Are You Eligible? A Look at the EITC for Low- and Moderate-Income Workers

The earned income tax credit, or EITC, is not available to you if your income is too high to qualify for it. You may be able to receive a sizable tax relief if you qualify.

The EITC: what is it, who qualifies, and how do you apply? What you should know is as follows.

The EITC: What Is It?

Since its inception in 1975, the earned income tax credit has aided low- and moderate-income households. Because it's a work credit, you must be employed to receive it. If you qualify, it may also decrease or eliminate any federal income tax obligations you may have.

The IRS reports that 23 million workers and families filed their 2022 taxes and got about $57 billion in Earned Income Tax Credits (EITCs) in 2023. The average EITC received by taxpayers was $2,541. In the previous year, the EITCs were worth around $64 billion to 32 million workers and their families.

How Much Money Am I Entitled To Through the EITC?

Although each person's circumstances are unique, the benefits might be significant. Keep in mind that the Earned Income Tax Credit (EITC) is a refundable tax credit, meaning you can get a refund even if you have no outstanding federal taxes.

Who Qualifies for EITC?

To qualify for the Earned Income Tax Credit (EITC) in 2023, your eligibility hinges on your income level, according to the IRS guidelines. Specifically, your earned income for the tax year 2023 should not exceed $63,398, and your investment income must be below $11,000.

Additionally, you must have valid Social Security numbers for each qualifying child, obtained by the due date of your 2023 tax return, including any extensions. Furthermore, you must have been a U.S. citizen or resident alien for the entirety of 2023, and if you file Form 2555 related to foreign earned income, you will not qualify for the EITC. It's important to note that if you are separated from your spouse and not filing a joint tax return, you must adhere to specific rules to qualify for the EITC.

The Earned Income Tax Credit: How Do I Claim?

Even if your income is less than the 2023 standard deductions $13,850 for single filers and married couples filing separately, $27,700 for joint filers, and $20,800 for heads of households, you still have to pay your federal taxes.

You may file electronically by visiting the Free File Alliance website, which is run by a nonprofit alliance of IRS-affiliated tax software providers that provides free filing services. (Free of charge for individuals with an adjusted gross income of $79,000 or less in 2023; other requirements may apply based on the kind of software you use.)