The Earned Income Tax Credit (EITC)

Did you know you can get a federal income tax credit just for working? The Earned Income Tax Credit (or EITC) is a special federal income tax credit that is available to low to moderate income working individuals and families. You may be able to qualify for it if your 2008 adjusted gross income is below $41,646 and you are not married filing separately. How much of a credit you qualify for depends on the number of dependents you claim, but it can be upwards of $4700, and may entitle you to a refund of Social Security and Medicare taxes that you have already paid.

Enacted in 1975, the Earned Income Tax Credit was designed to help offset the burden of social security taxes on lower income individuals and families, and to help provide an incentive to work rather than collect welfare or other social programs. When the EITC is larger than the amount of taxes owed, those who claim the credit are entitled to a tax refund.

To qualify for the EITC, taxpayers must meet certain requirements, such as:

  • The claimant must be resident of the United States, and have a social security number (as must all qualifying dependents).
  • Claimants without a qualifying child must be between the ages of 25-64.
  • Claimants must be single, head of household or married filing jointly (not married filing separately, except in certain special circumstances).
  • Claimants must not have investment income over $2900.

In order to qualify for the Earned Income Tax Credit, you must also file a tax return, even if you did not earn enough money to be obligated to file. The EITC has no effect on welfare benefits and is not used to determine eligibility for any social service program such as Medicaid, Food Stamps, low income housing, SSI (Supplemental Security Income) or most Temporary Assistance for Needy Families (TANF) payments.