Information Outreach
Earned Income Tax Credit
(updated 10-20-03)
Low-income families (with children) who work part time or full time
can increase their take-home pay through the Earned Income Tax Credit.
The amount of extra money depends on income and family size, and a
family does not have to owe taxes to get the EITC.
There are two ways families can receive extra EITC money:
- They can receive EITC money when filing their
tax return.
- They can receive part of the extra EITC money
in advance with each paycheck and the rest
when they file their tax return.
To get the extra EITC money in advance with each paycheck, employees
must file Form W-5 with their employer. Employees can get Form W-5
from their employer. The EITC does not cost the employer any money
because it is taken out of the employee's federal withholding taxes.
An example of how the EITC works:
In 2002, a family (with two children) with
gross income between $ and $ a year can receive
$ in extra EITC money. The family can receive
the entire $ when they file their federal tax
return or they can opt to receive $ per month
and the remaining $ when they file their federal
tax return.
Note that the EITC money is not counted as income when applying
for Medicaid, AFDC/TANF, Food Stamps, Supplemental Security Income
(SSI) or housing assistance.
To take advantage of the EITC, a family must file a federal tax return.
Free help with filing tax returns is available by calling the Internal
Revenue Service (IRS) at 1-800-829-1040.
Reports of Interest
- Should
the EITC for Workers Without Children be
Abolished, Maintained or Expanded? by
Robert Greenstein, Center on Budget and
Policy Priorities, Updated July 2000.
- A
Hand Up - How State Earned Income Tax Credits
Help Working Families Escape Poverty in
2000: An Overview, by Nicholas
Johnson, Center on Budget and Policy Priorities,
Updated June 2000.
- The
1998 Earned Income Credit Campaign Information
Kit, Center on Budget and Policy Priorities,
1998.
- Rising
Number of States Offer Earned Income Tax
Credits, by Nicholas Johnson and Ed
Lazere, Center on Budget and Policy Priorities,
September 14, 1998.
- "Earned
Income Tax Credit," Southern Regional
Initiative to Improve Access to Benefits
for Low Income Families With Children,
Southern Institute on Children and Families,
February 1998.
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