What an Earned Income Tax Credit Is

An Earned Income Tax Credit (EITC) is a refundable tax credit for people who work but earn below certain income limits. Unlike a tax deduction, which reduces the income you report, a tax credit reduces the tax you owe dollar-for-dollar. If the credit is larger than the tax you owe, the IRS sends you the difference as a refund — that is what "refundable" means.

The EITC exists in two forms: a federal version administered by the IRS, and state versions run by individual state tax agencies. The federal credit is available to anyone who meets the income and work requirements, regardless of where they live. Some states offer their own EITC on top of the federal one, while others do not.

The amount you receive depends on your income, filing status, and how many may have access to children you claim. The credit is designed to offset payroll taxes and provide additional money to working households with modest earnings.

Key Takeaways

  • The EITC is a refundable tax credit that reduces your tax bill and can result in a refund if the credit exceeds what you owe.
  • You must have earned income from work — self-employment, wages, or tips — to claim the federal EITC.
  • Income limits vary by filing status and number of may have access to children; the IRS publishes current limits each tax year.
  • Some states offer their own EITC in addition to the federal credit, and the amount varies by state.
  • You claim the EITC on your federal tax return using IRS Form 1040 and Schedule EIC, or through tax software.

Income Limits and Credit Amounts

The federal EITC has different income thresholds depending on your filing status and the number of may have access to children you claim. For the 2023 tax year, the maximum credit ranged from $560 for workers with no may have access to children to $3,995 for those with three or more may have access to children. These amounts change each year because the IRS adjusts them for inflation.

Income limits also shift annually. For example, in 2023, a single filer with no children could earn up to $16,810 and still claim the credit, while a married couple filing jointly with three or more children could earn up to $56,838. The IRS publishes updated limits in January of each tax year on its website and in the instructions to Form 1040.

The credit phases out as your income rises. This means the amount you receive decreases gradually once you exceed a certain income threshold. Once your income reaches the maximum limit for your situation, you no longer may have access to for any credit.

Who Can Claim the EITC

To claim the federal EITC, you must have earned income from work. This includes wages from an employer, net self-employment income, or tips. Income from investments, unemployment benefits, or disability payments does not count as earned income for EITC purposes.

You must also meet age and residency rules. 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, and you must have lived in the United States for more than half the year. If you claim may have access to children, the age and residency rules are different — the children must meet specific requirements, which the IRS outlines in Publication 596.

Your filing status matters. Single, married filing jointly, and head of household filers can all claim the EITC. Married couples filing separately cannot. You also cannot claim the credit if your investment income exceeds a certain amount — for 2023, that limit was $10,300.

may have access to Children and Dependents

If you claim may have access to children on your return, your EITC amount increases significantly. A may have access to child must be your son, daughter, stepchild, foster child, brother, sister, or a descendant of any of these. The child must live with you for more than half the tax year, be under age 17 at the end of the year, and have a valid Social Security number.

The child must also be a U.S. citizen, national, or resident alien. If you claim more than one may have access to child, you can receive a larger credit. The IRS requires you to list each child's name, date of birth, and Social Security number on Schedule EIC when you file.

You do not need to claim a child as a dependent on your tax return to claim them for the EITC, though most people do both. If another person — such as a grandparent or other relative — claims the child as a dependent, you cannot claim the EITC for that child.

How to Claim the EITC on Your Tax Return

To claim the federal EITC, you file Form 1040 (the main individual income tax form) along with Schedule EIC. Schedule EIC is a one-page form where you list information about any may have access to children. You can file by mail or electronically through tax software or a tax preparer.

If you file electronically, most tax software will ask you questions about your income and family situation and automatically calculate whether you may have access to and how much the credit is worth. If you file by mail, you must complete Schedule EIC by hand and attach it to your Form 1040.

The IRS also offers free tax preparation services through the Volunteer Income Tax information (VITA) program, which operates at libraries, community centers, and nonprofits across the country. VITA sites can help you file your return and claim the EITC at no cost if your income is below a certain threshold — typically around $60,000 for most filers.

State Earned Income Tax Credits

Many states offer their own EITC in addition to the federal credit. State credits work similarly to the federal version but have their own income limits and credit amounts. Some states offer a credit equal to a percentage of the federal EITC — for example, 20% or 30% of what you receive federally. Others set their own credit amounts.

As of 2024, more than 30 states and the District of Columbia offer some form of EITC. However, the rules, income limits, and credit amounts vary significantly by state. A few states do not offer an EITC at all. You claim the state credit on your state tax return, using a form or schedule specific to your state.

To find out whether your state offers an EITC and what the current rules are, visit your state's tax agency website or contact them directly. The Tax Foundation and the Center on Budget and Policy Priorities both maintain databases of state EITC programs with current information.

What Happens After You Claim the Credit

When you file your tax return with the EITC claimed, the IRS processes your return like any other. If you owe federal income tax, the credit reduces what you owe. If the credit is larger than your tax liability, the IRS issues you a refund for the difference.

The IRS typically issues refunds within 21 days of accepting your return if you file electronically and choose direct deposit. If you file by mail, it may take longer. You can track the status of your refund using the IRS "Where's My Refund?" tool on the IRS website.

If the IRS questions your EITC claim, they will send you a notice by mail. This can happen if your income, filing status, or number of dependents does not match IRS records, or if there is a discrepancy in your Social Security number or the child's information. If you receive a notice, respond within the timeframe given and provide any documents the IRS requests.

Frequently Asked Questions

Can I claim the EITC if I did not owe any federal income tax?

Yes. Because the EITC is refundable, you can receive a refund even if you owed no tax. This is one of the key features of the credit — it can put money in your pocket beyond just reducing what you owe.

What if I have self-employment income instead of wages?

Self-employment income counts as earned income for EITC purposes. You must report it on Schedule C (Profit or Loss from Business) and include your net self-employment income when calculating whether you meet the income limits. You will also owe self-employment tax on that income.

Can I claim the EITC if I am a dependent on someone else's return?

No. If another person claims you as a dependent — such as a parent or guardian — you cannot claim the EITC yourself. You must file your own return as an independent to claim the credit.

Do I need to file a tax return to get the EITC if I did not earn enough to owe taxes?

Yes. You must file a federal tax return to claim the EITC, even if your income is below the filing threshold. Filing is how you tell the IRS about your income and request the credit.

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

You can file an amended return using Form 1040-X for any of the past three years. If you claimed the credit incorrectly and owe money back, the IRS will bill you. If you did not claim it when you should have, you can file the amended return to receive the credit you missed.