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By Aliss Higham
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Americans on a low or middle income should be aware of a tax credit that could put thousands of dollars in their pockets.
Why It Matters
Tax season opened on January 27, meaning taxpayers can now file and pay their tax returns with the Internal Revenue Service. The deadline for federal returns is set to April 15 nationwide.
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What Is the EITC?
The Earned Income Tax Credit (EITC) is a federal tax incentive aimed at supporting low-to-moderate-income workers and their families. It lowers the taxpayer's overall tax liability and can lead to a significant refund. But despite this, the IRS estimates that roughly one in five eligible taxpayers "miss out on claiming this valuable credit."
The EITC effectively offsets taxes on a dollar-for-dollar basis. If a taxpayer's EITC exceeds their tax liability, they may qualify for a refund of taxes withheld from their paycheck throughout the year.
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How Much Is the EITC Worth?
While the maximum amount available is $7,830 when claiming the EITC for tax year 2024, the IRS has said eligible taxpayers received an average of $2,743 from the credit in tax year 2023. Only those with qualifying children can receive the maximum amount.
Who Can Get the EITC?
To qualify for the EITC, you must have under $11,600 in investment income and earn less than a specific amount, which is outlined in the table below:
Eligibility is also dependent on:
- Being a U.S. citizen or resident alien all year.
- Filing a tax return even if their income level doesn't usually require them to do so.
- Having a valid Social Security number (SSN) for themselves, as well as for their spouse, if filing a joint return, and for each qualifying dependent claimed for.
- Not having any foreign income.
How to Claim the EITC
To claim the EITC, you must file Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors. If you are claiming the credit for a qualifying child, you must also file the Schedule EIC (Form 1040 or 1040-SR), Earned Income Credit with your return. If any EITC is owed, it will be paid as part of your tax refund.
If you think you are eligible, but have not previously claimed, you have three years to file and claim a refund from the due date of your tax return. If you were eligible, you can still claim the EITC for prior years:
- For 2023 if you file your tax return by April 18, 2027
- For 2022 if you file your tax return by April 18, 2026
- For 2021 if you file your tax return by April 18, 2025
If you filed a tax return, but didn't claim the EITC and you were eligible, you can file an amended return, Form 1040-X.
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