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Claiming as many tax breaks as you can (legally, of course) is key to paying the IRS as little as possible. There are two main types: deductions and credits. Deductions reduce your taxable income, but credits are even more valuable. They provide a dollar-for-dollar reduction of your tax bill. So you definitely don’t want to miss any you’re eligible for.
Each tax credit has its own rules outlining who qualifies and how much the credit is worth. There’s one in particular that saved Americans a whopping $57 billion last year. Here’s how to know if you can claim it on your 2023 taxes.
A huge break for low- to middle-income families
The Earned Income Tax Credit (EITC) offers a pretty hefty tax break to families with low to middle incomes. The average household claiming this benefit last year reduced their tax bill by $2,541.
Best of all, it’s a refundable tax credit. This means it can actually bring your tax bill below zero, unlike nonrefundable credits. Basically, if you reduce your tax liability below zero, you get the rest of the credit back as a refund. So if you owed no income taxes and qualified for a $2,000 EITC this year, you could get a $2,000 refund just for filing your return.
It’s a pretty sweet deal, but not everyone qualifies for it. The most important rule you must meet is having an adjusted gross income (AGI) below the threshold for your tax filing status and number of qualifying children, as outlined in the table below:
| Number of Qualifying Children | Single, Head of Household, or Widowed Filers | Married Couples Filing Jointly |
|---|---|---|
| 0 | $17,640 | $24,210 |
| 1 | $46,560 | $53,120 |
| 2 | $52,918 | $59,478 |
| 3 or more | $56,838 | $63,398 |
To be considered a qualifying child, an individual must meet all of the following requirements:
- They have a valid Social Security number.
- They are not claimed as a qualifying child on multiple tax returns.
- They must be:
- Under 19 at the end of the year and younger than you OR
- Under age 24 at the end of the year and a full-time student at least five months out of the year OR
- Any age if permanently and totally disabled at any time during the year
- They must be:
- A biological child, stepchild, adopted child, or foster child OR
- A sibling, half-sibling, or step-sibling OR
- A grandchild, niece, or nephew
- They must live in the same home as you for more than half the year.
- They must not file a joint tax return with another person.
In addition to meeting the income requirements above, you must also meet the following criteria to claim the EITC on your tax return this year:
- You had less than $11,000 in investment income in 2023.
- You have a valid Social Security number by the due date of your 2023 return.
- You were a U.S. citizen or resident alien for all of 2023.
- You are not filing Form 2555, Foreign Earned Income.
There are also special qualifying rules for the following individuals:
If you have any questions about whether you qualify for the EITC, check out the IRS’s EITC Assistant tool. It will ask you a series of questions to help you determine if you’re eligible for the credit.
Here’s how much you could get
The EITC you’re eligible for depends on your income and the number of qualifying children you have. Here’s a look at the maximum credit amounts for the 2023 tax year:
| Number of Qualifying Children | Maximum EITC Amount |
|---|---|
| 0 | $600 |
| 1 | $3,995 |
| 2 | $6,604 |
| 3 | $7,430 |
How to claim the EITC on your 2023 taxes
Claiming the EITC on your tax return is pretty simple. Your tax preparer or tax preparation software will ask you questions to determine your eligibility and then will automatically calculate your credit amount based on the information you provide about your income and family size.
The IRS will apply the credit amount to your tax bill, and if there’s any money left over, it’ll pay it back to you as a refund. But early filers should note that claiming the EITC could delay your return. By law, the IRS cannot issue EITC refunds before mid-February. But the IRS expects most EITC refunds to be available by March 1, 2024 for these early filers, if you choose to have your refund direct deposited and there are no other issues with your return.
You can keep tabs on your refund using the IRS’s Where’s My Refund tool. This information is updated daily, so keep checking if you don’t see any results the first time you try.
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