WHAT IS THE EARNED INCOME TAX CREDIT OR EIC?
The Earned Income Tax Credit (EIC or EITC) is a federal income tax credit or benefit for eligible working people who earn low or moderate incomes. It has several important purposes: to reduce the tax burden on these workers, to supplement wages, and to make work more attractive than welfare. The credit reduced the amoutn of tax an individual owe, and may be returned in the form of a refund. Workers who qualify for the EITC and file a federal tax return can get back some or all of the federal income tax that was taken out of their pay during the year. They may also get extra cash back from the IRS. Even workers whose earnings are too small to have paid taxes can get the EITC. What’s more, the EITC reduces any additional taxes workers may owe, such as payroll taxes.
