The Earned Income Tax Credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children, in the United States. It was conceived as a “work bonus plan” to supplement the wages of low-income workers and help offset the effect of Social Security taxes. The amount of EITC benefit depends on a variety of factors, including income, filing status, and number of qualifying children.

To qualify for the EITC, a taxpayer must have earned income during the tax year, and investment income cannot have surpassed a specified level. The taxpayer must be a U.S. citizen or a resident alien for the entire year and have a valid Social Security number by the tax return’s due date. The investment income cap for 2023 is $11,000 or less.

The EITC is one of the most important tax credits available to individual taxpayers. It is a refundable tax credit, which means that taxpayers who qualify for the credit can reduce their tax bill by the amount of the credit and receive any remaining amount as a refund.

In summary, the EITC is a tax credit for low- to moderate-income working individuals and couples, particularly those with children, in the United States. It is a refundable tax credit that can reduce a taxpayers tax bill and provide a refund if the credit exceeds the tax owed. To qualify for the EITC, a taxpayer must have earned income during the tax year, and investment income cannot have surpassed a specified level.