The Earned Income Tax Credit: How to Qualify

The Earned Income Tax Credit (EITC) is money the federal government provides to low-income working people to help them make ends meet. The EITC is a refundable credit, which means you can collect it even if you don't owe any federal income tax. It's free money from the federal government.

The IRS administers the EITC, but you don't have to owe or pay any federal income taxes to qualify for it. However, you must file a tax return to get the credit and specifically claim the EITC.

Many people who qualify for the EITC don't get it because they fail to file.

What Is the Earned Income Tax Credit (EITC)?

The EITC is a refundable tax credit for taxpayers with lower earnings. This tax credit gives you a dollar-for-dollar reduction in the amount of taxes you owe. If the amount of the EITC is greater than the amount of tax you owe, then you can get a refund.

If you have low or moderate earnings, you can get the EITC, whether or not you have qualifying dependents.

Who Is Eligible for the Earned Income Tax Credit in 2023?

To qualify for the EITC, you must:

• be a U.S. citizen or resident alien (special rules apply if you or your spouse are a nonresident alien)
• be at least 25 years old
• be under 65 years old
• not be someone else's dependent or child for EITC purposes, and
• have at least $1 of earned income—such as wages, tips, or income from running a business—but not too much of it.

The income limit depends on your family size. The more "qualifying children" you have, the larger your income may be for qualifying purposes.

What Is a Qualifying Child for Purposes of the EITC?

A qualifying child can include your son, daughter, adopted child, stepchild, foster child, or a descendant of any of these, such as your grandchild, or your brother, sister, half-brother, half-sister, stepbrother, step-sister, or a descendant of any of them, like a niece or nephew.

The child must live with you for at least half the year and be younger than 19 (24 if a full-time student).

What Qualifies You for the EITC?

For 2023 (the tax return you'll file in 2024), you qualify for the credit if your earned income is less than:

• $17,640 ($24,210 if married filing jointly) with no qualifying children
• $46,560 ($53,120 married filing jointly) with one qualifying child
• $52,918 ($59,478 if married filing jointly) with two qualifying children, or
• $56,838 ($63,398 if married filing jointly) with three or more qualifying children.

Check the IRS website for the annually adjusted amounts.

If you have income other than earned income, such as unemployment payments, taxable Social Security payments, alimony, investment income (which can't exceed $11,000 for 2023, increasing to $11,600 in 2024), or retirement benefits, you must add it toward the limit. You don't have to add government assistance you receive, such as food stamps, Medicaid, or Supplemental Security Income (SSI).

How Much Income Can You Earn in Investments and Still Take the EITC?

Your investment income must be $11,000 or less in 2023. In 2024, that amount rises to $11,600.

How Much Is the EITC for 2023?

The maximum credits for 2023 are:

• $600 with no qualifying children
• $3,995 with one qualifying child
• $6,604 with two qualifying children, or
• $7,430 with three or more qualifying children.

If you owe any taxes for the year, your credit will first be subtracted from this amount, and the rest will be paid directly to you. If you owe no taxes, you'll be paid the full amount of the credit. Some workers have their credits prepaid through their employers as "negative withholding" from their paychecks.

When Will I Get the EITC?

If you can claim the EITC on your tax return, be aware that your refund might be delayed. The earliest the IRS will issue your refund is mid-February.

How Do You Qualify for the Earned Income Tax Credit?

The IRS has an EITC Assistant tool on its website that you can use to see if you might qualify.

How Do You Calculate the Earned Income Credit?

Use the IRS EITC calculator to determine your eligibility for the credit and get an estimate of the credit amount you might get. (The calculator provides just an approximation and using it doesn't guarantee you'll get the credit.)

How to Apply for the EITC

To claim the EITC, you must file an IRS income tax form, either Form 1040 or 1040-SR. If you have one or more qualifying children, you must complete Schedule EIC and attach it to your tax return. Schedule EIC provides the IRS with information about the qualifying children, including their names, ages, Social Security numbers, relationship to you, and the amount of time they lived with you during the year. If you use tax software, the program will help complete the forms for you.

More than half the people who qualify for the EITC use a tax preparer to prepare their returns. You can use a paid preparer—many preparers will deduct their fee from your EITC payments rather than make you pay upfront. However, if you qualify for the EITC, you probably also qualify for free tax preparation through the IRS Volunteer Income Tax Assistance program (VITA).

The VITA Program offers free tax help from IRS-certified volunteers. There are thousands of VITA sites located at community and neighborhood centers, libraries, schools, shopping malls, and other locations. To find a site, use the online VITA Locator Tool or call 800-906-9887.

Get More Tax Information

You can get more information on claiming the EITC at the IRS website. You can also learn more about tax deductions and credits by talking to a tax lawyer or other tax adviser.