Earned Income Credit - EIC

DEFINITION of '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.

BREAKING DOWN '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.

RELATED TERMS
  1. IRS Publication 596

    A document published by the Internal Revenue Service (IRS) that ...
  2. Child Tax Credit

    A credit given to taxpayers for each dependent child that is ...
  3. Non-Refundable Tax Credit

    A tax credit that can't reduce the amount of tax owed to less ...
  4. Dependent

    An individual whom a taxpayer can claim for credits and/or exemptions. ...
  5. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  6. Additional Child Tax Credit

    A refundable credit that can be claimed by taxpayers who are ...
Related Articles
  1. Taxes

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  2. Taxes

    Personal Income Tax Guide: 6 Overlooked Deductions And Credits

    By Ken ClarkDue to the overwhelming and ever-changing nature of the U.S. tax code, most taxpayers can't name more than the three or four of the most commonly deductible expenditures. Not only ...
  3. Taxes

    Are You Eligible For the Earned Income Tax Credit?

    Earned income tax credits in the United States decrease taxes owed on a dollar-for-dollar basis.
  4. Taxes

    Personal Income Tax Guide: Basic Concepts

    By Ken ClarkOne of the most important but misunderstood concepts in tax planning is the mechanics of the United States' progressive tax system. When asked how this system functions, most people ...
  5. Taxes

    This Explains $0 Federal Income Tax for Millions

    Understand how the earned income tax credit works and whether it applies to you.
  6. Professionals

    Preliminary Work And Taxpayer Data

    Information on topsic included in Section 1 of Part 1 on the SEE.
  7. Professionals

    Payment of Tax

    Payment of Tax
  8. Taxes

    How To Get The Most Money Back On Your Tax Return

    Many people pay more taxes than they have to simply because they don’t know better. Here are a few suggestions for getting the most out of your tax return.
  9. Professionals

    Tax Credits

    Tax Credits
  10. Professionals

    Tax Credits

    Tax Credits
RELATED FAQS
  1. What is the difference between a write-off and a deduction?

    Understand the differences between a tax write-off and a tax deduction. Learn how each one works to reduce income taxes and ... Read Answer >>
  2. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  3. Is the marginal tax rate a progressive tax?

    Learn how the marginal tax rate is a progressive tax that takes a higher percentage of income tax from high-income earners ... Read Answer >>
  4. What’s the difference between IRS Forms 1040 and 1040EZ?

    Though very similar, the differences between the 1040 and 1040EZ Forms are significant when it comes to filing your tax return. ... Read Answer >>
  5. How do I find out what my tax bracket is?

    Learn the information you need to determine what your tax bracket is. Read Answer >>
  6. What's the difference between a tax rate and a tax bracket?

    These two terms are often incorrectly used interchangeably. Find out the difference between your tax rate and your tax bracket. ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center