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Don't overlook the EITC, a valuable refundable tax credit that often goes unclaimed

IRS Commissioner Danny Werfel_CASH Campaign Baltimore MD_EITC awareness 2024
IRS Commissioner Danny Werfel speaking at an EITC Awareness Day event in Baltimore sponsored by the CASH (Creating Assets, Savings and Hope) Campaign of Maryland. (Photo courtesy CASH/IRS via X/Twitter)

It's the Friday before the annual tax season kick off on Monday, Jan. 29. That means today is Earned Income Tax Credit (EITC) Awareness Day.

For the past 18 years, the Internal Revenue Service and community organizations, state and local government officials, schools, employers, and other groups have spent EITC Day getting the word out on this valuable, but too often overlooked, tax credit.

Today, IRS Commissioner Danny Werfel headed up I-95 for an EITC Awareness Day event in Baltimore sponsored by the CASH (Creating Assets, Savings and Hope) Campaign of Maryland.

The IRS' head honcho's participation underscores the agency's commitment to encouraging all who are EITC eligible to claim the tax break.

Latest IRS data show that approximately 23 million workers and families received about $57 billion in EITC for tax year 2022. But that's just a portion of those who could qualify for the tax break.

The IRS estimates that about one in five of EITC eligible taxpayers don't claim the credit, which two years ago averaged around $2,541.

EITC maximum amounts: The maximum EITC amounts that can be claimed on 2023 tax returns should push that average up, as the inflation adjusted amounts are larger.

The current maximum EITC for taxpayers with no dependents is $600. The top EITC amounts for families with children are —

  • $3,995 for filers with one qualifying child;
  • $6,604 for those with two qualifying children; and
  • $7,430 for families with three or more qualifying children.

All children associated with an EITC claim must have Social Security numbers.

Note, too, that the EITC is a refundable tax credit. That means that in addition to offsetting any tax you owe dollar-for-dollar, you can get a refund if there's any EITC amount left after the credit erases your tax bill.

Who can claim the EITC: To get those maximums, or any EITC amount, taxpayers must, as the "earned" in the credit's name indicates, have jobs. But they can't make too much money.

EITC claimants' income for the 2023 tax year must not exceed the following limits —

  • $17,640 ($24,210 if married filing jointly, or MFJ) with no qualifying children;
  • $46,560 ($53,120 for MFJ filers) with one qualifying child;
  • $52,918 ($59,478 for MFJ taxpayers) with two qualifying children;
  • $56,838 ($63,398 for MFJ filers) with three or more qualifying children.

Also, you must rely on those earnings. Regardless of your filing status, if you have investment income that exceeds $11,000 you cannot claim the EITC.

In addition to earnings limits, taxpayers must be between the ages of 25 and 64 to claim the EITC.

All children used in claiming an EITC amount much have valid Social Security numbers.

Married but separated spouses who do not file a joint return may qualify to claim EITC if they meet certain requirements. This applies if they —

  • did not live with their spouse during the last six months of the year, or if they have a separation agreement or decree; and
  • lived with their qualifying child or children for more than one-half of the year.

There also are special rules for members of the military and clergy, and for taxpayers and their relatives with disabilities.

Irregular filers typically miss out: Why is the EITC so often ignored? Year after year, the IRS sees patterns in those who don't bother to claim the tax credit.

Those missing out include individual people who live in non-traditional homes, such as a grandparent raising a grandchild, and those who have limited English skills; and who are 

For various reasons, these and other groups of taxpayers don't seem to get the word that they should explore the possibility they could benefit from the EITC.

In many cases, individuals don't realize that changes in their life may make them EITC eligible for the very first time. This could be due to a loss of income, a change in marital status, or the addition of a dependent child for whom they now are responsible.

Many single people ignore the EITC because they think it's only available to filers with dependent children. It's true the EITC is worth more to families with qualifying kids, but the $600 that a solo taxpayer could get is certainly worth claiming.

Another reason the EITC often goes unclaimed is that many people have earnings so low that they aren't required to file a tax return.

If you're unsure about your EITC eligibility, the IRS' EITC Assistant can help you relatively quickly check whether you qualify.

Complex and confusing: But perhaps the biggest deterrent is the EITC's complexity.

The EITC was developed in 1975 as a way to help offset the burden of Social Security taxes and provide an incentive to work. But like all parts of the Internal Revenue Code, it's become more complicated over the years. It takes lots of worksheets to sort through the earnings limits and family size options.

Tax software can help. Lower-income taxpayers should check out this year's Free File options. The participating tax software companies can help walk EITC eligible taxpayers through the credit claiming process on Schedule EIC, an excerpt of which is shown below.

Schedule EIC 2023 tax year version
See more tax forms and more about them at Tax Forms 2024.

If your adjusted gross income is more than this year's $79,000 Free File threshold, the IRS also provides online versions of paper tax forms via Free File Fillable Forms. Note, however, that these forms don't have the computation capabilities of commercial tax software.

Those who like more personal tax help can get it at a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) location. At these sites, usually in local community gathering places operated by nonprofit groups, IRS-trained volunteers will help eligible taxpayers prepare and e-file their returns, including EITC claims.

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