(En Español)

1. What is the Wisconsin earned income credit?
   
   
2. Do I qualify for the Wisconsin earned income credit?
   
   
3. How is the Wisconsin earned income credit figured?
   
   
4. Where can I find more information about the federal earned income credit?
   
   
5. If I report income adjustments on Wisconsin Schedule I, does that affect my federal earned income credit for Wisconsin purposes?
   
   

1. What is the Wisconsin earned income credit?

   The Wisconsin earned income credit is a special tax benefit for certain working families with at least one qualifying child. The earned income credit is refundable. This means that a qualifying claimant will receive the full benefit of the credit regardless of the net tax computed on their return, including those whose Wisconsin income is not high enough to incur a tax.

2. Do I qualify for the Wisconsin earned income credit?

   To qualify for Wisconsin earned income credit for 2023, you must meet all of the following requirements:

   • Qualify for the federal earned income credit
     
     Exception: For Wisconsin, a married individual filing as married filing separate cannot claim the earned income tax credit. Only a married individual that qualifies to file as head of household under sec. 7703(b), IRC, may claim the credit on a separate return. (See exception below to filing a joint return if married.)
     
     
   • Have at least one qualifying child (the federal definition of a "qualifying child" applies for Wisconsin purposes)
   • Be a full-year Wisconsin resident
     
     NOTE: If you are an Afghan or Ukrainian Parolee receiving benefits available to refugees under sec. 2502(b) of Public Law 117-43 or sec. 401 of Public Law 117-128, you do not have legal refugee status and do not qualify for the Wisconsin earned income tax credit.
     
     
   • File a joint return if you are married
     
     Exception: You may claim the credit on a separate return if all of the following apply:
     
     
     • You paid more than half the cost of keeping up a home for the year
     • Your spouse did not live in that home during the last six months of the year
     • The home was, for more than half of the year, the principal home of your child for whom you are entitled to claim an exemption for federal income tax purposes
       
       
3. How is the Wisconsin earned income credit figured?

   The Wisconsin earned income credit is based on a percentage of the federal credit.

   Number of Qualifying Children	Percentage of Federal Credit for 2023
   0	No credit available
   1	4% of federal credit
   2	11% of federal credit
   3 or more	34% of federal credit

   
   
4. Where can I find more information about the federal earned income credit?

   More information about the federal earned income credit is available from the Internal Revenue Service:

   • Federal Publication 596, Earned Income Credit (EIC)
   • Federal Publication 596SP, Crédito por Ingreso del Trabajo
     
   • Federal Frequently Asked Questions
     
     
5. If I report income adjustments on Wisconsin Schedule I, does that affect my federal earned income credit for Wisconsin purposes?​

   The answer is that it might. While Wisconsin's earned income credit is a percentage of the federal earned income credit, the federal amount used is based on the Internal Revenue Code (IRC) adopted by Wisconsin. This includes the computation of earned income and federal adjusted gross income (AGI) used to determine your federal earned income credit for Wisconsin purposes. If an income adjustment on Schedule I affects your earned income and/or federal AGI, you need to recompute the allowable federal earned income credit based on the amounts under Wisconsin law. This may or may not result in a different federal credit for Wisconsin purposes.

   Example 1: Taxpayer A computed their federal earned income credit on federal Form 1040 based on earned income and a federal AGI of $30,000. Taxpayer A reports a $10,000 adjustment to federal AGI (no earned income impact) on Schedule I for income included in Wisconsin's definition of the IRC. This income increases Taxpayer A's federal AGI to $40,000 with no change to earned income. Taxpayer A must recompute their federal earned income credit for Wisconsin purposes based on the revised federal AGI of $40,000. The revised credit amount is used in computing the Wisconsin earned income credit on Form 1 (line 29 since 2022) or Form 1NPR (line 60 since 2022), as appropriate.

   Example 2: Taxpayer B reports $35,000 of earned income and a federal AGI of $20,000 on their federal Form 1040. Their federal earned income credit on Form 1040 is based on the $35,000 of earned income. Taxpayer B reports a $7,500 adjustment to federal AGI (no earned income impact) on Schedule I for income included in Wisconsin's definition of the IRC. This income increases Taxpayer B's federal AGI to $27,500 with no change to earned income. While Taxpayer B should double check their federal earned income credit for Wisconsin purposes, no change will occur in this instance because the credit for both federal and Wisconsin purposes is based on the $35,000 of earned income.

Applicable Laws and Rules

This document provides statements or interpretations of the following laws and regulations enacted as of April 4, 2024: sec. 71.07, Wis. Stats., and sec. Tax 2.07, Wis. Adm. Code.

Laws enacted and in effect after this date, new administrative rules, and court decisions may change the interpretations in this document. Guidance issued prior to this date, that is contrary to the information in this document is superseded by this document, according to sec. 73.16(2)(a), Wis. Stats.

The department welcomes your input on our guidance. Submit comments on this guidance document.

Guidance Document Number: 100139

April 4, 2024