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 threshold
The Earned Income Tax Credit (EITC) is a refundable tax credit, which means the IRS can send you money even if you owe no taxes at all. You receive it by filing a tax return, and the amount depends on how much you earned, whether you have children, and your filing status. The credit phases in as your earnings rise, reaches a maximum, then phases out at higher incomes — so there is a specific income range where you benefit most.
Unlike a tax deduction, which reduces the income the government counts, a credit directly reduces what you owe or increases what you get back. Because the EITC is refundable, if the credit is larger than your tax bill, the IRS sends you the difference. For many low-wage workers, this is the largest payment they receive all year.
You do not receive the credit automatically. You must file a federal tax return to claim it, even if no one is required to file on your behalf. The IRS does not contact you to tell you that you may be may have access to to it.
Key Takeaways
- The EITC is a refundable credit that can result in a payment from the IRS if you work and earn below the income limit for your household size and filing status.
- The credit amount changes based on your earnings, with a maximum benefit that varies by whether you have children and how many.
- You must file a federal tax return to claim the EITC; the IRS will not contact you or send it automatically.
- The income limits and maximum credit amounts change each year, so you should check the current year's rules before filing.
How much money you can receive depends on your income and family structure
The EITC has four separate benefit levels based on whether you have children and how many. For the 2023 tax year, the maximum credits were: $600 with no children, $3,733 with one child, $6,052 with two children, and $6,935 with three or more children. These amounts change annually, and the income limits that determine whether you may have access to also shift each year.
Your credit begins to reduce once you earn above a certain threshold. For example, in 2023, if you filed as single with no children, the credit started to phase out at $17,320 in earned income. If you had one child, it phased out at $46,560. The exact numbers for your situation depend on your filing status (single, married filing jointly, head of household) and the current tax year.
Earned income means wages, salaries, tips, and net self-employment income. It does not include investment income, unemployment benefits, Social Security, or child support. If your only income is from sources other than work, you cannot claim the EITC.
The income thresholds and credit amounts change every year
The IRS adjusts EITC income limits and maximum credit amounts annually for inflation. This means the ranges that may have access to you shift slightly upward most years, but the structure stays the same. You need to use the numbers for the specific tax year you are filing, not the previous year or a general estimate.
The IRS publishes updated EITC tables and income limits on its website each January. Tax software and tax preparation services update automatically, but if you are filing by hand or using an older resource, you must look up the current year's figures. Using last year's numbers could cause you to claim the wrong amount or miss out entirely if your income has changed.
You must file a tax return to receive the credit, even if you would not otherwise owe taxes
The EITC is not a benefit you receive through a separate application or government program. You claim it by filing IRS Form 1040 (the main federal income tax return) and including Schedule EIC if you have may have access to children. If you do not file a return, you do not receive the credit, and you cannot receive it retroactively in a later year.
If your income is very low, you may not be required to file a tax return under normal rules. However, if you think you might be may have access to to the EITC, you should file anyway because the credit can result in a refund larger than any taxes you owe. Many people with low incomes file specifically to claim the EITC and receive a payment.
You can file on your own using tax software, work with a tax preparer, or use free tax preparation services. The IRS offers free filing through its Free File program for people below a certain income threshold, and many nonprofits and community organizations offer free tax help during filing season.
may have access to children must meet specific requirements
If you claim the EITC with children, each child must meet four tests: relationship (your child, stepchild, foster child, sibling, or descendant of any of these), age (under 17 at the end of the tax year), citizenship (U.S. citizen, national, or resident alien), and residency (lived with you for more than half the year). The child must also have a valid Social Security number.
A child can only be claimed by one person for the EITC in a given year. If two parents are separated or divorced, only one can claim the child. If you and another adult both live with the child and both work, you must decide who will claim the credit. The IRS has tiebreaker rules if both people claim the same child, and it will disallow one claim.
Your filing status affects the income limits and maximum credit
The EITC rules differ by filing status. Single filers, married couples filing jointly, and heads of household all have different income thresholds and maximum credit amounts. Married couples filing jointly generally have higher income limits than single filers, which means they can earn more and still receive the full credit.
If you are married, you must file jointly to claim the EITC. If you file married filing separately, you cannot claim the credit at all. This is one of the few tax situations where your filing status directly determines whether you can receive a benefit.
The EITC exists at both federal and state levels in some places
The federal EITC is available to all workers who meet the income and work requirements, regardless of where they live. However, some states and the District of Columbia also offer their own earned income tax credits that work similarly to the federal version. These state credits are separate from the federal credit and are claimed on your state tax return.
State EITC amounts vary widely. Some states offer a credit equal to a percentage of the federal EITC (for example, 20 percent of the federal amount), while others have their own formulas. A few states do not offer an EITC at all. If you live in a state with an EITC, you can claim both the federal and state credits in the same year.
Frequently Asked Questions
What counts as earned income for the EITC?
Earned income includes wages, salaries, tips, and net self-employment income from work. It does not include investment income, interest, dividends, rental income, unemployment benefits, Social Security, pensions, or child support. You must have earned income to claim the EITC.
Can I claim the EITC if I am self-employed?
Yes. Self-employed people can claim the EITC based on their net self-employment income (income minus business expenses). You must file Schedule C with your tax return to report your business income, and the IRS will use that figure to determine your EITC amount.
What happens if I claim the EITC and the IRS says I made a mistake?
The IRS may audit your EITC claim if it suspects an error, particularly around may have access to children or income reporting. If the IRS finds a mistake, it will reduce or eliminate your credit and may ask you to repay money. You have the right to respond to any IRS notice and provide documentation to support your claim.
Can I receive the EITC if I am not a U.S. citizen?
You must have a valid Social Security number to claim the EITC. Resident aliens can claim it, but undocumented immigrants cannot. If you have an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number, you are not able to claim the credit.
Do I lose other benefits if I receive the EITC?
The EITC does not count as income for most means-tested programs like SNAP, Medicaid, or housing assistance. However, some programs may count it differently, so you should check with the specific program you receive. The EITC is treated as a tax refund, not ongoing income.