The Earned Income Tax Credit–best known as EITC–is a tax credit that reduces the amount of federal income tax owed as is refundable if the tax filer’s credit is larger than their tax liability. Created by Congress in 1975, the federal Earned Income Tax Credit, or EITC, provides a lump-sum cash refund to low-wage working individuals and families.
EITC is credited with bringing more children out of poverty each year than any other federal program.
The amount of the credit changes every year and is based on earnings, the number of qualifying children, and marital status. A qualifying child is determined by age, the relationship to the filer, how long the filer and child have lived together in the US, and whether the child has filed a joint return. Those without a qualifying child must be 25-65 years old at the end of the year, live in the United States for more than half the year, and cannot qualify as a dependent of another person. For a complete list of requirements, see IRS Publication 596. The Earned Income Tax Credit (EITC) is for working people who earn less than $57,414. EITC provides a boost to help pay your bills or save for a rainy day. This year, the amount of credit you could receive is up to $6,728.