The Earned Income Tax Credit is for people who work and earn below certain income limits

The Earned Income Tax Credit (EITC) is a federal tax credit for people who work but earn a modest income. You do not need to owe taxes to claim it — the credit can result in a refund even if you paid nothing in. The IRS administers it, and you claim it on your federal tax return using Form 1040 and Schedule EIC (or Schedule 8812 if you have may have access to children).

The credit is designed to reduce the tax burden on working people and families. The amount you receive depends on your income, filing status, and whether you have may have access to children. Income limits change each year, and they are higher if you have children than if you do not.

Key Takeaways

  • You must have earned income from work — self-employment, wages, or farm income all count, but investment income does not.
  • Your income must fall below the annual limit set by the IRS, which varies by filing status and number of may have access to children.
  • You must be a U.S. citizen or resident alien with a valid Social Security number.
  • If you have no children, you must be between 25 and 64 years old to claim the credit.
  • Married couples filing jointly can claim the credit if both spouses meet the income and work requirements.

Income limits for the EITC in 2024

The IRS sets income thresholds that determine whether you can claim the credit. These limits are higher if you file as head of household or married filing jointly than if you file as single. The limits also increase if you have one, two, or three or more may have access to children.

For 2024, the income limits range from roughly $16,000 for a single filer with no children to over $63,000 for a married couple filing jointly with three or more children. The exact figures depend on your filing status. You can find the current year's limits on the IRS website under "EITC Income Limits" or in the instructions to Form 1040.

If your income is at or below the limit for your situation, you may be able to claim the credit. If your income exceeds the limit, you cannot claim it that year, even if you have may have access to children.

What counts as earned income

Earned income means money you received from working. Wages, salaries, tips, and net self-employment income all count. If you are self-employed, your net profit from your business counts as earned income. Farm income also counts if you operated the farm yourself.

Income that does not count includes interest, dividends, capital gains, rental income, Social Security benefits, unemployment benefits, or workers' compensation. If your income comes entirely from investments or benefits, you cannot claim the EITC, even if your total income is low.

Age and citizenship requirements

If you have no may have access to children, you must be at least 25 years old and under 65 at the end of the tax year to claim the credit. If you are younger than 25 or 65 or older, you do not meet this requirement unless you have a may have access to child.

You must be a U.S. citizen or resident alien for the entire tax year. You will need a valid Social Security number to claim the credit. If you are married filing jointly, both spouses must have valid Social Security numbers.

may have access to children and the credit amount

If you have children, the credit amount is larger, and the income limits are higher. A may have access to child must be your son, daughter, stepchild, foster child, or sibling (or a descendant of any of these). The child must be under 17 at the end of the tax year, live with you for more than half the year, and be a U.S. citizen, national, or resident alien.

The credit increases with each may have access to child you have. One child results in a larger credit than no children; two children result in a larger credit than one; and three or more children result in the largest credit. The IRS uses the number of may have access to children to determine both your income limit and your credit amount.

How to claim the EITC on your tax return

You claim the EITC by filing a federal tax return, even if you do not owe taxes. You will use Form 1040 (the main individual income tax form) and either Schedule EIC or Schedule 8812, depending on whether you have may have access to children and their ages. The IRS instructions for Form 1040 explain which schedule to use.

If you file electronically, tax software will walk you through the questions needed to determine whether you can claim the credit and calculate the amount. If you file by paper, you will fill out the schedules by hand. Many people use free tax preparation services through the IRS Free File program or community organizations if they cannot afford to pay for help.

You can also request an Advance EITC from your employer during the year, which means your employer gives you part of the credit in your paycheck rather than waiting until you file your return. This is less common now, but it remains an option if you want the money sooner.

Special rules for married couples and separated spouses

Married couples filing jointly can claim the EITC if both spouses meet the income and work requirements. If you are married but file separately, you cannot claim the credit. If you are divorced or legally separated, you file as single (or head of household if you have a may have access to child), and the rules for single filers explore.

If you are married and your spouse has no earned income, you can still claim the credit based on your income alone, as long as you file jointly and meet all other requirements. Your spouse does not need to have worked for you to claim the credit.

Frequently Asked Questions

Can I claim the EITC if I am self-employed?

Yes. Your net self-employment income counts as earned income. You will report it on Schedule C (Profit or Loss from Business) and then use that figure to determine your EITC. You must still meet the income limits and other requirements.

What if my income is right at the limit?

If your income is at or below the limit for your filing status and number of children, you can claim the credit. The IRS uses your adjusted gross income (AGI) to determine this, which you will find on your tax return. If you are unsure whether you are under the limit, you can file a return and let the IRS determine it.

Do I lose the credit if I earn a little more money?

The credit does not disappear all at once. As your income rises above a certain point, the credit amount decreases gradually. This means earning a bit more may reduce the credit, but it will not eliminate it entirely unless your income exceeds the full limit for your situation.

Can I claim the EITC if I have a foster child?

Yes, if the foster child meets the other requirements — living with you for more than half the year, being under 17 at the end of the tax year, and being a U.S. citizen, national, or resident alien. You will need documentation showing the child's relationship to you and their residency.

What if I made a mistake on my EITC claim last year?

You can file an amended return using Form 1040-X to correct an error. If the IRS sent you a notice about your EITC, follow the instructions in the notice. You may also contact the IRS directly or seek help from a tax professional or free tax preparation service.