The Earned Income Tax Credit is money the federal government returns to you at tax time if you work and earn below a certain income level
The Earned Income Tax Credit (EITC) is a refund you may receive when you file your federal income tax return. Unlike most tax credits that straightforward reduce what you owe, the EITC can give you money back even if you paid nothing in taxes during the year. The amount depends on how much you earned, whether you have children, and your filing status.
You do not need to do anything special to receive it beyond filing your tax return. The IRS calculates whether you may have access to based on the income and family information you report. If you are may be able to access, the credit appears as part of your refund.
Key Takeaways
- The EITC is a federal tax credit for working people with low to moderate income, and it can result in a refund even if you owe no taxes.
- The amount you receive depends on your earned income, filing status, and the number of may have access to children in your household.
- You must have earned income from work to receive the EITC — income from unemployment, disability, or investments does not count.
- Filing your tax return is how you receive the credit; you do not need to submit a separate request to the IRS.
- Income limits change each year, so your may be able to access may shift from one tax year to the next.
Who can receive the Earned Income Tax Credit
To receive the EITC, you must have earned income from work during the tax year. This includes wages from a job, net income from self-employment, or tips you reported to your employer. Income from unemployment benefits, Social Security, disability payments, or investment earnings does not count toward the EITC.
Your total income must fall below a limit set by the IRS. These limits change each year and differ based on your filing status and the number of children you claim. For example, a single person with no children has a lower income limit than a married couple filing jointly with two children. The IRS publishes the current year's limits on its website each tax season.
You must also be a U.S. citizen or resident alien, have a valid Social Security number, and file a federal income tax return. If you are married, you generally must file jointly to receive the credit, though there are limited exceptions.
How the credit amount is calculated
The IRS uses a formula based on your earned income and filing status. The credit increases as your income rises, reaches a maximum amount, and then decreases as income climbs further. The exact dollar amounts change yearly.
Having children significantly increases the credit. A worker with no children receives a smaller credit than a worker with the same income but one or more may have access to children. A may have access to child must be under age 17 at the end of the tax year, related to you, and live with you for more than half the year.
You do not calculate this yourself. When you file your return, you report your income and family information, and the IRS determines your credit amount. If you use tax software or a tax preparer, they handle the calculation.
The difference between the EITC and other tax credits
Most tax credits reduce the amount of tax you owe. If you owe $500 in taxes and have a $300 credit, you pay $200. The EITC works differently: it is a refundable credit, meaning you can receive money back even if you owe nothing.
For example, if you earned $15,000 and paid $800 in federal income tax withholding, but your EITC is $2,000, you would receive a refund of $1,200 ($2,000 credit minus $800 you already paid). This makes the EITC one of the largest sources of federal refunds for low-income workers.
Income limits and phase-out ranges
The IRS sets income limits that determine whether you can receive the EITC. If your income exceeds the limit for your situation, you do not receive the credit. These limits are higher for people with children than for those without.
Within the may be able to access income range, the credit amount changes. It grows as you earn more income up to a peak amount, then shrinks as income continues to rise. This shrinking range is called the phase-out. The phase-out exists so the credit gradually disappears rather than stopping abruptly at a single income level.
Because limits and phase-out ranges shift each year, your may be able to access can change from one tax year to the next even if your circumstances stay the same. A raise that pushes you above the limit, or a drop in income that brings you back into range, both affect whether you receive the credit.
How to receive the Earned Income Tax Credit when you file
You receive the EITC by filing a federal income tax return, even if you would not normally be required to file. If you use tax software, the program asks questions about your income and family situation and calculates your credit automatically. If you use a tax preparer, they include the EITC calculation in their work.
If you file by paper, you complete Schedule EIC (Earned Income Credit) and attach it to your Form 1040. The IRS instructions for these forms walk through the steps. You can also call the IRS at 1-800-829-1040 if you have questions about whether you may have access to.
File your return as soon as you have all the documents you need — your W-2 forms from employers, or records of self-employment income. The sooner you file, the sooner you receive your refund, which may be deposited directly to your bank account or sent by check.
What happens if your income changes during the year
The EITC is based on your total earned income for the entire tax year. If you earned $20,000 in the first half of the year and then lost your job, your annual income is still $20,000 for EITC purposes. You report the actual amount you earned when you file your return.
Some workers can receive part of the EITC in their paychecks throughout the year rather than waiting until tax time. This is called the Advanced EITC. You must ask your employer to set this up by filing Form W-5 with them. Not all employers offer this option, and it requires you to estimate your annual income in advance.
Frequently Asked Questions
Do I have to file a tax return to get the EITC?
Yes, you must file a federal income tax return to receive the credit. Even if your income is low enough that you would not normally be required to file, you should file to claim the EITC. Filing is how the IRS knows you are may be able to access and processes your refund.
Can I receive the EITC if I am self-employed?
Yes, if you have net self-employment income below the income limit. You report your self-employment income on Schedule C and your net profit counts as earned income for the EITC. You must also pay self-employment tax, which is separate from the income tax credit.
What if I have a child who does not have a Social Security number?
Your child must have a valid Social Security number to be claimed as a may have access to child for the EITC. If your child does not have one, you cannot include them when calculating your credit amount. You can still file your return and claim the credit based on your own income and any other may have access to children.
Can I claim the EITC if I am married but file separately?
Generally, no. Married couples must file jointly to receive the EITC. There are rare exceptions for people who are victims of domestic abuse, but these require special circumstances. In most cases, filing separately disqualifies you from the credit.
What if the IRS says I received too much EITC?
The IRS may audit your return and determine you were not actually may be able to access or received more than you should have. If this happens, you may owe back some or all of the credit. The IRS will send you a notice explaining what they found and how much you owe. You have the right to respond and provide additional information if you disagree.