What the Earned Income Tax Credit Is
The Earned Income Tax Credit (EITC) is a federal tax credit for people who work but earn low to moderate income. Unlike a deduction, which reduces the income you report, a credit reduces the tax you owe dollar-for-dollar. If your credit is larger than the tax you owe, the IRS sends you the difference as a refund—even if you owe zero tax.
The EITC is designed to put money back in the pockets of working people. You don't have to be poor to claim it, and you don't have to itemize deductions. You claim it when you file your tax return, and the IRS processes it like any other part of your return.
Key Takeaways
- The EITC is a refundable tax credit, meaning you can receive money back from the IRS even if you owe no tax.
- Your income, filing status, and number of may have access to children determine how much credit you may receive.
- You claim the EITC by filing a tax return with the IRS, using Form 1040 and Schedule EIC.
- The IRS has a free tool on its website to see whether you may be may be able to access and estimate your credit amount.
- Some states offer their own earned income tax credits on top of the federal credit.
Income Limits and Credit Amounts Vary by Family Size
The amount of EITC you can receive depends on your earned income, filing status, and whether you have may have access to children. The IRS sets income limits each year, and they change slightly to account for inflation. For the 2023 tax year, the maximum credit ranged from about $600 for workers without children to over $3,900 for families with three or more may have access to children.
Income limits also vary. A single filer with no children might have a limit around $16,000 in earned income, while a married couple filing jointly with three children could have a limit near $63,000. These numbers shift annually. The IRS publishes updated limits on its website each January, and tax software automatically uses the correct year's figures when you file.
The credit phases in as your income rises—you earn more credit as you earn more income, up to a maximum. Then it phases out as income climbs further. This structure means the credit is largest for people earning roughly $15,000 to $40,000 per year, depending on family size.
Who Can Claim the EITC
To claim the EITC, you must have earned income from work—wages, salary, self-employment income, or similar sources. You cannot claim it on investment income, unemployment benefits, or Social Security. You must also be a U.S. citizen or resident alien, have a valid Social Security number, and file a tax return.
If you have no children, you must be between 25 and 64 years old to claim the credit. If you have may have access to children, there is no age limit. A may have access to child must be your biological child, stepchild, foster child, sibling, or descendant of any of these, and must live with you for more than half the year. The child must also have a valid Social Security number and be a U.S. citizen, national, or resident alien.
Your filing status matters too. You can claim the EITC if you file as single, married filing jointly, or head of household. You cannot claim it if you file as married filing separately.
How to Claim the EITC on Your Tax Return
You claim the EITC by filing a federal tax return with the IRS. Most people use Form 1040 (the main individual income tax form) and Schedule EIC, which lists information about your may have access to children. If you use tax software, it walks you through questions about your income and family, then fills in the forms for you.
You do not need to send proof of your children's relationship to you or their residency when you file. However, you must keep records—birth certificates, school enrollment documents, lease agreements, utility bills—in case the IRS asks to verify your claim later. The IRS randomly audits some EITC claims, and having documentation ready protects you.
If you earned very little or no income in a year, you may still file a return to claim the EITC. Many people do this specifically to receive the credit as a refund. Filing costs nothing if you use free IRS software or a free tax preparation service.
The IRS Tool to Check Your Potential Credit
The IRS offers a free interactive tool called the EITC Assistant on its website (irs.gov). You answer a series of yes-or-no questions about your income, filing status, and children. The tool tells you whether you may be may be able to access and gives you an estimate of your credit amount. It takes about five minutes and requires no personal information beyond what you would put on a tax return.
This tool is useful if you are unsure whether you may have access to or want a rough idea of what to expect. It does not file anything for you or lock in a number—it is purely informational. Your actual credit depends on your final income and family situation when you file.
State Earned Income Tax Credits
Many states offer their own earned income tax credits on top of the federal credit. These state credits work similarly: they reduce your state income tax or result in a state refund. Some states' credits are worth hundreds of dollars per year.
Not all states have them. States like Texas, Florida, and Wyoming have no state income tax and therefore no state EITC. Other states, such as California, Illinois, and New York, do offer them. If you live in a state with an EITC, you claim it on your state tax return using a separate form or schedule. Tax software automatically includes your state's forms if you live in a state that offers the credit.
Common Mistakes That Delay or Reduce Your Credit
The most common error is claiming a child who does not meet the relationship or residency test. The IRS verifies Social Security numbers and sometimes cross-checks with state records. If a child does not may have access to, your credit is reduced or denied, and you may owe back taxes plus interest.
Another mistake is misreporting income. Self-employed people sometimes understate earnings to lower their tax bill, but this also lowers their EITC. The IRS matches income reported on your return to income reported by employers and banks, so discrepancies trigger audits.
Filing late or missing the important date can cost you the credit for that year. The EITC is claimed on your annual tax return, and you have three years from the original due date to file and claim it. After that, the credit expires for that tax year.
Frequently Asked Questions
Do I have to have a job to claim the EITC?
Yes, you must have earned income from work. This includes wages, salary, tips, and self-employment income. Unemployment benefits, disability payments, and investment income do not count as earned income and do not may have access to you for the credit.
What if I have a child from a previous relationship?
The child can be your biological child, stepchild, foster child, or a descendant of any of these. The child does not have to share your last name. What matters is that the child lived with you for more than half the year and meets the age and citizenship requirements. You do not need custody papers or a court order.
Can I claim the EITC if I am self-employed?
Yes. Self-employment income counts as earned income. You report it on Schedule C (Profit or Loss from Business) and then claim the EITC based on your net self-employment income. You must file a tax return to claim it, even if your income is very low.
What happens if the IRS audits my EITC claim?
The IRS will ask you to provide proof of your children's relationship and residency, your income, and your filing status. Keep birth certificates, school records, lease agreements, and pay stubs. If you cannot prove your claim, the IRS will reduce or deny your credit and may ask you to repay what you received.
Can I claim the EITC if I am not a U.S. citizen?
You must be a U.S. citizen, national, or resident alien to claim the EITC. You also need a valid Social Security number. If you have an Individual Taxpayer Identification Number (ITIN) instead, you do not may have access to for the federal EITC, though some states offer credits to ITIN holders.