Earned Income Tax Credit (EITC)

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What is Earned Income Tax Credit?

Earned Income Tax Credit (EITC) is a refundable tax credit awarded to workers and families with low-to-medium income. If the EITC surpasses the amount of taxes you owe, you can get a tax refund, provided you qualify for the credit.

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Key Takeaways

  • You must meet several qualifying criteria to apply for EITC (outlined in this article)
  • The maximum credit amount increases with the number of qualifying children and/or dependents
  • You can file and claim an EITC tax refund for the three prior tax years

How Does Earned Income Tax Credit Work?

The EITC reduces the amount of federal taxes you owe based on your earned income for the tax year, filing status, and family size. The amount of credit may vary depending on whether you have children, are financially supporting a family member, or have a disability.

If you meet the qualifying criteria, you’ll have to file a federal tax return to the IRS (Form 1040) in order to claim your EITC. You can print out Form 1040 from the IRS website or file it electronically using IRS Free File.

Earned Income Tax Credit for Tax Year 2023

Tax returns are always filed for the prior tax year. In addition to meeting the eligibility criteria, you must have paid all federal taxes owed for the prior tax year to apply for the EITC.

Here’s a quick breakdown of the AGI (Adjusted Gross Income), investment income, and credit amounts for the tax year 2023:

Number of qualifying children or dependents Filing as Single, Head of Household, or Widowed Filing as Married/Filing Jointly Maximum Credit Amounts
0 $17,640 $24,210 $600
1 $46,560 $53,120 $3,995
2 $52,918 $59,478 $6,604
3+ $56,838 $63,398 $7,430

The investment income limit, regardless of the number of qualifying children or dependents, is capped at $11,000. Keep in mind that this income is separate from your work income.

To see if you qualify for the EITC, learn more about income limits, and read the official guides, visit the official IRS website.

How to Qualify for Earned Income Tax Credit

There are several qualifying criteria for applying for EITC.

The basic qualifying rules include:

  • Having a valid SSN (Social Security Number) by the due date of the current tax year return
  • Being a U.S. citizen for the full tax year or a resident alien for at least 6 months (with a valid SSN)
  • Not filing form 2555, Foreign Earned Income
  • Having worked and earned less than $63,398
  • Have investment income under $11,000 for the tax year

In addition to these basic qualifying rules, there are special qualifying rules for:

Furthermore, you must meet one of the following qualifying statuses to apply:

  • Single
  • Married, filing separately
  • Married, filing jointly
  • Head of household
  • Qualifying surviving spouse (widowed)

How to Claim Earned Income Tax Credit

If you’ve determined that you meet the qualifying criteria, you may apply for your Earned Income Tax Credit by filing Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors.

Both forms are available on the IRS website, and you’ll have the option to either print and mail them to the IRS or file them electronically, using the instructions on the website (by following the links above).

Additionally, if you have a qualifying child, you will also be required to fill out and submit the Schedule EIC (Form 1040 or 1040-SR), Earned Income Credit, to provide basic information about the child/children.

Note: You have three years to file and claim a refund, starting from the due date of your tax returns. In other words, you can claim EITC for the past three tax years. Keep in mind that the AGI and max credit amounts may vary year-by-year.

If you need help filing your tax returns, you may get free assistance from VITA (Volunteer Income Tax Assistance) centers. Alternatively, you can always hire a tax professional.

FAQs

What qualifies as earned income?

Who is a qualifying child for EITC?

Who can be claimed as a qualifying relative for EITC?

When can I expect my EITC refund?

What are tax deductions in the U.S. for 2024?

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Aleksandar Stevanovic
Software Reviews Expert
Aleksandar Stevanovic
Software Reviews Expert

Aleksandar Stevanovic spent 10 years honing his craft as a freelance content writer. He has a degree in Economics, and extensive experience in software, crypto, and cybersecurity industries. He covers a multitude of topics, writing factual and informative articles, helping individuals better understand the intricacies of the online world. Over the last two years, his research focus shifted more towards tech and software content, as evidenced by his publications on CEX.IO, Business2Community, and Techopedia. He believes in simplifying complex topics and bringing them closer to like-minded individuals. His work is as detail-oriented as it is creative, and is designed to…