What is the Earned Income Tax Credit (EITC)?

Jinnifer P. Ortquist, Michigan State University Extension -

Take the time to see if you are eligible for this refundable tax credit.

The Earned Income Tax Credit (EITC) is a refundable tax credit for qualifying workers. This tax credit is also known as the Earned Income Credit (EIC), and is a successful anti-poverty program. This tax credit can be very helpful to qualifying workers because it reduces the federal tax to zero and any unused credit is refunded.

What are EITC eligibility requirements?

  • There are many eligibility criteria for this tax credit. Visit the EITC Assistant to see if you qualify.

What determines how much EITC is received?

  • Income and family size determine this tax credit. Each year adjustments are made for inflation.
  • Review 2013 tax year income limits and maximum credits.

If eligible for the EITC, what do I do next?

  • Workers must file a tax return even if their income is below the filing requirement. There are many free tax preparation sites in Michigan for those who meet income guidelines.
  • If you earn $58,000 or less, you may qualify to file your state and federal taxes for free at www.MyFreeTaxes.com/UWSEM.
  • If you meet income eligibility requirements you can prepare and file your federal tax return online. Visit IRS.gov for a listing of free programs.

EITC facts?

  • Only four of the five people eligible for the EITC claim it
  • In 2013, the average amount of EITC paid out was $2335.00.
  • In 2013, over 27 million workers received over $63 billion in EITC for the 2012 tax year.
  • The EITC has brought an estimated 6.6 million people out of poverty.

Who are potential workers that might be missing out on the EITC? Workers who:

  • Are not proficient in English
  • Are self-employed
  • Receive disability pensions or has a child with disabilities
  • Live in rural areas
  • Are grandparents raising grandchildren, etc. 

For more information on this topic visit the EITC homepage. For additional financial resources, including educational workshops visit Michigan State University Extension or MIMoneyHealth.org.

This article was published by Michigan State University Extension. For more information, visit https://extension.msu.edu. To have a digest of information delivered straight to your email inbox, visit https://extension.msu.edu/newsletters. To contact an expert in your area, visit https://extension.msu.edu/experts, or call 888-MSUE4MI (888-678-3464).

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