How the Earned Income Tax Credit Works and Who Can Claim It

The Earned Income Tax Credit is money the IRS sends you when your income falls below certain thresholds

The Earned Income Tax Credit (EITC) is a refundable tax credit for people who work but earn below a set income limit. Unlike most tax credits that only reduce what you owe, the EITC can result in a refund even if you owe nothing — meaning the IRS sends you money. The amount depends on your income, filing status, and whether you have children.

You claim the EITC on your tax return using Form 1040 and Schedule EIC (or Schedule 8812 if you have may have access to children). The IRS processes it when they process your return. You do not need to contact anyone or take a separate step — it happens automatically if you fill out the form correctly and meet the income limits.

The credit is designed to offset the cost of working and to reduce the tax burden on lower-income households. It has been in place since 1975 and changes slightly each year — the income limits, the maximum credit amount, and the phase-out rates all shift based on inflation.

Key Takeaways

The EITC is a refund from the IRS that can pay you money even if you owe no tax, as long as your income is below the annual limit for your situation.
Income limits vary by filing status and number of may have access to children, ranging from roughly $16,000 to $60,000 depending on your household.
You must have earned income from work — self-employment, wages, or tips — to claim the credit; investment income or unemployment does not count.
You claim the EITC by filing a tax return with Form 1040 and Schedule EIC or Schedule 8812; the IRS calculates and sends the refund automatically.
The credit amount increases with each child you claim, up to a maximum, then decreases as your income rises above a certain point.

Income limits and credit amounts change every year

The IRS adjusts the EITC income limits and maximum credit amounts each January to account for inflation. For the 2024 tax year (the return you file in 2025), the income limits and credit amounts are different from 2023, which were different from 2022. You must use the numbers that match the year you are filing for.

The credit is larger if you have children. A single filer with no children has a much lower maximum credit than a single filer with three children. The income limit is also higher when you have children — you can earn more and still claim the credit. For example, in 2024, a single parent with one child has a higher income limit than a single parent with no children.

You can find the current year's income limits and maximum credit amounts on the IRS website (irs.gov) or in the instructions that come with Form 1040. Tax software also builds these numbers in automatically, so if you use software to file, you do not need to look them up yourself.

You must have earned income to claim the credit

The EITC requires earned income — money you made from working. This includes wages from a job, net profit from self-employment, or tips you reported. It does not include unemployment benefits, Social Security, disability payments, investment income, or money from a spouse's income alone.

If you are married and filing jointly, only one spouse needs earned income to claim the credit. However, both spouses must have a valid Social Security number or Individual Taxpayer Identification Number (ITIN). If you file as married filing separately, neither of you can claim the EITC.

You must also have worked during the tax year you are filing for. If you had no income in 2024, you cannot claim the EITC for the 2024 tax year, even if you had income in 2023.

may have access to children increase the credit amount significantly

If you have children, the EITC is larger. The IRS recognizes "may have access to children" — a term with specific rules. A may have access to child must be your son, daughter, stepchild, foster child, or a descendant of any of these (such as a grandchild). They must be under age 17 at the end of the tax year, live with you for more than half the year, and be a U.S. citizen, national, or resident alien with a valid Social Security number.

The credit increases with each may have access to child you claim, up to a maximum of three children. The credit for one child is smaller than the credit for two children, which is smaller than the credit for three or more children. Once you reach three children, adding more children does not increase the credit further.

You cannot claim the same child on two different tax returns. If you and another person (such as an ex-spouse or parent) both claim the same child, the IRS will reject one of the claims or ask for proof of who should claim the child. Keep records showing the child lived with you — school enrollment, lease or mortgage documents, or medical records all work.

How the credit phases out as your income rises

The EITC is not a flat amount for everyone below the income limit. Instead, it grows as your income rises from zero, reaches a maximum at a certain income level, then shrinks as your income continues to rise. This is called the phase-out.

For example, if you have one child, the credit might increase by 34 cents for every dollar you earn, up to a peak amount. Once your income passes a certain threshold, the credit decreases by 15.98 cents for every dollar you earn above that point. The exact percentages and thresholds change each year and depend on your filing status and number of children.

This means two people with the same number of children but different incomes will receive different credit amounts. Someone earning $20,000 might receive a larger credit than someone earning $35,000. The IRS instructions and tax software calculate this automatically — you do not need to do it by hand.

How to claim the EITC on your tax return

To claim the EITC, you must file a tax return, even if you normally would not have to file. You cannot claim the credit without filing. Use Form 1040 (the main individual income tax form) and attach Schedule EIC if you have no may have access to children, or Schedule 8812 if you do have may have access to children.

Fill in your income, filing status, and the information about any may have access to children. The form asks for each child's name, date of birth, Social Security number, and relationship to you. If you are using tax software, it will walk you through these questions and calculate the credit for you. If you are filing by hand, the instructions that come with the form show you how to calculate it.

File your return by the important date (usually April 15). If you are owed a refund, the IRS will send it to you by mail or direct deposit, depending on how you filed. If you chose direct deposit, the refund typically arrives within 21 days of the IRS accepting your return. If you chose a paper check, it takes longer.

The IRS may verify your information after you file

The IRS sometimes contacts people who claim the EITC to verify that the information on their return is correct. This is called an audit or examination. They may ask you to send documents proving your income, your filing status, or that a child qualifies.

Common documents the IRS requests include pay stubs or a letter from your employer showing your income, proof that a child lived with you (such as school records or a lease), and the child's birth certificate. Keep these documents for at least three years after you file, in case the IRS asks for them.

If the IRS finds an error, they will recalculate your credit and send you a notice explaining the change. If you disagree with their findings, you have the right to appeal. The notice will explain how to do this.

Frequently Asked Questions

Can I claim the EITC if I am self-employed?

Yes. Self-employment income counts as earned income. You must report your net profit (income minus business expenses) on Schedule C and then claim the EITC on your Form 1040. The income limit and credit amount are the same as for someone with wage income.

What if my income is right at the limit?

If your income is at or below the limit for your situation, you can claim the credit. The IRS uses your adjusted gross income (AGI) to determine this. If you are unsure whether you are under the limit, file the return and let the IRS calculate it — if you do not may have access to, they will straightforward not give you the credit.

Do I lose the EITC if I get a raise?

Not necessarily. The credit phases out gradually as your income rises, so a small raise might reduce the credit but not eliminate it. A large raise could push you above the income limit entirely. You can estimate the impact using the IRS EITC calculator on irs.gov.

Can I claim the EITC if I did not work the whole year?

Yes, as long as you had earned income at some point during the tax year. The credit is based on your total earned income for the year, not on how many months you worked. If you earned $8,000 over six months, that counts the same as earning $8,000 over twelve months.

What happens if I claim a child who does not may have access to?

If the IRS determines that a child does not meet the may have access to requirements, they will disallow the credit related to that child and recalculate your refund. You may owe money back. If the error was unintentional, you typically will not face penalties, but you should correct it as soon as possible.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.