The Earned Income Tax Credit reduces what you owe in taxes or increases your refund if you earn below certain income limits
The Earned Income Tax Credit (EITC) is a tax credit for people who work but earn modest incomes. When you file your taxes, the IRS calculates whether you meet the income and work requirements. If you do, the credit either lowers the federal income tax you owe or adds money to your refund. You do not have to owe taxes to receive it — many people get the credit as a refund even though they paid nothing in during the year.
The credit is designed to reward work and reduce the tax burden on lower-income households. The amount you receive depends on your income, filing status, and how many may have access to children you have. A single person with no children receives a smaller credit than a family with two children at the same income level.
Key Takeaways
- The EITC is a refundable credit, meaning you can receive money back even if you owe no taxes.
- Your income must fall below a set limit that changes each year and depends on your filing status and number of children.
- You must have earned income from work — investment income, unemployment, or disability payments do not count.
- You claim the credit on your tax return using Form 1040 and Schedule EIC, or your tax software will calculate it automatically.
Income limits and credit amounts vary by year and family size
The IRS sets new income limits and maximum credit amounts each year based on inflation. For 2023, a single filer with no children could earn up to roughly $16,000 and still receive a small credit. A married couple filing jointly with three or more children could earn up to roughly $56,000. These numbers shift annually, so you need to check the current year's limits when you file.
The credit amount also phases in and out. As your income rises, the credit grows until it reaches a maximum, then it shrinks as you earn more. This means two people at different income levels can receive different credit amounts, even if the difference in their pay is small. The IRS publishes income limits and maximum credit amounts on their website each tax year.
You must have earned income and meet work requirements
To receive the EITC, you must have earned income from a job or self-employment. Income from unemployment benefits, Social Security, disability payments, investment returns, or rental property does not count. If you are self-employed, your net profit from your business counts as earned income.
You also must be a U.S. citizen or resident alien with a valid Social Security number. If you are married filing jointly, both spouses need valid numbers. If you have may have access to children, they must also have Social Security numbers and meet age and relationship requirements.
may have access to children must meet specific age, relationship, and residency rules
A child can help you receive a larger credit, but they must meet four tests: relationship, age, residency, and citizenship. The child must be your son, daughter, stepchild, foster child, sibling, or a descendant of any of these (like a grandchild or niece). They must be under age 17 at the end of the tax year, though there are different rules for older dependents in some cases.
The child must live with you for more than half the tax year in the United States. They cannot file a joint return with a spouse, and they must be a U.S. citizen, national, or resident alien. If multiple people claim the same child, only one person can receive the credit for that child — the IRS will disallow the duplicate claims.
How to claim the credit on your tax return
If you file your taxes yourself on paper, you use Form 1040 (the main individual income tax form) and Schedule EIC to calculate and claim the credit. You enter your income, filing status, and information about any may have access to children. The form walks you through the calculation, though the math can be complex if your income is near a phase-out range.
Most people use tax software or a tax preparer, and both will calculate the EITC automatically if you answer the income and family questions correctly. The software asks about your earned income, filing status, and dependents, then computes whether you may have access to and how much you receive. You do not have to do the math yourself — the software or preparer handles it.
The credit can be claimed on your current-year return or carried back to prior years
You normally claim the EITC on your tax return for the year you earned the income. If you did not claim it in a prior year when you were may have access to to it, you can file an amended return (Form 1040-X) to claim it. The IRS generally allows you to go back three years, so if you missed the credit in 2020, you can still file an amended return for that year in 2023.
Some people also receive an advance payment of the credit during the year instead of waiting until they file taxes. This is less common now, but if you are enrolled in the program, your employer sends you part of the credit with your paychecks. You then reconcile the advance payments against the full credit you are may have access to to when you file your return.
State and local earned income credits may add to your federal credit
Many states and some cities offer their own earned income credits on top of the federal EITC. These work similarly to the federal credit — they reduce your state or local income tax or increase your refund. Some state credits are worth a percentage of the federal credit (for example, 20 percent of what you receive federally), while others have their own income limits and amounts.
You claim state and local credits on your state or local tax return, not on your federal return. If you use tax software, it will usually calculate these automatically if you select your state. If you file by hand, your state tax form will have a schedule or worksheet for the credit. Check your state's tax agency website to see whether your state offers an earned income credit.
Frequently Asked Questions
Can I receive the EITC if I am self-employed?
Yes. Your net profit from self-employment counts as earned income. You report it on Schedule C (Profit or Loss from Business) and then claim the EITC based on that income. You still must meet the income limits and other requirements, and you must pay self-employment tax on your profit.
What happens if I claim a child who does not meet the requirements?
The IRS will disallow the credit for that child and may ask you to repay the credit amount you received. If the error was unintentional, you can amend your return. Intentional false claims can result in penalties and interest.
Do I have to file a tax return to get the EITC?
Yes. You must file a federal income tax return to claim the credit, even if your income is so low that you normally would not have to file. The IRS does not send the credit to you automatically — you have to report your income and claim it on your return.
Can I claim the EITC if I have no children?
Yes, but the credit is much smaller. A single person with no children can receive a maximum credit of a few hundred dollars if their income is low enough. The credit is designed primarily to help families with children, so the childless credit is limited.
What if my income changes during the year?
Use your actual income for the year you are filing for. If you earned $20,000 in January through June and then lost your job, you still report the $20,000 on your return. The credit is based on your total earned income for the full tax year, not your income at any single point.