How to Determine If You’re Eligible for the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable federal income tax credit that can reduce the amount of taxes you owe and can also give you a refund. The EITC is designed to help low- and moderate-income workers and families. Last year, the average EITC received nationwide was about $2,541. But the IRS says millions of people still haven’t taken advantage of this valuable credit.
How does the Earned Income Tax Credit work?
The Earned Income Tax Credit (EITC) is primarily designed to provide financial assistance to working families with children. For returns filed in 2024, you may be eligible for up to $7,430, depending on your marital status, income and number of children. (People without children may also qualify for this assistance, although at a lower cost.)
Note that unemployment income is not considered earned income, so it cannot be included in your calculations.
The great thing about this particular credit is that it is refundable , meaning that if the credit exceeds the taxes you owe, you will receive the rest as a refund.
Why don’t more people apply for credit?
Many low-income people don’t file taxes at all (it’s not required if you make less than $13,850), so they just don’t know about it.
Additionally, this credit can be the most difficult of all tax credits to calculate because it uses complex rules and formulas that are not easy to understand. Eligibility is determined by a combination of income type (subject to investment income limits), year-end marital status, citizenship status, and number of children, location, and age. Additionally, eligibility may change each year.
How to Determine Whether You’re Eligible for the EITC
The fastest and easiest way to determine eligibility is to use the EITC Assistant on the IRS page. The site walks you step-by-step through all the eligibility criteria in a questionnaire format, followed by a calculation of the amount you may be owed.
Also consider using the IRS Free File program , which partners with private tax preparation companies to offer free software that will calculate and process your EITC claim. Of course, if at any point you feel uncomfortable using loan software, it may be worth hiring someone to do your taxes for you .
Finally, consider the Voluntary Income Tax Assistance program known as VITA , which offers in-person services at various locations across the country.