IRS Tax Tips
March 3, 2006 – AT-2006-44
The Earned Income Tax Credit
Millions of Americans forfeit critical tax relief each year by failing to claim the Earned Income Tax Credit, a federal tax credit for low-to-moderate income individuals who work. Taxpayers who qualify and claim the credit could owe less federal tax, owe no tax or even receive a refund.
In 2004, more than 21 million taxpayers received approximately $39 billion in EITC. However, the IRS estimates 25 percent of people who qualify for the credit do not claim it. At the same time, there are millions of Americans who have claimed the credit in error, many of whom simply don’t understand the criteria.
The EITC is based on the amount of your earned income and whether or not there are qualifying children in your household. If you have children, they must meet the relationship, age and residency requirements. Additionally, you must file a tax return to claim the credit.
If you were employed for at least part of 2005 and at least age 25, but under age 65, you may be eligible for the EITC based on these general requirements:
- You earned less than $11,750 ($13,750 if married filing jointly) and did not have an any qualifying children
- You earned less than $31,030 ($33,030 if married filing jointly) and have one qualifying child
- You earned less than $35,263 ($37,263 if married filing jointly) and have more than one qualifying child
For more information about the EITC, see Publication 596, Earned Income Credit, which contains eligibility criteria and instructions for claiming the tax credit. Copies of the publication are available in English and Spanish.