Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC), sometimes called the Earned Income
Credit (EIC), is a refundable federal income tax credit for low-income working individuals and families. Congress originally
approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive
to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the
credit. The maximum credit is $6,242 (with three or more qualifying children).
To qualify, taxpayers must
meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.
has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid,
Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF)
Taxpayers must file individually, married filing jointly, or head of household to qualify (not married filing separately).
The credit is phased out at income levels of:
- $47,955 ($53,505 married filing jointly) with three or more qualifying children
- $44,684 ($50,198 married filing jointly) with two qualifying children
($44,846 married filing jointly) with one qualifying child
- $14,880 ($20,430
married filing jointly) with no qualifying children