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 level

The Earned Income Tax Credit (EITC) is a refundable tax credit for people who work but earn low to moderate wages. When you file your federal income tax return, the IRS calculates whether you may have access to. If you do, they either reduce the taxes you owe or send you money back — often more than you paid in. You do not have to owe taxes to receive it; the credit can result in a refund even if your tax liability is zero.

The credit exists because Congress designed it to put money back into the pockets of working people. It phases in as your income rises, reaches a maximum amount, then phases out at higher incomes. The exact dollar amount you receive depends on your income, filing status, and how many children live with you.

Key Takeaways

  • The EITC is a refund you may receive when you file taxes if you work and earn below income limits that vary by filing status and number of children.
  • You must have earned income from a job or self-employment to receive the credit; investment income and benefits do not count.
  • The credit is refundable, meaning you can receive money back even if you paid no federal income tax during the year.
  • Income limits and maximum credit amounts change each year and differ based on whether you file as single, married, or head of household and whether you have dependent children.
  • You claim the EITC by filing a federal tax return; you cannot receive it without filing, even if you would normally have no tax obligation.

How the credit amount is calculated

The EITC works in three phases. First, as your earned income rises from zero, the credit increases dollar-for-dollar up to a maximum amount. This is called the "phase-in" period. Once you reach a certain income level, the credit stays flat at its maximum. Then, as your income continues to rise, the credit decreases until it reaches zero. This is the "phase-out" period.

The exact numbers depend on your situation. A single person with no children has a lower maximum credit and lower income limits than a married person filing jointly with three children. The IRS publishes new income limits and credit amounts every year because they adjust for inflation. For example, the 2023 maximum credit for a person with one child was different from the 2024 maximum for the same situation.

You do not calculate this yourself. When you file your tax return using tax software or a tax preparer, you enter your income and filing information, and the software or preparer determines your credit amount. The IRS then verifies it when they process your return.

Who can receive the EITC

To receive the EITC, you must have earned income. This means wages from a job, net profit from self-employment, or other compensation for work you performed. Income from unemployment benefits, Social Security, disability payments, investment returns, or government assistance programs does not count as earned income and does not make you ineligible, but it does not help you may have access to either.

You must also meet income limits. These limits vary by year and by your filing status and number of dependent children. A single person with no children has lower income limits than a married couple with two children. You can find the current year's limits on the IRS website or by asking a tax preparer.

You must be a U.S. citizen or resident alien with a valid Social Security number. If you are married, you must file a joint return to claim the credit (with rare exceptions). If you have children, they must meet specific requirements: they must be your biological child, stepchild, or adopted child; they must be under age 17 at the end of the tax year; they must live with you for more than half the year; and they must have a valid Social Security number.

The difference between the EITC and the Child Tax Credit

The Child Tax Credit is a separate benefit that also appears on your tax return. Both can apply to the same tax return, but they are different credits with different rules. The Child Tax Credit gives you a credit for each may have access to child, regardless of your income level (though it phases out at higher incomes). The EITC is based primarily on your earned income and filing status, and the presence of children affects the maximum amount you can receive.

The Child Tax Credit is also refundable, but only partially. The EITC is fully refundable. This means if your EITC is larger than the taxes you owe, you receive the full difference as a refund. With the Child Tax Credit, there is a limit to how much of it can be refunded to you.

You can claim both credits on the same return if you meet the requirements for each. A tax preparer or tax software will calculate both and include whichever applies to your situation.

State and local earned income tax credits

Many states and some cities offer their own earned income tax credits in addition to the federal EITC. These work similarly to the federal credit: you claim them on your state or local tax return, and they are based on your earned income and filing status. The amounts and income limits are set by each state or city, so they vary widely.

Some states' credits are worth several hundred dollars per year. Others are smaller. A few states do not offer an earned income credit at all. If you live in a state or city that has one, you claim it when you file your state or local return — it is separate from your federal return, though the process is similar.

Tax software and tax preparers usually calculate state and local credits automatically if you provide your state and city information. You can also find information about your state's credit on your state tax authority's website.

How to claim the EITC when you file taxes

You claim the EITC by filing a federal income tax return. You cannot receive the credit without filing, even if your income is so low that you would normally have no tax obligation. This is why the IRS encourages people with low earned income to file a return every year.

When you file using tax software, you answer questions about your income, filing status, and dependents. The software calculates your EITC automatically. If you use a tax preparer, they do this calculation for you. You then sign the return and submit it to the IRS, either electronically or by mail.

The IRS processes your return and, if you are due a refund (including your EITC), sends it to you. Refunds typically arrive within 21 days of the IRS receiving your return if you file electronically and choose direct deposit. If you file by mail, it takes longer.

What happens if the IRS questions your EITC

The IRS verifies EITC claims on some returns. If they have questions about your income, filing status, or dependent children, they will send you a notice. This does not mean you did anything wrong; it is a routine verification process. You will need to provide documents that support what you reported on your return, such as pay stubs, a birth certificate for a dependent child, or proof that a child lived with you.

If you claimed a child who does not meet the requirements, or if your income was higher than you reported, the IRS may reduce or deny your credit. If this happens, they will explain the reason and tell you how to respond. You have the right to provide additional information or to disagree with their decision.

Working with a tax preparer or using IRS-certified free tax preparation services can help you avoid errors on your return. Many community organizations offer free tax preparation specifically for people with low to moderate income.

Frequently Asked Questions

Do I have to file a tax return to get the EITC?

Yes. The EITC is claimed on your federal income tax return, so you must file to receive it. Even if you earned very little and would not normally owe taxes, you need to file a return to get the credit. The IRS does not automatically send it to you.

Can I claim the EITC if I am self-employed?

Yes. Self-employment income counts as earned income. You report it on Schedule C of your tax return, and it counts toward your EITC. You will also owe self-employment tax, but that does not prevent you from claiming the credit.

What if my income changes during the year?

You claim the EITC based on your total earned income for the entire year, not what you earned in any single month. If you had a job for part of the year and were unemployed for part of it, you add up all the wages you received and use that total. Income changes do not disqualify you; only your year-end total matters.

Can I get the EITC if I have no children?

Yes, but the credit is smaller. Adults with no may have access to children can receive the EITC if they meet income and age requirements, but the maximum credit amount is lower than for people with children. You must be between 25 and 64 years old (with some exceptions for people with disabilities).

What if I received the EITC but later found out I was not supposed to?

The IRS may ask you to repay part or all of the credit. If you claimed a child who did not meet the requirements, or if your income was higher than you reported, you could owe money back. The amount you have to repay depends on your current income and filing status. You can set up a payment plan if you cannot pay it all at once.