Earned Income Tax Credit (EITC)
Financial term in the Tax category
Definition
A refundable federal tax credit for low- to moderate-income working individuals and families. The credit amount depends on income, filing status, and number of qualifying children, and can result in a refund even if no taxes are owed.
Related Terms
Tax Credit
A dollar-for-dollar reduction in taxes owed. More valuable than deductions, which only reduce taxable income. Examples include Child Tax Credit and Earned Income Tax Credit.
Child Tax Credit
A federal tax credit that reduces taxes owed for each qualifying child under age 17. The credit directly lowers your tax bill dollar-for-dollar and may be partially refundable if it exceeds the taxes you owe.
Frequently Asked Questions
What is Earned Income Tax Credit (EITC)?
A refundable federal tax credit for low- to moderate-income working individuals and families. The credit amount depends on income, filing status, and number of qualifying children, and can result in a refund even if no taxes are owed.
Why is Earned Income Tax Credit (EITC) important in personal finance?
Earned Income Tax Credit (EITC) is an important tax concept that helps individuals make better financial decisions. Understanding Earned Income Tax Credit (EITC) can improve your financial planning and help you achieve your money goals.
How does Earned Income Tax Credit (EITC) relate to Tax Credit?
Earned Income Tax Credit (EITC) and Tax Credit are related financial concepts. A dollar-for-dollar reduction in taxes owed. More valuable than deductions, which only reduce taxable income. Examples include Child Tax Credit and Earned Income Tax Credit.
More Tax Terms
View all Tax termsGet Personalized Advice
Ask Warren AI how Earned Income Tax Credit (EITC) applies to your specific financial situation.
Try Warren Free