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The Curious Bag
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The Earned Income Tax Credit (EITC), sometimes called the Earned Income Credit, is a federal income tax credit for lower income families who qualify. In addition, some states have earned income tax credit programs for state income taxes.
Purpose
Congress passed the legislation approving the EITC in 1975. It's goal was to offset the burden of Social Security taxes and increase work incentives.
Why Claim the Credit
The EITC can reduce the amount of taxes owed by a family and potentially increase the size of the tax refund for the family.
Effect on Welfare Benefits
The EITC is designed to have no effect on eligibility for welfare benefits such as Medicaid, SSI, food stamps, or low-income housing.
Maximum Credit
The maximum tax credit can change with the tax laws for each year. For the 2008 tax year, the maximum possible credit was $4,824.
Threshold
Qualification for the credit is determined by two factors: earnings and number of qualifying children. For a married couple filing jointly in 2008 who had two or more qualifying children, earned income had to be less than $41,646. This value changes from year to year.
Source:
Resource:
IRS: Earned Income Tax Credit
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