The Earned Income Tax Credit, or EITC, provides tax relief to millions of low- to moderate-income Americans, although the IRS estimates that one in five eligible taxpayers don’t claim it on their tax returns.
Established in 1975, the EITC originally provided a maximum credit amount of just $400. Today, taxpayers can receive a credit of up to $7,830 per year, depending on their income and how many children they have.
“The Earned Income Tax Credit is an economic lifeline for so many. Yet, 7 million eligible low-income taxpayers each year never claim the credit,” said former IRS Commissioner Danny Werfel in 2024.
Werfel believed the IRS could do more to make sure eligible families are aware of the lucrative tax credit, which is part of why he helped push the tax bureau to launch Direct File options for the 2023 tax season. This free service guides taxpayers through the filing service, and in the 2024 tax season expanded to cover 25 states—more than double the original 12.
The former commissioner hoped to see more families take advantage of the EITC as the IRS expands its digital offerings. Eligible households must meet some strict requirements, of course. Let’s take a look at the details to see if you qualify.
What is the EITC tax credit?
The EITC is designed to help low- to moderate-income working individuals and families. It can significantly reduce their tax burden and sometimes helps to provide a refund.
Not everyone qualifies for the EITC, of course. Taxpayers who do qualify must have earned income from employment or self-employment. This income must be below specific thresholds, which change yearly.
Taxpayers must also file a tax return, even if their income is below the filing requirement. They cannot claim the EITC if they are married but file separately. Lastly, taxpayers must be citizens or residents of the United States for at least half the year.
How it’s calculated
The amount of the EITC varies based on income and the number of qualifying children. It has a maximum credit, which increases with each child, up to a limit. For tax year 2024, the maximum credit amounts and adjusted gross income (AGI) limits are:
The credit begins to phase out as income rises above a certain level. This means fewer benefits are offered for higher earners.
What you’ll need to apply
The number of children you have can affect the amount you receive. To qualify, children must meet specific age, relationship, residency, and joint return requirements. Children must be under the age of 19 at the end of the tax year, or under 24 if they are full-time students.
They must be a taxpayer’s child, stepchild, foster child, or descendant of these. The child must also live with the taxpayer for more than half the year. If qualifying children do not meet these criteria, the taxpayer may not receive the full credit.
Gather all income documentation
In addition to qualifying children, taxpayers must provide specific income documentation. These include:
- Proof of income for AGI: W-2 forms or 1099 forms showing wages earned from jobs.
- Social Security numbers: documentation for everyone listed on the tax return, including dependents.
- Investment income: Applicants must have received $11,600 or less in investment income to qualify.
- Filing status: information on the tax return’s filing status, such as single or married.
Taxpayers should also keep records of any other income, such as self-employment or interest income. If someone is claiming dependents, they must provide documentation on the relationship and residency of those dependents. This can include school records or medical bills. Having all required documentation can speed up the processing of the EITC claim.
Earned income does not include:
- Pay you got for work when you were an inmate in a penal institution
- Interest and dividends
- Pensions or annuities
- Social Security
- Unemployment benefits
- Alimony
- Child support
Don’t delay—file before deadlines to avoid penalties
By law, the IRS cannot issue EITC refunds before mid-February, but we are now within the eligible window. Make sure you file for this credit along with your tax return before any applicable deadlines. For the 2024 tax year, the following deadlines apply:
- April 15, 2025: Deadline for filing 2024 tax returns for most tax filers
- May 1, 2025: Extended deadline for filers impacted by Hurricanes Helene or Milton
- October 15, 2025: Extended deadline if you file Form 4868 for an automatic six-month extension, or for residents of California impacted by the January wildfires
Make sure you don’t delay filing; while you can receive an extension if necessary, failing to file on time can lead to expensive penalties. The IRS even offers a free filing service in some states if your AGI is $84,000 or less, so don’t delay.
You can typically expect your tax refund within 21 days
Once the IRS receives the tax return, they review it for accuracy. The refund process, if applicable, typically takes about 21 days from the filing date for direct deposits. However, processing may take longer for returns claiming EITC due to extra reviews.
The IRS may contact taxpayers for additional information if necessary. If the return is missing documents or has errors, it can slow down processing. Taxpayers can check the status of their refunds on the IRS website. This tool helps keep applicants informed about their EITC claims and possible refunds.
