What the Earned Income Tax Credit Is
The Earned Income Tax Credit (EITC) is a federal tax credit for people who work but earn low to moderate income. Unlike a deduction, which reduces the income you report, a credit directly reduces the tax you owe — and if the credit is larger than your tax bill, the IRS sends you the difference as a refund. You claim it when you file your federal tax return.
The EITC is designed to reward work and reduce the tax burden on working families. The amount you receive depends on your income, filing status, and how many children you have. You do not have to owe taxes to receive it; many people who claim the EITC owe nothing and receive the full credit as a refund.
Key Takeaways
- The EITC is a refundable tax credit, meaning you can receive money back even if you owe no federal income tax.
- Your income must fall within a specific range that varies by filing status and number of children; in 2024, the maximum income for a single filer with no children is around $17,000, and for married filers with three or more children it is around $63,000.
- You must have earned income from work — self-employment, wages, or salaries — to claim the credit; investment income and benefits do not count.
- You claim the EITC on your federal tax return using Form 1040 and Schedule EIC, or through tax software or a tax preparer.
- Some states offer their own earned income tax credits on top of the federal credit, which you claim on your state return.
Income Limits and Credit Amounts by Family Size
The EITC phases in as your income rises, reaches a maximum, then phases out. The exact amounts and income ranges change each year based on inflation. For 2024, here is how the credit breaks down by filing status and number of children:
| Filing Status & Children | Maximum Credit (2024) | Income Limit to Receive Any Credit |
|---|---|---|
| Single, no children | $600 | ~$17,000 |
| Single, one child | $3,733 | ~$46,500 |
| Single, two children | $6,164 | ~$52,500 |
| Single, three or more children | $6,935 | ~$56,000 |
| Married filing jointly, no children | $600 | ~$23,000 |
| Married filing jointly, one child | $3,733 | ~$52,500 |
| Married filing jointly, three or more children | $6,935 | ~$63,000 |
These figures are approximate and change annually. The IRS publishes exact limits each January. If your income is above the limit for your situation, you cannot claim the credit that year.
Who Can Claim the EITC
To claim the EITC, you must meet several requirements. You must be a U.S. citizen or resident alien with a valid Social Security number. You must have earned income from work — wages from an employer, net self-employment income, or taxable scholarship or fellowship grants used for living expenses. Income from unemployment benefits, Social Security, disability payments, or investment sources does not count as earned income.
Your filing status matters. You can file as single, married filing jointly, or head of household. You cannot claim the credit if you file as married filing separately. If you have children, they must be your biological children, stepchildren, foster children, or siblings, and they must live with you for more than half the year. The child must be under 17 at the end of the tax year, have a valid Social Security number, and be claimed as your dependent.
Your investment income must be $11,000 or less in 2024 (this limit changes yearly). Investment income includes interest, dividends, capital gains, and rental income. If your investment income exceeds the limit, you cannot claim the EITC.
How to Claim the EITC on Your Tax Return
You claim the EITC when you file your federal income tax return. If you file by paper, you use Form 1040 (the main tax form) and Schedule EIC, which lists information about you, your children, and your income. If you use tax software, the program walks you through questions about your income and family situation and automatically fills in the credit. If you use a tax preparer or accountant, they complete the forms for you.
You must file a return to claim the credit, even if your income is so low that you would not normally have to file. The IRS will not contact you to tell you that you owe a refund; you have to file to receive it. You can file for free using IRS Free File if your income is below a certain threshold (around $79,000 in 2024), or you can use a paid tax software or preparer.
The deadline to claim the EITC for a given tax year is typically April 15 of the following year, though you can file late if you have a valid reason. If you file late, you may still receive the credit, but you will lose the refund if you wait more than three years from the original deadline.
State Earned Income Tax Credits
Many states offer their own earned income tax credits that work alongside the federal credit. These state credits are separate from the federal EITC and are claimed on your state tax return. Some states offer a credit equal to a percentage of the federal credit (for example, 10 percent or 20 percent), while others have their own income limits and amounts.
States with earned income tax credits include California, Colorado, Connecticut, Delaware, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, Virginia, and Washington, D.C. Not all states offer the credit, and the amounts vary widely. Check your state's tax authority website to learn whether your state has a credit and how to claim it.
What Happens After You Claim the Credit
After you file your return, the IRS processes it, which typically takes 21 days if you file electronically and file correctly. If you claim the EITC and the IRS approves it, the credit reduces your tax bill dollar for dollar. If the credit is larger than the tax you owe, the IRS sends you the difference as a refund.
The IRS may audit your return to verify that you meet the requirements for the credit. This is more common for people who claim the EITC with children. If the IRS audits you, they will ask for documents such as your tax return, proof of your income (W-2 forms or self-employment records), proof that your children live with you (lease, utility bill, school records), and your children's birth certificates or Social Security cards. Keep these documents for at least three years after you file.
If the IRS determines that you claimed the credit incorrectly, they will send you a notice explaining the error and the amount you owe back. You have the right to respond to the notice and provide additional documentation if you believe the IRS made a mistake.
Frequently Asked Questions
Can I claim the EITC if I am self-employed?
Yes. Self-employment income counts as earned income. You must report your net self-employment income on Schedule C and pay self-employment tax. Your net income (after business expenses) is what counts toward the EITC income limit and credit calculation.
What if my income changes during the year?
You claim the EITC based on your total income for the entire tax year, not your income at any single point. If you earned less than the income limit for your situation when you add up all income from January through December, you may still claim the credit even if you earned more in some months.
Do I have to claim the EITC if I am offered it?
No, claiming the EITC is optional. However, because it is a refundable credit and most people who claim it receive money back, it is usually worth claiming if you meet the requirements. The only reason not to claim it would be if you believe you do not meet the requirements or if you want to avoid an IRS audit, though audits are not common.
Can I claim the EITC if I receive unemployment or disability benefits?
Unemployment benefits and disability payments do not count as earned income, so they do not help you meet the earned income requirement. However, if you also worked during the year, your wages count, and you may still claim the credit based on that earned income.
What if I made a mistake on my EITC claim last year?
You can file an amended return using Form 1040-X to correct an error. You have three years from the original deadline to file an amended return and claim a refund. If you owe money back because you claimed the credit incorrectly, the IRS will contact you with a notice and instructions on how to repay.