of the qualifying child on the return of tax for the taxable year. The Secretary may prescribe other methods for providing the information described in clause (i). For purposes of paragraphs (1)(A)(ii)(I) and (3)(C), the principal place of abode of a member of the Armed Forces of the United States shall be treated as in the United States during any period during which such member is stationed outside the United States while serving on extended active duty with the Armed Forces of the United States. For purposes of the preceding sentence, the term “extended active duty” means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period. In the case of an individual who is married, this section shall apply only if a joint return is filed for the taxable year under section 6013. For purposes of this section— Except as provided in subparagraph (B), marital status shall be determined under section 7703(a). An individual shall not be treated as married if such individual— Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months. The amount of the credit allowed by this section shall be determined under tables prescribed by the Secretary. The tables prescribed under paragraph (1) shall reflect the provisions of subsections (a) and (b) and shall have income brackets of not greater than $50 each— No credit shall be allowed under subsection (a) for the taxable year if the aggregate amount of disqualified income of the taxpayer for the taxable year exceeds $10,000. For purposes of paragraph (1), the term “disqualified income” means— the excess (if any) of— the sum of— the excess (if any) of— In the case of any taxable year beginning after 2015 (2021 in the case of the dollar amount in subsection (i)(1)), each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to— the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting in subparagraph (A)(ii) thereof— If any dollar amount in subsection (b)(2)(A) (after being increased under subparagraph (B) thereof), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. If the dollar amount in subsection (i)(1), after being increased under paragraph (1), is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50. No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of paragraph (1), the disallowance period is— In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit. For purposes of— Solely for purposes of subsections (c)(1)(E) and (c)(3)(D), a taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act) on or before the due date for filing the return for the taxable year. In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022— Subsection (c)(1)(A)(ii)(II) shall be applied by substituting “the applicable minimum age” for “age 25”. For purposes of this paragraph, the term “applicable minimum age” means— For purposes of this paragraph, the term “specified student” means, with respect to any taxable year, an individual who is an eligible student (as defined in section 25A(b)(3)) during at least 5 calendar months during the taxable year. For purposes of this paragraph, the term “qualified former foster youth” means an individual who— For purposes of this paragraph, the term “qualified homeless youth” means, with respect to any taxable year, an individual who certifies, in a manner as provided by the Secretary, that such individual is either an unaccompanied youth who is a homeless child or youth, or is unaccompanied, at risk of homelessness, and self-supporting. Subsection (c)(1)(A)(ii)(II) shall be applied without regard to the phrase “but not attained age 65”. The table contained in subsection (b)(1) shall be applied by substituting “15.3” for “7.65” each place it appears therein. The table contained in subsection (b)(2)(A) shall be applied— Subsection (j) shall not apply to any dollar amount specified in this paragraph.