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EncyclopediaSeeEICEarned income credit
Earned income creditA tax credit for taxpayers with children.Earned Income Tax CreditAlso called the EITC. A dollar-for-dollar reduction in the tax liability for lower and middle income persons in the United States. The credit is applied against taxes owed on wages, salaries, tips and other forms of earned income. Investment income is excluded and one may not have more than a certain amount of investment income to be eligible for the credit. Households with children may receive larger credits. The EITC is refundable, meaning if the credit causes one's tax liability to go below zero, one receives the difference from the IRS.Earned income credit (EIC).The earned income tax credit (EIC) reduces the income tax that certain low-income taxpayers would otherwise owe. It's a refundable credit, so if the tax that's due is less than the amount of the credit, the difference is paid to the taxpayer as a refund. To qualify for the EIC, a taxpayer must work, earn less than the government's ceiling for his or her filing status and family situation, meet a set of specific conditions, and file the required IRS schedules and forms. Earned Income CreditA refundable tax credit for qualified taxpayers based on earned income, adjusted gross income, and the number of qualifying children. See our Earned Income Tax Credit rate table for the current income limits.AcronymsSeeeditor-in-chief |