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How the Earned Income Tax Credit Works

        Money | Taxes

Author's Note

As a faithful user of TurboTax, I've walked through the qualifying questions for the Earned Income Tax Credit a number of times, but never fully understood what it was I was qualifying (or not qualifying) for. As with any tax credit, I was disappointed to find out that I didn't qualify for any free money, year after year. But now that I understand what the EITC is and who it's for, I'm thankful that I never passed the EITC test. The EITC is rightfully reserved as an emergency credit for those who are truly struggling to stay above the poverty line, and I'm glad to learn that it works. The EITC is the most successful of all government anti-poverty programs. I'm glad I haven't needed it, but I'm also glad to know it's there if I ever do.

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Sources

  • Forman, Jonathan Barry. Tax Policy Center. "Earned income tax credit." http://www.taxpolicycenter.org/taxtopics/encyclopedia/EITC.cfm
  • Internal Revenue Service. "About EITC" http://www.eitc.irs.gov/central/abouteitc/
  • Internal Revenue Service. "About EITC: Basic Qualifications" http://www.eitc.irs.gov/central/abouteitc/basicqualifications/
  • Internal Revenue Service. "Earned Income Tax Credit Q&A" http://www.irs.gov/pub/irs-pdf/p3211esp.pdf
  • Internal Revenue Service. Publication 596. "Earned Income Credit (EIC)." 2011 http://www.irs.gov/pub/irs-pdf/p596.pdf
  • Internal Revenue Service. "The Range of EITC for 2011" http://www.eitc.irs.gov/public/site_files/3056-EITC_2011_Graph_1100x850.jpg
  • Short, Kathleen. U.S. Census Bureau. "The Research Supplemental Poverty Measure 2010." November 2011 http://www.census.gov/prod/2011pubs/p60-241.pdf
  • Tax Policy Center. "Taxation and the family: What is the Earned Income Tax Credit?" http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm
  • Tax Policy Center. "Taxes and the poor: How do refundable and nonrefundable credits differ?" http://www.taxpolicycenter.org/briefing-book/key-elements/poor/credits.cfm

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