Earned Income Tax Credit FAQs: Who Qualifies & How to Apply

It’s a new year and a new time for celebration, commitment, and confidence that we can achieve our goals. For many of us, especially after a year of inflation and uncertainty, those goals are financial in nature. Whether it’s finally making your side hustle your main gig or simply getting your budget in order, the IRS has an incentive that could significantly impact your tax return this year—the Earned Income Tax Credit.

We know that many folks aren’t quite ready to think about their taxes just yet—especially those who are self-employed and dreading their Schedule Cs. But the CPAs at Leadingham Rodgers are gearing up for a new season of tax triumphs. After all, we’re here to help clients proactively approach their financial health. So, let’s take a look at one of the options lower-income taxpayers may have for easing the financial burden this tax season.

What is the Earned Income Tax Credit?

The Earned Income Tax Credit (EITC or EIC) is a financial credit that low- to moderate-income taxpayers can apply toward their taxes. The exact amount granted to each person varies depending on their income and how many children they have. But it’s money on the table that you can use to reduce the amount of taxes that you owe—or increase your IRS refund.

Who Qualifies for the Earned Income Tax Credit?

The EITC was designed to assist families who aren’t making a lot of money, specifically, families with children. That’s why people with more children in their household usually get a bigger credit. However, in recent years, the EITC has also been expanded to help people without children. Now, any U.S. citizen who worked but made less than a certain amount of money per year could benefit from the extra money provided by this initiative.

What is the EITC for 2023?

Anyone who worked and earned income but made less than the threshold amounts (outlined below) may be eligible for between $600 and $7,430 in tax credits. That’s increased for 2023, up from a range of $560 to $6,935 last year, in part due to the Inflation Reduction Act.

Number of Qualifying Children	Income Maximum for Workers Filing Single	Income Maximum for Workers Filing Joint	Could Receive EITC Up To:
None	$17,640	$24,210	$600
1	$46,560	$53,120	$3,995
2	$52,918	$59,478	$6,604
3 or more	$56,838	$63,398	$7,430

What is a “qualifying child” for tax purposes?

In order to claim a child as part of your EITC application, they must meet the IRS’s rules for a qualifying child. A child qualifies if they:

Have a valid Social Security Number
Are younger than you
Are under age 19, are under 24 and a full-time student, OR are any age and permanently and totally disabled
Are legally your child, sibling, grandchild, niece, or nephew
Live in the home with you for more than half of the tax year
Do not file a joint return with another person (like their husband or wife)

What Disqualifies You from Earned Income Credit?

If you made more total income last year than the amounts listed in the table above, you won’t qualify. Additionally, won’t qualify if you:

Have investment income of more than $10,000
Were not a US citizen or resident alien for the entire year or did not live in the US for more than half the tax year
Need to file a Form 2555 for foreign earned income
Do not have a valid Social Security Number
Did not earn any income

There are also special qualifying rules for members of the military and the clergy, as well as taxpayers with disabilities. If these situations apply to you, visit your local CPA for help determining your eligibility!

Can a Business Owner Get Earned Income Credit?

Self-employed taxpayers and sole proprietors can qualify for the EITC if they meet the requirements listed above. If your total earnings from all sources—including wages and tips from all jobs, gig work, and side hustles you had in 2022—fall below the thresholds, you can apply for the credit.

When filing your tax return, the IRS requires you to report all business income and deduct all allowable business expenses to arrive at your net earnings. Businesses have their own separate tax credits and deductions outside of the EITC.

If you need help understanding which tax credits or tax deductions apply to you, the tax preparation experts at Leadingham Rodgers are happy to help.

How Do I Claim the EITC?

If your tax situation is fairly simple or straightforward, you can claim the credit with an e-filing service. But for more complex situations, especially for independent contractors, a trusted Certified Public Accountant can help. At Leadingham Rodgers, our team has helped thousands of people, from individuals to large businesses, prepare and file their tax returns accurately and optimally.

Call Leadingham Rodgers today if you’re ready to get help preparing and filing your tax return for the 2023 tax season!

Leadingham Rodgers: Expert Tax Services for Montgomery, AL

With deep roots in the local community, the CPAs at Leadingham Rodgers take an active role in all our clients’ financial futures. We keep current on all the latest tax laws, identifying tax planning and preparation opportunities that can optimize your liabilities today and in the future. Whether you’re an independent contractor or running a business with 500+ employees, our accountants have the knowledge and expertise to maximize your savings. Call us today at 334-721-2548 or contact us online to learn more.

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Tax Preparation Checklist for Prattville, AL, Business Owners

August 14, 2026

Proper tax preparation can save Prattville, AL, business owners significant time and money, especially with notable changes taking effect. Whether you run a retail shop along Cobbs Ford Road, manage a service business near McQueen Smith Road, or own a small LLC in Autauga County, knowing what to gather before your CPA appointment makes the filing process faster and less stressful. This checklist covers key document categories, relevant deduction updates, and why a local CPA often outperforms a national chain for complex business returns. Business Identity and Formation Documents Every tax planning engagement starts with proof of who you are and how your business is structured. Your CPA needs these to determine which return forms apply and how income passes through to your personal return. Gather the following before your appointment: your EIN confirmation letter from the IRS; your LLC operating agreement or articles of incorporation; a current Autauga County business license if applicable; and your prior-year federal and Alabama state tax returns. Income Records Accurate income records are the foundation of every business return. Collect profit and loss statements for the full calendar year, bank statements for all business accounts, 1099-NEC forms received from clients who paid you $600 or more, sales records or point-of-sale reports, and tax preparation documentation of any other income such as rental payments, interest, or asset sales. Business Expense Records Deductible expenses directly reduce taxable income, so thorough recordkeeping here matters. Collect documentation for rent or mortgage interest on your business location, utility bills and phone expenses, payroll records including W-2s and 1099-NEC forms issued to contractors, receipts for equipment and software, and mileage logs. The IRS standard mileage rate for business use is 70 cents per mile, so a complete log adds up quickly. Deduction Changes That Matter to Autauga County Businesses Several meaningful deductions are available or newly permanent. Prattville, AL, business owners should factor into their tax preparation. The Permanent 20% Qualified Business Income (QBI) Deduction The 20% QBI deduction is now permanent for pass-through entities, including sole proprietorships, LLCs, S-corps, and partnerships. If your business generates $100,000 in net income, you may be eligible to deduct $20,000 directly from taxable income. Businesses with at least $1,000 in qualified business income may also qualify for a new $400 minimum deduction. 100% Bonus Depreciation Is Back Businesses that purchased equipment, machinery, or other qualifying property may deduct the full cost in the year of purchase rather than depreciating it over several years. This can significantly reduce your current-year tax liability if you invested in your Prattville, AL, operation. SALT Deduction Cap Expanded The federal cap on state and local tax (SALT) deductions increased to $40,400. Business owners who pay significant Autauga County property taxes or the city's combined 9.5% sales tax rate may benefit from tracking these amounts carefully. New Vehicle Loan Interest Deduction Qualifying taxpayers may deduct up to $10,000 in annual loan interest on new vehicles assembled in the United States. Income phase-out thresholds apply, so bring your vehicle purchase and financing documents to review eligibility. Prattville, AL's Local Tax Preparation Layer Prattville, AL, business owners operate under a layered tax structure. The city self-administers its sales tax and requires separate filing through the City of Prattville's One Spot system in addition to state filings with the Alabama Department of Revenue. If your operations cross into Elmore County, your sales tax obligations may differ by zone. A CPA familiar with Alabama's filing requirements can help you stay compliant and avoid penalties. Why a Local CPA May Outperform a National Chain Tax planning for business owners involves far more than plugging numbers into software. National chain preparers typically handle high volumes of straightforward individual returns. For a business with employees, contractor relationships, multi-county sales tax obligations, QBI calculations, and depreciation schedules, a CPA firm with deep knowledge of Alabama tax law is better suited to the job. A local CPA can review your entity structure under permanent QBI rules, evaluate pass-through entity tax (PTET) elections that reduce your federal SALT burden, and proactively identify deductions you may not know you qualify for. Because they work with Alabama businesses year-round, they understand how state and federal rules interact when Alabama conforms selectively to federal changes. What Documents Should I Bring to My First CPA Appointment? Bring your prior-year return, EIN confirmation, profit and loss statement, all 1099s received and issued, bank statements, payroll records, and receipts for major purchases or vehicle expenses. Organized records make tax preparation more efficient and help your CPA complete your return accurately the first time. When Is the Business Tax Filing Deadline in Alabama? S-corp and partnership returns are due March 15. Sole proprietors filing Schedule C have until April 15. Extensions are available but do not extend the time to pay taxes owed. Ready to File? Work With a CPA Serving Prattville, AL, Businesses Pulling together the right documents and understanding the deduction landscape puts you in the best possible position heading into filing season. Leadingham Rodgers, LLC , serves business owners with personalized tax preparation and year-round accounting support. Visit the tax services page or contact us online to schedule a consultation. You can also call (334) 270-3366 to speak with a member of the team directly.

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