Earned Income Tax Credit
Policymakers have made substantial progress in recent years in “making work pay” for low-income families with children by strengthening the Earned Income Tax Credit (EITC) and Child Tax Credit. But low-income workers not raising minor children receive little or nothing from the EITC; for example, a childless adult working full time at the minimum wage is ineligible, because his earnings exceed the income limit for the very limited credit for workers not raising minor children. As a result, childless workers are the sole group that the federal tax system taxes deeper into poverty.
About one in four current or former armed forces families with children, or 1.5 million military families, receive either the Earned Income Tax Credit (EITC) or the low-income component of the Child Tax Credit (CTC), two tax credits for low- and moderate-income working families, according to an analysis of Census and IRS data.
- Tax Credits for Lower-Income Working Families Help 21 Million Mothers
- The Earned Income Tax Credit and Refundable Child Tax Credit in Rural America
The Earned Income Tax Credit (EITC), which went to 27.5 million low- and moderate-income working families in 2010, provides work, income, educational, and health benefits to its recipients and their children. Recent ground-breaking research suggests that the EITC’s benefits extend well beyond the limited time during which families typically claim the credit.
Children who receive more help from the EITC do better in school, are likelier to attend college, and earn more as adults.
Each year millions of eligible workers risk missing out on the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) and free tax filing assistance for low- and moderate-income workers because they do not know they qualify, do not know how to claim the credits or do not know where to find free tax filing assistance. Your outreach efforts can ensure that eligible workers can receive the tax credits they’ve earned.
More about the EITC:
- Questions and Answers About the EITC
- 2012 Earned Income Tax Credit Estimator
- Policy Basics: The Earned Income Tax Credit
- Reducing Overpayments in the Earned Income Tax Credit
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The Earned Income Tax Credit (EITC), a federal tax benefit for low- and moderate-income workers, reduces the impact of the payroll and income taxes they pay; it also supplements the earnings of very low-wage workers. Building on the EITC’s success, roughly half of the states have enacted state EITCs, which offset state taxes and supplement wages for low-income workers.