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Income Tax Credit for Low-Income Individuals and Families

Information for Families

Published: February 10, 2016
Information About:
State/Local Child Support Agencies, Families
Topics:
Family Services & Referrals, Economic Stability/Job Services
Types:
Outreach/Brochures
Tags:
Earned Income Tax Credit (EITC), Internal Revenue Service (IRS), Toolkit & Training

In partnership with the Temporary Assistance for Needy Families (TANF) and the Internal Revenue Service (IRS), OCSE encourages eligible taxpayers to file for the Earned Income Tax Credit (EITC). Despite the success of the program, research reveals that perhaps 25% of eligible tax filers fail to claim it.

What is EITC?

  • EITC is a refundable tax credit that increases the income of low- and moderate-income working families by providing tax reductions and cash supplements.
  • As a federally funded anti-poverty initiative, the primary purpose of EITC is to help employed low-wage earners achieve financial self-sufficiency by offsetting taxes, supplementing wages, and making work more attractive than welfare.
  • Refunds received from EITC are not considered income for any federal or federally funded public benefit program, such as:
    • Medicaid
    • Supplemental Security Income
    • Supplemental Nutrition Assistance Program (food stamps)
    • Low-income housing
    • Most cash assistance payments received through state TANF programs

How does EITC help families?

  • Nationwide, last year, about 27 million taxpayers received more than $65 billion in EITC.
  • EITC has been instrumental in closing the poverty gap for many of the nation’s working poor.
  • Low-income children whose families recieve refundable tax credits are more likely to attend college and have higher earnings.
  • EITC increases have been linked to improved infant well-being and health.
  • Children in households that receive the EITC appear likelier to avoid early disabilities and illnesses linked to child poverty, which may also increase their earning capacity as adults.

How do I claim EITC?

  • Taxpayers can check their 2015 tax year eligibility by answering questions and providing basic income information using the IRS EITC Assistant that is available in English and en Español. The tools determine filing status, the number of qualifying children a parent may have, and then estimate the amount of EITC filers could expect. They can also print out a summary of their results.
     
  • Once eligibility is determined, taxpayers can file and claim the EITC for free:
    • The Volunteer Income Tax Assistance program offers free tax return preparation service through more than 13,000 community sites for people earning $54,000 a year or less.
    • The IRS offers brand name software products through the Free File website. The IRS works with national partners, community-based coalitions and thousands of local partners and governments. These partnerships provide free EITC tax return preparation, tax help, and tax education.

Tax Year 2015 qualification levels:

  • Earned Income and adjusted gross income must each be less than:
    • $47,747 ($53,267 married filing jointly) with three or more qualifying children
    • $44,454 ($49,974 married filing jointly) with two qualifying children
    • $39,131 ($44,651 married filing jointly) with one qualifying child
    • $14,820 ($20,330 married filing jointly) with no qualifying children
       
  • Tax Year 2015 maximum credit:
    • $6,242 with three or more qualifying children
    • $5,548 with two qualifying children
    • $3,359 with one qualifying child
    • $503 with no qualifying children

Useful resources:

Last Reviewed: February 10, 2016