The Earned Income Credit (EIC) is a refundable tax credit designed to help low- to moderate-income taxpayers reduce their tax liability or receive a refund. The EIC is particularly beneficial for working families with children, although some taxpayers without qualifying children may also qualify.
The amount of the EIC depends on:
- The taxpayer’s income level.
- Filing status.
- The number of qualifying children.
Taxpayers with earned income from wages, self-employment, or other sources can qualify for the credit if their income is below certain thresholds. For the 2021 tax year, the maximum credit for taxpayers with three or more children is $6,728.
The EIC is refundable, meaning that if the credit exceeds the taxpayer’s tax liability, they may receive the difference as a refund. Taxpayers claiming the EIC must meet specific eligibility criteria, including filing a tax return and having a valid Social Security Number for themselves and their dependents.