The Earned Income Credit

The Earned Income Credit (EIC) is a special tax benefit for working people who earn low or moderate incomes. Workers who qualify for the EIC 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 EIC, and the EIC reduces any additional taxes that workers may owe.

Working couples making less than $34,178 and individuals making less than $33,178 may find they now qualify for the Earned Income Credit. Enacted by Congress in 1975 and administered by the Internal Revenue Service (IRS), the EIC is also meant to offset social security and other living expenses. For the tax year 2002, single or married people who worked full or part time at some point in 2002 can qualify, depending on their income. Who qualifies:

• Families with two or more children who earn less than $33,178 ($34,178 if married filing jointly) are eligible for a credit of up to $4,140;
• Families with one child who earn less than $29,201 ($30,201 if married filing jointly) are eligible for a credit of up to $2,506;
• Workers without a qualifying child who earn less than $11,060 ($12,060 if married filing jointly) are eligible for a credit of up to $376.