The Earned Income Tax Credit is a refundable tax credit that reduces what you owe and can send you money back

The Earned Income Tax Credit (EITC) is a federal tax benefit for people who work but earn below certain income thresholds. Unlike a deduction, which lowers your taxable income, a credit directly reduces your tax bill dollar for dollar. The EITC is refundable, which means if the credit is larger than the tax you owe, the IRS sends you the difference as a refund — even if you owed zero tax to begin with.

The credit is designed to supplement wages for lower-income workers. The amount you receive depends on your filing status, how much you earned, and whether you have children. A single person with no children might receive a few hundred dollars, while a parent with two may have access to children could receive several thousand.

You claim the EITC on your federal tax return using IRS Form 1040 and either Schedule EIC (if you have may have access to children) or Schedule 1 (if you don't). The IRS does not automatically send you the credit — you must file a return to claim it, even if no tax was withheld from your paychecks.

Key Takeaways

  • The EITC reduces your federal income tax and can result in a refund if the credit exceeds what you owe.
  • You must have earned income from work — self-employment, wages, or farm income all count — to claim the credit.
  • The amount of the credit phases out as your income rises, so there is a maximum income limit based on your filing status and number of children.
  • You must file a federal tax return to claim the EITC, even if your income is below the filing requirement.
  • The IRS offers free tax preparation through VITA (Volunteer Income Tax information) sites if you earn below a certain threshold.

How the EITC amount changes based on your income and family structure

The EITC works in three phases: it grows as your income rises, reaches a maximum, then shrinks as income climbs further. The exact income ranges and maximum credit amounts change each year and depend on whether you file as single, married filing jointly, or head of household.

For the 2023 tax year (filed in 2024), a single filer with no may have access to children could receive up to $560. A single parent with one may have access to child could receive up to $3,995. A single parent with two may have access to children could receive up to $6,560. A single parent with three or more may have access to children could receive up to $6,935. These amounts are higher for married couples filing jointly.

The income limits also vary. For example, in 2023, a single filer with no children could earn up to $16,810 and still claim some credit. A single parent with one child could earn up to $46,560. These thresholds increase slightly each year for inflation.

Because the credit phases out, earning an extra dollar of income might reduce your credit by 15 or 21 cents, depending on which phase you are in. This is why some people find that a raise or bonus actually reduces their total refund — the credit shrinks faster than the extra income grows.

Who can claim the EITC and what counts as earned income

To claim the EITC, you must have earned income — money you made from working. This includes W-2 wages from an employer, net self-employment income, and farm income. It does not include investment income, Social Security benefits, unemployment benefits, or child support.

You must also be a U.S. citizen or resident alien for the entire tax year. Your filing status must be single, married filing jointly, or head of household. Married couples filing separately cannot claim the EITC.

If you have may have access to children, they must meet specific tests: they must be your son, daughter, stepchild, foster child, sibling, or descendant of any of these; they must be under age 17 at the end of the tax year (or any age if permanently disabled); they must have lived with you for more than half the year; and they must be U.S. citizens, nationals, or resident aliens. Each child can only be claimed by one person.

If you have no may have access to children, you can still claim the EITC if you are between ages 25 and 64 at the end of the tax year, have lived in the United States for more than half the year, and cannot be claimed as a dependent on someone else's return.

The difference between the EITC and the Child Tax Credit

The EITC and the Child Tax Credit are separate benefits that work differently. The Child Tax Credit is worth up to $2,000 per child under age 17 and does not require you to have earned income — you can claim it based on investment income alone. The EITC requires earned income but has no per-child cap and can be larger for families with multiple children.

Both credits are refundable (though the Child Tax Credit's refundable portion, called the Additional Child Tax Credit, is capped at $1,700 per child in 2023). You can claim both credits in the same year if you meet the requirements for each. They are calculated separately on your return and do not reduce each other.

The EITC also phases out at higher income levels than the Child Tax Credit, so a family might lose EITC may be able to access before losing Child Tax Credit may be able to access as income rises.

How to claim the EITC on your tax return

You claim the EITC by filing a federal income tax return with the IRS, even if you have no tax liability. You will need your Social Security number, your spouse's if filing jointly, and your children's Social Security numbers if claiming them.

On Form 1040, you report your earned income on the appropriate line (wages on line 1a, self-employment income on line 5, farm income on line 6). If you have may have access to children, you complete Schedule EIC to list each child's name, age, and relationship to you. If you have no children, you may complete Schedule 1 to claim the credit, though some filers can claim it directly on Form 1040.

The IRS calculates the credit amount based on your income and family structure. You do not need to do the math yourself — the IRS has tables and worksheets in the Form 1040 instructions, and tax software calculates it automatically.

If you file electronically, the IRS typically processes your return within 21 days. If you claim the EITC and the Additional Child Tax Credit together, the IRS may hold your refund until mid-February to prevent fraud, even if you file in January.

Free tax preparation options for EITC filers

The IRS operates the Volunteer Income Tax information (VITA) program, which provides free tax preparation at community centers, libraries, and nonprofits across the country. VITA is open to people who earn below a certain threshold — typically around $60,000 — and is especially useful for EITC filers because trained volunteers understand the credit's rules and can help you claim it correctly.

To find a VITA site near you, visit the IRS website or call 211. You will need to bring documents: your Social Security card or ITIN letter, photo ID, proof of income (W-2s, 1099s, or pay stubs), and your children's Social Security cards if claiming them. Bring your bank account information if you want your refund deposited directly.

The IRS also partners with tax software companies to offer free filing through the Free File program. If your income is below the threshold (which varies by software provider but is usually around $73,000), you can read tax software at no cost and file electronically. Free File software includes EITC calculations.

What happens if you claim the EITC incorrectly

If you claim the EITC and the IRS later determines you were not may have access to to it — for example, because a child did not meet the residency test or your income was above the limit — the IRS will send you a notice asking you to repay the credit. You have the right to respond and explain your position.

If the IRS finds that you claimed the EITC fraudulently (meaning you knowingly provided false information), you may face penalties and interest. Honest mistakes are treated differently from intentional fraud, and the IRS considers factors like whether you had professional help preparing your return.

To avoid problems, keep records of your children's residency (utility bills, school records, lease agreements), your earned income (W-2s, 1099s, pay stubs), and any correspondence with the IRS. If you are unsure whether a child qualifies, ask a tax professional or contact the IRS before filing.

Frequently Asked Questions

Can I claim the EITC if I am self-employed?

Yes. Self-employment income counts as earned income for EITC purposes. You will need to calculate your net self-employment income (revenue minus business expenses) on Schedule C and report it on your Form 1040. The EITC is then calculated based on that net income.

What if my child lives with me but is not my biological child?

Stepchildren, foster children, and adopted children all count as may have access to children for the EITC if they lived with you for more than half the year and meet the other tests. A niece or nephew can also count if they are your dependent. The relationship test is flexible — it is about who actually lived in your home, not biology.

Can I claim the EITC if I am married but file separately?

No. Married couples filing separately cannot claim the EITC. You must file jointly to be may be able to access. This is one of the few tax benefits that requires joint filing.

Does the EITC count as income for other programs like SNAP or Medicaid?

The EITC refund itself does not count as income in the month you receive it for most means-tested programs, but the rules vary by program and state. Contact your state's SNAP or Medicaid office to understand how a refund might affect your benefits in future months.

What if I earned income but had no taxes withheld?

You can still claim the EITC. In fact, many EITC filers have little or no tax withheld because their income is low. You must file a return to claim the credit — the IRS will not send it to you automatically.