Understanding the Benefits of an Earned Income Tax Credit

The earned income tax credit (EITC) is a tax benefit that can provide a financial boost to individuals and families who have earned income from a job. It is a refundable credit, meaning that if the amount of the credit exceeds the amount of taxes owed, the taxpayer will receive the difference as a refund. The main requirement for eligibility is that the taxpayer must have earned income from a job. The amount of the EITC is determined by income level, marital status, and the number of dependent children.

It is designed to provide additional financial support to low- and moderate-income workers with qualifying children. The credit can be used to reduce federal taxes owed or to receive a refund if the credit amount exceeds the taxpayer's tax liability. In addition to the federal EITC, some states offer their own version of the credit. For example, Arkansas has created a temporary earned income tax credit called the Inflationary Relief Income Tax Credit.

These state credits provide an additional benefit to low-income taxpayers by reducing their state income tax liability. The Get It Back campaign helps eligible people apply for tax credits and use free tax filing assistance to maximize their benefits. This campaign also helps taxpayers understand how credits such as the EITC can help them reduce their taxes or receive a refund. For 30 years, partnerships between government agencies and non-profit organizations have connected low- and moderate-income people with tax benefits such as the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) and Voluntary Tax Assistance (VITA).

These programs are designed to help taxpayers maximize their benefits and ensure they are taking advantage of all available credits.