Tax Credits and Tools

Tax credits can help you save money and build assets. A few important credits include:

  • The Child Tax Credit (CTC)
  • The Credit for the Elderly or Disabled
  • The New Jersey Property Tax Credits/Exemptions (for seniors, people with disabilities, or veterans), and
  • The federal and state Earned Income Tax Credits (EITCs).

To get any of these tax credits, you must file your taxes!

Get free help filing your taxes

If you have limited income, don't pay someone to do your taxes. If you made $56,000 or less last year, you can use a Volunteer Income Tax Assistance (VITA) center to file. With VITA, certified volunteers help prepare your taxes and make sure you get any credits you qualify for. Most sites also offer free electronic filing (e-filing). VITA sites are often at community centers, libraries, schools, shopping malls, and other convenient locations. Find a local VITA center or call 1-800-906-9887.

Free tax preparation help is also available through New Jersey Citizen Action and United Way of Northern New Jersey.

If you prefer to file your own taxes online, you can do that for free if you made less than $66,000 last year. Learn more about the IRS Free File program.

Tip: Always keep all your W-2 forms and a record of who you have worked for during the year. Then, file your taxes, even if your income is low enough that you don't have to file — you can only get a tax credit if you file your taxes.

Child Tax Credit (CTC)

The Child Tax Credit (CTC) gives parents with children under age 17 up to a $2,000 tax credit for each child. Eligible families must be working and earning at least $2,500 a year.

Note: If you get Supplemental Security Income (SSI) benefits and get money from a CTC, you should spend it within 12 months. After 12 months, Social Security will count that money toward SSI's resource limit.

Credit for the Elderly or Disabled

If you or your spouse is a U.S. citizen who got taxable disability income and was permanently and totally disabled during this tax year, you may be eligible for the Credit for the Elderly or the Disabled.

New Jersey Property Tax Credits/Exemptions

Seniors, people with disabilities, and qualified war veterans or their unmarried surviving spouses/partners who own their own home get an annual deduction of up to $250 on their property taxes. And qualified US veterans with a permanent and total disability or their unmarried suriving spouses/partners do not have to pay any property taxes on their home. For more details or to download claim forms, contact the New Jersey Department of the Treasury.

Earned Income Tax Credits (EITCs)

If you have low income, Earned Income Tax Credits (EITCs) may help lower your federal and state income taxes. Even if you don’t earn enough money to owe federal and state income taxes, you may be able to get the federal and state EITCs. Many people who qualify for EITCs don’t get them, because they don’t know they could or they don't file their taxes.

To qualify, you must have income from employment, self-employment, or employer-paid disability benefits that is below certain limits and you must file your federal and state taxes.

The amount you get from your EITCs depends on your Adjusted Gross Income (AGI), whether you are married, and the number of children you have. For 2019 (filing taxes by April 2020), the federal EITC ranges from $529 to $6,557.

The New Jersey EITC is 35% of the Federal EITC, or $185 to $2,295. For example, if your federal EITC is $4,000, your New Jersey EITC is $1,400.

Federal EITC Adjusted Gross Income (AGI) Limits and Maximum Credits*

No Children

1 Qualifying Child

2 Qualifying Children

3 or More Qualifying Children

Single

AGI limit: $15,570
Max credit: $529
AGI limit: $41,094
Max credit: $3,526
AGI limit: $46,703
Max credit: $5,828
AGI limit: $50,162
Max credit: $6,557

Married (filing jointly)

AGI limit: $21,370
Max credit: $529
AGI limit: $46,884
Max credit: $3,526
AGI limit: $52,493
Max credit: $5,828
AGI limit: $55,952
Max credit: $6,557
* Figures are for tax year 2019 (filing by April 2020).
Earned Income Tax Credit (EITC) eligibility requirements

General requirements:

  • You must meet adjusted gross income requirements (see table above).
  • You must have earned income from employment, self-employment, or employer-paid disability benefits that you got before retirement.
  • You must have a Social Security number valid for employment.
  • You cannot file your taxes as “married filing separately.” If you are married, you must file a joint tax return.
  • You must be a U.S. citizen or resident alien. If not, you must be married to a U.S. citizen or resident alien and filing a joint tax return.
  • You must live in the U.S. for more than half of the year.

Age requirements:

  • If you are claiming qualifying children, you can be any age.
  • If you’re not claiming a qualifying child, you must be 25 – 64 years of age.

Additional requirements:

  • You cannot claim foreign income or a foreign housing deduction using Form 2555.
  • You cannot have more than $3,600 in investment income (for 2019).
  • You cannot be the dependent of another person.
  • You cannot be the qualifying child of another person.

Qualifying Children

A child must meet some requirements to be considered a “qualifying child” for an EITC:

  • Relationship: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these (for example, your grandchild, niece, or nephew).
  • Residence: The child must live at the same residence as you for more than half the year and have a valid Social Security number.
  • Age: At the end of the tax year, the child must be 18 or younger. Or, if going to school full-time, the child must be 23 or younger. The only exception is if your child is permanently and totally disabled, in which case there is no age requirement.

A qualifying child can only be listed on one tax return for an EITC.

How to Get an EITC

To claim a federal EITC, you must file a federal tax return, IRS Form 1040. If you have a qualifying child, be sure to attach a Schedule EIC.

To calculate the value of your EITC, you can use the Earned Income Credit Worksheet in your 1040 instruction booklet. Or you can ask the IRS to calculate it for you by noting an “EIC” on the Earned Income Credit line on your tax return.

To see whether you qualify for an EITC and how much you might get, use the IRS EITC Assistant.

To claim a state EITC, you must file a state tax return. Learn more about the New Jersey EITC.

EITC, SSI, and SSDI

You must have earned income to qualify for an EITC. Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) do not count as earned income. You can, however, get SSI or SSDI benefits and claim an EITC, as long as you also have earned income.

If you're on SSI, spend any money you get from an EITC within 12 months. Otherwise, that money will count toward SSI's resource limit, unless you save the money in an Individual Development Account (IDA), a Plan to Achieve Self-Support (PASS), or an ABLE account.