Earned Income Credit (EIC)

What is ‘Earned Income Credit – EIC’

A tax credit in the United States which benefits certain taxpayers who have low incomes from work in a particular tax year. The earned income credit (EIC) reduces the amount of tax owed on a dollar-for-dollar basis, and may result in a refund to the taxpayer if the amount of the credit is greater than the amount of tax owed.

Explaining ‘Earned Income Credit – EIC’

In order to qualify for the EIC, taxpayers must have earned income from work which is less than certain income limits and also meet a series of eligibility requirements. The eligibility requirements include: the taxpayer must have a qualifying child, or if the taxpayer does not have a qualifying child, the taxpayer must be between the ages of 25 and 65, live in the U.S. for more than half of the year and not qualify as a dependent of another person.

Further Reading

  • The impact of family income on child achievement: Evidence from the earned income tax credit – www.aeaweb.org [PDF]
  • Periodic Earned Income Tax Credit (EITC) payment, financial stress and wellbeing: a longitudinal study – link.springer.com [PDF]
  • The earned income tax credit and the limitations of tax-based welfare reform – www.jstor.org [PDF]
  • Material hardship among banked and unbanked earned income tax credit-eligible families – www.tandfonline.com [PDF]
  • Earned income tax credit policies: Impact and optimality: The Adam Smith Lecture, 2005 – www.sciencedirect.com [PDF]
  • The Earned Income Tax Credit as an Incentive to Report: Engaging the Informal Economy Through Tax Policy – heinonline.org [PDF]
  • Welfare, the earned income tax credit, and the labor supply of single mothers – academic.oup.com [PDF]
  • Dignity and dreams: What the Earned Income Tax Credit (EITC) means to low-income families – journals.sagepub.com [PDF]
  • Income mobility and the Earned Income Tax Credit: Short-term safety net or long-term income support – journals.sagepub.com [PDF]
  • The long-term impact of the earned income tax credit on children's education and employment outcomes – www.journals.uchicago.edu [PDF]