What Is the Earned Income Tax Credit

The EITC or Earned Income Tax Credit, is a benefit for working people who have low to moderate income. Millions of taxpayers who earned $53,505 or less last year may qualify for EITC for the first time in 2017.

If you are self-employed, a farmer, or another type of worker and earned $53,505 or less last year, you could receive a larger refund if you qualify for the EITC. If you have three or more qualifying children, you could get a maximum credit of up to $6,269. Unlike most deductions and credits, the EITC is refundable. In other words, if you are eligible you may get a refund from the IRS even if you owe no tax. Last year, more than 27 million eligible workers and families received almost $67 billion in EITC; with an average EITC amount of more than $2,455.

The IRS recommends that all workers who earned around $54,000 or less learn about EITC eligibility and use the EITC Assistant to find out if they qualify. The tool will help you to determine if you qualify to receive the EITC and estimate the amount of the credit you could get. Remember, to get the EITC, you must file a tax return and specifically claim the credit.

A new law approved by Congress requires the IRS to hold refunds claiming the EITC and the Additional Child Tax Credit (ACTC) until Feb. 15. By law, the IRS must hold the entire refund — even the portion not associated with EITC or ACTC. This change helps ensure taxpayers receive the refund they are owed by giving the agency more time to help detect and prevent fraud.