EITC, the earned income tax credit, sometimes called EIC or earned income credit is a refundable tax credit. Meaning, EITC can reduce the federal tax to zero and any unused credit is refunded. But, workers must file a tax return to get the credit even if their income is below the filing requirement. To qualify, workers must have taxable income from working for someone or from owning or running a business or farm.
1Source: EITC Calendar Year Report, December 2016.
2 Source: The national EITC participation rate is 80% (TY2012), estimated in cooperation with the Census Bureau. A major break-through in the study of EITC Participation Rate was accomplished with the estimation of state level participation rates based on the American Community Survey (ACS). While the ACS data does not allow for as precise a determination of EITC eligibility as the Current Population Survey (CPS) data, the state estimates allow interested parties to observe differences in state level taxpayer participation rates. The official estimate is the CPS national estimate of 80% (TY2012), with the ACS estimates as supplementary source of information.
3Source: Chuck Marr, Chye-Ching Huang, Arloc Sherman and Brandon DeBot, CBPP-EITC and Child Tax Credit Promote Work, Reduce Poverty, and support children’s Development, Research finds, October 1, 2015
3Source: EITC administration cost ratio: proportion of EITC executed budget January, 2009
Determining eligibility for EITC is complicated. You must make over 20 separate determinations. This tool kit presents the basic qualifiers. Refer to the EITC Home Page on irs.gov IRS for more detailed information on who qualifies for EITC.
Income and family size determine the amount of the EITC. The income amounts and the amount of EITC are adjusted for inflation each year.
We estimate that four out of five workers claim the EITC they earned. Help IRS reach the potentially qualifying workers who miss out on thousands of dollars every year on EITC. Help us educate them about the credit and motivate them to join the four out of file who file and claim it. This includes workers who are: