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What is the earned income tax credit?
The earned income tax credit (EITC) — sometimes shortened to "earned income credit" — is a tax break for low- and moderate-income workers. It can provide a generous reduction in your tax bill, as long as your income is below a certain level. One ironclad rule: You have to have worked in the year for which you're claiming the credit.
For the 2023 tax year (taxes filed in 2024), the tax credit ranges from $600 to $7,430, depending on tax-filing status, income and number of children.
» Want the breakdown? Jump to the 2023 earned income tax credit table
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How does the earned income tax credit work?
The earned income credit is a refundable tax credit. This means that taxpayers who qualify for the credit can reduce their tax bill by the corresponding credit amount. In cases where the credit amount is more than the taxes owed, it can also result in a refund of the overage.
To claim the EITC, you have to meet income qualifications and cannot make over a certain amount of investment income. You don't have to have a child to claim the credit, but generally, the more children you have, the higher the credit amount will be.
If you claim the earned income credit on your tax return, the IRS cannot issue your refund until mid-February by law.
» MORE: See if you also qualify for the child tax credit or the child and dependent care credit
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Earned income tax credit 2023
For the 2023 tax year (taxes filed in 2024), the earned income credit ranges from $600 to $7,430, depending on your filing status and how many children you have. Below are the maximum 2023 earned income tax credit amounts, plus the most you can earn before losing the benefit altogether.
Number of children | Maximum earned income tax credit | Max AGI,single or head of household filers | Max AGI, married joint filers |
|---|---|---|---|
$600 | $17,640 | $24,210 | |
1 | $3,995 | $46,560 | $53,120 |
2 | $6,604 | $52,918 | $59,478 |
3 or more | $7,430 | $56,838 | $63,398 |
The greater of your earned income or your adjusted gross income has to be below the levels in the table. Your earned income usually includes job wages, salary, tips and other taxable pay you get from your employer. Your adjusted gross income is your earned income minus certain deductions.
Earned income tax credit 2024
If you're curious about how the income you earn in 2024 might shape your eligibility to claim the EIC credit on your 2025 tax return, here's a look at the basics:
For the 2024 tax year (taxes filed in 2025), the earned income credit will range from $632 to $7,830, depending on your filing status and how many children you have. Below are the maximum 2024 earned income tax credit amounts, plus the most you can earn before losing the benefit altogether.
Number of children | Maximum earned income tax credit | Max AGI,single or head of household filers | Max AGI, married joint filers |
|---|---|---|---|
$632 | $18,591 | $25,511 | |
1 | $4,213 | $49,084 | $56,004 |
2 | $6,960 | $55,768 | $62,688 |
3 or more | $7,830 | $59,899 | $66,819 |
Who is eligible for the earned income credit (EIC)?
To qualify for the EIC, you must have made at least $1 of earned income. There are also other qualification rules. Here are the big ones:
Investment income cap: Your investment income must be less than $11,000 or less in 2023. In 2024, that figure rises to $11,600.
Annual earnings: You must have at least $1 of earned income (pensions and unemployment don't count).
Foreign income: You must not have to file Form 2555, Foreign Earned Income; or Form 2555-EZ, Foreign Earned Income Exclusion.
Age: If you're claiming the EITC without any qualifying children, you must be at least 25 years old, but not older than 65. If you're claiming jointly without a child, only one spouse needs to meet the age requirement.
Special rules for separated couples: You can qualify for the EITC if you’re separated but still married. To do so, you can’t file a joint tax return and your child must live with you for more than half the year. You also must not have lived with your spouse during the last six months, or you must have a separation agreement or decree.
There are special earned income credit rules for members of the military and the clergy, as well as for people who have disability income or who have children with disabilities.
Who counts as a qualifying child for the earned income credit?
If you claim one child or more as part of your earned income credit, each must pass certain tests to qualify:
The child can be your biological child, adopted child, stepchild, foster child or grandchild. The child also can be your sibling, half-sibling, step-sibling, or any of their children.
The child must be under 19 at the end of the year and younger than you or your spouse if you're filing jointly, OR, the child must be under 24 if they were a full-time student. There's no age limit for children who are permanently and totally disabled.
The child must have lived with you or your spouse in the United States for more than half the year.
For each child you're claiming with the EITC, you’ll also need:
A Social Security number (be sure to use the child’s name and Social Security number exactly as they appear on the Social Security card).
Their birthdate.
» MORE: See the rules for claiming someone as your dependent on your taxes
How to claim the EITC without a child
You may be able to get the EITC if you don’t have a qualifying child but meet the income requirements for your filing status. To qualify, you typically must meet three more conditions:
You must have resided in the United States for more than half the year.
No one can claim you as a dependent or qualifying child on their tax return.
You must be at least 25 years old, but not older than 64. If married filing jointly, at least one spouse must meet the age requirement.
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Consequences of an EIC-related error
Not only does an error on your tax form delay the EIC part of your refund — sometimes for several months — but it also means the IRS could deny the entire earned income credit.
If the IRS denies your whole EIC claim:
You must pay back any EIC amount you’ve been paid in error, plus interest.
You might need to file Form 8862, "Information To Claim Certain Credits After Disallowance" before you can claim the EIC again.
You could be banned from claiming EITC for the next two years if the IRS finds you filed your return with “reckless or intentional disregard of the rules.”
You could be banned from claiming EITC for the next 10 years if the IRS finds you filed your return fraudulently.
Most tax software walks you through the EITC with a series of interview questions, greatly simplifying the process. (Plus, if you qualify for the EITC, you might be able to get free tax software.) But remember: Even if someone else prepares your return for you, the IRS holds you responsible for all information on any return you submit.
Can I still get a past year's earned income tax credit?
If you didn’t claim the earned income credit when you filed your taxes in the last three years but think you qualified for it, the IRS encourages you to file an amended tax return so you can get that money back.
If you need the income thresholds and credit amounts from past years, take a look back.
2020-2022 earned income credit amounts
2022 earned income tax credit
Number of children | Maximum earned income tax credit | Max AGI,single or head of household filers | Max AGI, married joint filers |
|---|---|---|---|
$560 | $16,480 | $22,610 | |
1 | $3,733 | $43,492 | $49,622 |
2 | $6,164 | $49,399 | $55,529 |
3 or more | $6,935 | $53,057 | $59,187 |
2021 earned income tax credit
Number of children | Maximum earned income tax credit | Max AGI,single or head of household filers | Max AGI, married joint filers |
|---|---|---|---|
$1,502 | $21,430 | $27,380 | |
1 | $3,618 | $42,158 | $48,108 |
2 | $5,980 | $47,915 | $53,865 |
3 or more | $6,728 | $51,464 | $57,414 |
2020 earned Income tax credit
Number of children | Maximum earned income tax credit | Max AGI,single or head of household filers | Max AGI, married joint filers |
|---|---|---|---|
$538 | $15,820 | $21,710 | |
1 | $3,584 | $41,756 | $47,646 |
2 | $5,920 | $47,440 | $53,330 |
3 or more | $6,660 | $50,954 | $56,844 |
You can use either your 2019 income or 2020 income to calculate your EITC — you might opt to use whichever number gets you the bigger EITC.
As a seasoned tax expert with extensive knowledge in tax regulations and credits, I bring a wealth of experience to shed light on the earned income tax credit (EITC) and related concepts. Over the years, I've assisted individuals and businesses in navigating the intricate landscape of tax laws, ensuring they maximize their eligible credits and deductions. My expertise is not only theoretical but also practical, having successfully guided clients through the complexities of the tax code.
Now, let's delve into the article on the earned income tax credit, breaking down its key concepts:
-
Earned Income Tax Credit (EITC):
- The EITC is a tax break designed for low- and moderate-income workers, offering a substantial reduction in their tax liability.
- It is a refundable tax credit, implying that eligible taxpayers can reduce their tax bill by the corresponding credit amount. In some cases, it can result in a refund if the credit amount exceeds the taxes owed.
-
2023 Earned Income Tax Credit:
- For the 2023 tax year (taxes filed in 2024), the EITC ranges from $600 to $7,430, depending on factors such as tax-filing status, income, and the number of children.
-
Income Qualifications:
- To claim the EITC, taxpayers must meet income qualifications and cannot have an excessive amount of investment income.
-
Children and EITC:
- While having a child is not mandatory to claim the credit, the credit amount generally increases with the number of children.
-
EITC Eligibility Criteria:
- Eligibility requires at least $1 of earned income, with specific rules regarding investment income, annual earnings, foreign income, and age.
-
Qualifying Child Criteria:
- To claim the EITC with a child, the child must pass certain tests related to relationship, age, residency, and disability status.
-
Consequences of Errors:
- Errors on the tax form can lead to delays in receiving the EITC refund and potential denials. Repayment of EIC amounts received in error may be required, and individuals could face bans on claiming the credit for a specified period.
-
Filing Past Years' EITC:
- Individuals who did not claim the EITC in the last three years but believe they qualify are encouraged to file an amended tax return to recover the eligible amount.
-
2024 Earned Income Tax Credit:
- A preview of the EITC for the 2024 tax year shows a range from $632 to $7,830, with similar dependencies on filing status and the number of children.
-
Income Thresholds for Past Years:
- The article provides income thresholds and maximum credit amounts for the years 2020-2022, allowing individuals to retroactively claim the EITC if they meet eligibility criteria.
As a tax expert, I emphasize the importance of understanding these concepts to optimize tax returns and ensure compliance with the ever-evolving tax regulations. If you have any specific questions or require further clarification on these topics, feel free to ask.
