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Earned Income Tax Credit

The Earned Income Tax Credit, EITC, is a refundable federal income tax credit for low- and moderate-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of Social Security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.

Refunds received from the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), or any other tax credit are not considered income for any federal or federally funded public benefit programs. Also, under the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, your credit or other tax refund is not counted as a resource for at least 12 months from when you receive it.

If you save your refund, federal or federally funded agencies will not use it to determine your eligibility or the amount of your benefit. This new rule is for refunds received after December 31, 2009, and through 2012. It is always best to check with your local benefits coordinator to find out if your benefits fall under this provision.

How do workers know if they quality for the credit? To quality, tax payers must meet certain requirements and file a tax return, even if they did not earn enough money to be eligible to file a tax return.

Below is information that shows possible refundable credits for individuals and families that file a return and meet the requirements of the EITC. The American Recovery and Reinvestment Act (ARRA), signed into legislation February 17, 2009, provided a temporary increase in the EITC for taxpayers with three or more qualifying children. The Tax Relief and Job Creation Act of 2010 extended those changes in 2011 and 2012.

 

Number of Children Earned Income must be less than Maximum EITC
3 or more children $45,060 ($50,270 married filing jointly) $5,891
2 Children $41,952 ($47,162 married filing jointly) $5,236
1 Child $36,920 ($41,130 married filing jointly) $3,169
No Children $13,980 ($19,190 married filing jointly) $475

 

Click here to use the EIT estimator. This is just an estimation tool intended to illustrate what the EITC might be worth to you. Visit the IRS web site here to determine if you are eligible, and how large a credit you will actually receive.

Can tax filers claim EITC from previous years? Yes. Generally, you must file your claim for EITC or other credits/ refunds within three (3) years after the date you filed (or should have if you haven’t filed) your original return, or within two (2) years after the date you paid the tax, whichever is later. Returns filed anytime before the due date (typically April 15) are considered filed on the due date. To claim the EITC from previous years you must either:

  • File a tax return for the years you were eligible and wish to claim EITC
    or
  • If you have already filed a return for the previous years, file an amended tax return for the year(s) you were eligible and wish to claim EITC.

If you did not claim EITC for tax year 2010, click here to check your eligibility.