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Earned Income Tax Credit 2023

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The Earned Income Tax Credit (EITC) is a tax credit for working individuals and couples with low to mid-range earnings and minimal tax obligations. Eligible taxpayers can receive an average of $2,411 as a reduction on their overall tax bill with the EITC.

The EITC is designed to assist lower-income households by offsetting the cost of residing and working in the United States. To be eligible, your earnings must fall within specific parameters.

Each year, the IRS updates these standards to reflect inflation and other changes in the costs of living. If you think that you meet the criteria for EITC, keep reading to learn more about the earned income credit 2023 and if you’re eligible for it!

What Is The Earned Income Tax Credit (EITC)?

The Earned Income Tax Credit (EITC) is a tax credit for economically disadvantaged working families and singles. It can reduce the amount of federal income tax you owe and increase your refundable credits. The credit is designed to help families with and without children who are working hard to get by.

When the EITC was first introduced in 1975, it was called the “work bonus plan” credit because it helped supplement monthly earnings for families that worked. Today, the EITC supports working families in a different way: it gives them more take-home pay and makes it easier for them to meet their basic living needs.

And while the EITC has grown into one of the country’s most successful anti-poverty programs, its reach has remained relatively significant: over 25 million workers and families receive the credit.

How Does the Earned Income Tax Credit Work?

The earned income credit is an annual tax refund that can help offset taxes owed. It was created to encourage work and to give working families and single people some extra money for the basics, like food and rent. The EITC is based on your Adjusted Gross Income (AGI). Adjusted Gross Income is all the money you earn from wages, earnings from your business, investments, or Social Security benefits.

When calculating your EITC, you take into account both earned and unearned income.

  • Unearned income includes things like: Social Security benefits and child support payments, inmate wages, pensions, and other payments you receive while incarcerated, alimony, pensions or annuities, unemployment benefits, interest, and dividends.
  • Earned income includes things like: money you make from work – like salary, overtime pay, tips, or commissions. Any earnings that weren’t taxed by your employer such as running errands, online selling, freelance work, and deliveries using a car. Earned income also includes union strike benefits, nontaxable salary pay, certain disability benefits, and self-employment earnings.

Since earned income usually exceeds unearned income, it’s usually the main factor in determining your EITC. The amount depends on various factors, including your family size and household earnings.

Am I Eligible For the EITC?

The EITC is available to all taxpayers with AGI below certain limits, including single and joint filers with no dependents, and heads of household. No matter if you’re single or married, or if you have kids or not, you can claim the credit. Earning money from a job is the main requirement.

Other qualifying factors include:

  • Working at least 20 hours per week during the year (including overtime)
  • Earning wages or self-employment income; and/or
  • Annual income amount
  • Having a social security number
  • For individuals without children, there is an age cap of 19
  • Families with children under the age of 19

There are also special rules for certain groups, like those who are blind or disabled, or who have a child who is under age 17 and not fully responsible for their own care.

Eligibility For the EITC

How Much Can I Get With the EITC?

The amount of credit depends on the number of people in your family, your relationship status, and what you earn. It can go up to $6,728. As earned income increases, the credit amount decreases, and you cannot get EITC if you have savings of more than $10,300. The credit amount is higher for families with more children.

  • Families and individuals without children: $560
  • Families and individuals with one child: $3,733
  • Families and individuals with two children: $6,164
  • Families and individuals with three or more children: $6,935

Income Limit For The Earned Income Tax Credit in 2023

The EITC credit is available to families who have earned income and can include wages, salary, or self-employment revenue. It’s also available for qualifying non-custodial parents who are responsible for the care of children under age 17.

Number of children Maximum Adjusted Gross Income (AGI) single or head of household filers Max Adjusted Gross Income (AGI), married joint filers Maximum earned income tax credit
0 $16,480 $22,610 $560
1 $43,492 $49,622 $3,733
2 $49,399 $55,529 $6,164
3 or more $53,057 $59,187 $6,935

Does My State Have the EITC?

In 2023, earned income tax credit is not in all states. Many states have their own version of the EITC, with some having more generous benefits than others. The EITC can be claimed by taxpayers using a single federal form (EITC Form 1040), but some states also accept EITC forms filed with the Internal Revenue Service (IRS). The following is a list of states that offer EITC as well as their percentage of credit allowed.

  • California: 45%
  • Colorado: 10%
  • Connecticut: 23 %
  • Delaware: 20 %
  • District of Columbia: 40 %
  • Hawaii: 20 %
  • Illinois: 18 %
  • Indiana: 9 %
  • Iowa: 15 %
  • Kansas: 17 %
  • Louisiana: 3.5 %
  • Maine: 5 %
  • Maryland: 50 %
  • Massachusetts: 30 %
  • Michigan: 6 %
  • Minnesota: Ranges from 25 to 45 % of federal
  • Montana: 3 %
  • Nebraska: 10 %
  • New Jersey: 39 %
  • New Mexico: 10 %
  • New York: 30 %
  • New York City: 5 %
  • Ohio: 30 %
  • Oklahoma: 5 %
  • Oregon: 9 % (12% if under age 3)
  • Rhode Island: 15 %
  • South Carolina: 41.67 %
  • Vermont: 36 %
  • Virginia: 20 %
  • Wisconsin: One child (4 %), two Children (11 %), three Children (34 %).

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Who gets the earned income credit?

The qualifying factors include individuals and families, working at least 20 hours per week during the year (including overtime and self-employment). For individuals without children, there is an age cap of 19, and for families with children under the age of 19.

How much is the earned income credit?

Individuals with no qualifying children: $560, those with one child can get $3,733, those with two children can get $6,164, and those with three or more children can get $6,935. 

Can a single person get the earned income credit?

The EITC is available to single individuals, and they are eligible to apply for it. In order to qualify for credit, financial status is the main factor that must be met.

When can I expect my refund with EITC?

Decisions on paper applications can take up to four weeks, and online applications can take up to 21 days. Those who qualify can expedient payment from a maximum of 21 days after a decision is made.

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