The Earned Income Tax Credit (EITC): An Overview

Source: Gene Falk, Margot L. Crandall-Hollick, Congressional Research Service, CRS Report for Congress, R43805, January 19, 2016

The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers with relatively low earnings. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. The credit is authorized by Section 32 of the Internal Revenue Code (IRC) and administered as part of the federal income tax system. In 2013, a total of $68.1 billion was claimed by 28.8 million tax filers, making the EITC the largest need-tested anti-poverty cash assistance program. …This report provides an overview of the EITC, first discussing eligibility requirements for the credit, followed by how the credit is computed and paid. The report then provides data on the growth of the EITC since it was first enacted in 1975. Finally the report concludes with data on the EITC claimed on 2013tax returns, examining EITC claims by number of qualifying children, income level, tax filing status, and location of residence…..