What is the EITC tax credit?


Quick Answer

The EITC is the earned income tax credit and is a benefit to working people with low to moderate income and people who have qualifying children, notes the Internal Revenue Service. The IRS offers tools and forms with which taxpayers can judge their eligibility for the EITC.

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Full Answer

To be eligible for the EITC, taxpayers must have earned an income from working for someone or from running or owning a business or farm, explains the IRS. The IRS offers an earned income tax credit assistant to help determine filing status, child eligibility and an estimate of the available credit. There are limits and thresholds that impact this amount.

Taxpayers looking to claim the earned income tax credit must complete the associated federal tax return, reports the IRS. If the taxpayer is employing someone else to file this return, she should also bring the appropriate supporting documentation, including Social Security Number information, prior-year returns, income statements, such as W-2s or 1099s, expense records, bank account numbers, and childcare information. If the taxpayer has a qualifying child, she must include Schedule EIC with the return to claim the credit. The IRS offers a link to free electronic filing of related forms on its site.

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