Indiana's Earned Income Tax Credit (EITC), established in 1999, was not based on federal benefits. The EITC model that Indiana adopted in 2003 copied the federal scheme at 6% of the national credit. In 2009, as part of a plan to overhaul property taxes, this rate was increased to 9%. Indiana EITC operates similarly to the federal program, lowering low-income taxpayers' tax obligations and providing any leftover funds as a repayment.

A federal tax relief measure passed in 2010 enlarged the federal program, but Indiana decided to separate its state eligibility requirements from the federal system in 2011. Due to the elimination of the "marriage penalty," which initiated the income phase-out at a higher level of earnings for married couples, persons claiming Indiana's EITC no longer benefited from greater payouts for families having three or more children.

Indiana EITC Eligibility Requirements

To qualify for Indiana's EITC, you should claim for the federal EITC on your national tax return. The majority of Indiana's credit regulations mirror those of the federal government. You should have earned money from a job or your business, and it cannot come from a foreign source.

Additionally, you must be a United State citizen or resident foreign for the whole year and possess a valid Social Security number. Suppose a nonresident foreign is married to a United State citizen or a resident foreign, and the couple files a joint marriage return. In that case, they are eligible for the tax credit. You will not be taxed on the credit or any refund you receive for the ensuing 12 months.

To be eligible for the EITC in 2021, you can use one of the following statuses:

• Married filing jointly
• Head of the family
• Eligibility for widow or widower
• Single
• Married filing for divorce

If you are married, not filing a joint return, and had a qualifying child who resided with you for more than a quarter of 2021, you may be eligible to file for the EIC.

Your ability to claim the federal EITC is suspended if you file a separate married return. If someone (your parents) declares you a dependent child and you are the eligible child dependent of another taxpayer, you cannot receive the Indiana credit.

If you do not have any dependent child, you must be between 25 and 65 to be eligible for the Indiana EITC. If not, there are no age restrictions.

Income Requirements for Indiana EITC

To be eligible for Indiana earned income tax credit (EITC), your modified MAGI and your federal adjusted gross income (AGI) must fall below a set threshold. For the tax year 2021, which corresponds to the yield you'll submit in 2022, the following thresholds apply:

• If your two children are eligible, $47,900
• If your one child is eligible, $42,100
• If you don't have any children who qualify, $15,900

Indiana EITC Rules for Eligible Children

The earlier three requirements are the exactly same for children who qualify for the national EITC. In the end of the going tax year, a qualified child must be younger than 19 or, if enrolled in full-time school, younger than 24. Children must also be younger than their parents if you are married and submitting a joint yield.

Regardless of age, totally and permanently disabled children qualify for EITC.

Children who qualify must have been living along with their parents for more than half of the current tax year; however, time spent in school or other short-term absences is not regarded as living away from parents if the children expect to come back to parents house.

Your children, stepchildren, and grandchildren all qualify as children. Your brother, step-sibling, or successor of your relatives (nephew or niece) may also qualify as a dependent for the EITC. A married child is not allowed to have filed a joint income if it was solely to receive a tax repayment.

Indiana doesn't currently offer state-level Indiana Child Tax Credit (CTC).

Qualifying Guidelines for Foster Children

If you treated the child in your home as you would your own child, Indiana's concept of a foster child comprises your sibling, step-siblings, or a child of your siblings or step-siblings. A state agency may place an unconnected child with you as a foster child; this youngster must reside with you year-round.

Due to these unique regulations, you may consult a tax expert if you plan to claim foster children to qualify for the earned revenue credit.

Amount of Indiana Tax Credits for 2022

The Indiana credit cannot be greater than 9% of your national EITC and may be decreased by 9% of owed substitute minimum tax.

How can I claim for the Indiana EITC?

Complete Schedule IN-EIC form and attach it to your Indiana tariff return. Download a form on the Indiana Revenue Department website to apply for Indiana EITC.

How do I claim the Indiana credit for taxes paid to another state?

If you pay taxes to another state while residing in Indiana, you might be eligible to claim a credit. You can claim the credit if the income was taxed in Indiana and the other state, you are an Indiana resident, and you filed a tax return in the other state.

You can claim a credit for the taxes withheld on the resident return if you were an Indiana resident during the current tax year and received income from another state. You should constantly verify the laws of the other state in regard to income taxation.