The basic rules for the Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable tax credit for people with low to moderate income from work. You must have earned income — wages, self-employment income, or certain other work-related payments — to claim it. The credit reduces the tax you owe and often results in a refund, even if you owe no tax at all.
The IRS sets income limits that change each year. For 2023, the maximum income ranges from about $16,000 for a single person with no children to about $63,000 for a married couple filing jointly with three or more children. Your filing status, number of may have access to children, and total income all determine whether you meet the basic requirements.
You do not need to have children to claim the EITC, but the credit is larger if you do. The credit also phases out — it gets smaller as your income rises — so earning more money can reduce the amount of credit you receive.
Key Takeaways
- You must have earned income from work in the tax year you claim the credit, and your income must fall below the IRS limit for your filing status and number of children.
- The EITC is refundable, meaning you can receive money back even if you owe no federal income tax.
- You claim the EITC on your federal tax return using Form 1040 and Schedule EIC, or through tax software that handles the calculation for you.
- If you have a may have access to child, you must provide their Social Security number and meet relationship and residency tests on your return.
- The credit amount and income limits change each year, so you should check the current year's limits before filing.
Income limits and filing status
The IRS publishes new income limits every January for the current tax year. These limits depend on whether you file as single, head of household, married filing jointly, or married filing separately. Married filing separately filers cannot claim the EITC at all.
Your income for EITC purposes includes wages, salaries, tips, and net self-employment income. It also includes certain other earned income like taxable scholarship or fellowship grants. Investment income — dividends, interest, capital gains — does not count as earned income and does not reduce your EITC, but if your investment income exceeds a certain amount in a given year, you become ineligible for the credit that year.
The IRS website publishes the current year's income limits in a table on their EITC page. You can also find them in the instructions to Form 1040 or in the EITC worksheet included with tax software. If your income is close to the limit, calculate it carefully or use a tax professional to confirm your status.
may have access to children and the larger credit
A may have access to child for EITC purposes must be your son, daughter, stepchild, foster child, sibling, or descendant of any of these (such as a grandchild or niece). The child must be under age 17 at the end of the tax year, live with you for more than half the year, and be a U.S. citizen, national, or resident alien.
The child must also have a valid Social Security number, and you must provide that number on your return. If you claim a child who does not meet these tests, the IRS will disallow the credit and may assess penalties.
The credit amount increases with each may have access to child. For 2023, the maximum credit was about $560 for one child, $1,100 for two children, and $1,600 for three or more children. These amounts change yearly. If you have no may have access to children, the maximum credit is much smaller — about $560 — and the income limit is lower.
How to claim the credit on your tax return
You claim the EITC by filing a federal tax return, even if you would not normally have to file. Use Form 1040 (the main individual income tax form) and attach Schedule EIC if you have a may have access to child. If you file electronically using tax software, the software will calculate the credit for you based on the information you enter.
The software or the IRS worksheet will ask for your earned income, filing status, number of may have access to children, and their Social Security numbers. Double-check all numbers before submitting. If you file by mail, include Schedule EIC with your return and sign it.
You can also use the IRS EITC Assistant tool on the IRS website to determine whether you meet the basic requirements before you file. This tool walks you through the rules and tells you whether you likely may have access to.
Self-employed workers and the EITC
If you are self-employed, your earned income is your net profit from self-employment after you subtract business expenses. You calculate this on Schedule C (for sole proprietors) or Schedule C-EZ (for simpler situations). Your net self-employment income is what counts toward the EITC income limit and credit calculation.
You must also pay self-employment tax on this income, which funds Social Security and Medicare. The EITC does not reduce your self-employment tax obligation, but it does reduce your federal income tax. If your net self-employment income is very low or negative, you may not owe self-employment tax but could still claim the EITC if you have other earned income.
Keep careful records of your business income and expenses so you can accurately report your net profit. If you are unsure how to calculate it, a tax professional can help.
What happens if your income changes during the year
The EITC is based on your total earned income for the entire tax year. If you earned less than expected — because you were unemployed part of the year, took unpaid leave, or changed jobs — your income may fall below the limit even if you thought it would exceed it. In that case, you would become may be able to access for the credit.
Conversely, if you earned more than expected, your credit may be reduced or eliminated. The credit phases out gradually as income rises, so a small increase in earnings might reduce the credit by a larger amount. This is why it is important to file your return and claim the credit based on your actual income for the year, not an estimate.
If you received an advance EITC payment from your employer during the year (a rare option), you must report it on your return. This reduces the credit you receive when you file.
Common mistakes and how to avoid them
One frequent error is claiming a child who does not meet the relationship or residency test. The IRS verifies Social Security numbers and cross-checks them against other returns, so claiming a child who is not yours or who did not live with you will trigger an audit. Keep records showing the child lived with you — utility bills, school enrollment, medical records — in case the IRS asks.
Another mistake is miscalculating self-employment income or forgetting to include all sources of earned income. If you worked multiple jobs, freelanced, or had gig work, add all of it together. Use tax software or a worksheet to may support you do not miss any income.
A third error is filing too early in the tax season. The IRS does not issue refunds for returns claiming the EITC until mid-February, even if you file in January. This delay is a security measure to prevent fraud. If you are counting on the refund, plan accordingly.
Frequently Asked Questions
Can I claim the EITC if I did not work the entire year?
Yes. You must have earned income in the tax year, but it does not have to be for the full 12 months. If you worked part of the year and your total earned income falls below the limit for your filing status and number of children, you can claim the credit based on what you actually earned.
What if I have a child but do not have their Social Security number yet?
You cannot claim the EITC for that child without a valid Social Security number. You can file your return claiming the credit for any other may have access to children or as a single person with no children, then file an amended return once you have the number. The IRS will not process the credit for a child without a number.
Does the EITC count as income for other programs like SNAP or Medicaid?
The EITC refund you receive is generally not counted as income for means-tested programs like SNAP, Medicaid, or housing information. However, the rules vary by program and state. Contact your state's benefits office to confirm how the EITC is treated for the specific program you use.
Can I claim the EITC if I am married but file separately?
No. Married filing separately filers cannot claim the EITC under any circumstances. If you are married, you must file jointly to be may be able to access. If you are separated or divorced, you can file as head of household if you meet the requirements, which allows you to claim the credit.
What if the IRS denies my EITC claim?
The IRS will send you a notice explaining why the credit was denied. Common reasons include income exceeding the limit, a child not meeting the relationship or residency test, or a Social Security number mismatch. You can respond to the notice with documentation or file an amended return if you believe the IRS made an error.