What is the phaseout for the earned income credit?

The earned income credit is subject to a phaseout, which means that even if you are eligible to claim the credit, you may not be able to claim it for the full amount if your adjusted gross income is above a certain level. Precisely how the phaseout works depends on your filing status and whether you have any qualifying children.

For the 2006 tax year, if you are single, filing as head of household or a widow or widower, the following scenarios apply: (i) if you have no qualifying children, you cannot claim any credit if your adjusted gross income is over $12,120; (ii) if you have one qualifying child, you cannot claim any credit if your adjusted gross income is over $32,001; and (iii) if you have more than one qualifying child, you cannot claim any credit if your adjusted gross income is over $36,348.

If, however, you are married filing jointly, for the 2006 tax year, you should look to the following scenarios: (i) if you have no qualifying children, you cannot claim any credit if your adjusted gross income is over $14,120; (ii) if you have one qualifying child, you cannot claim any credit if your adjusted gross income is over $34,001; and (iii) if you have more than one qualifying child, you cannot claim any credit if your adjusted gross income is over $38,348.