Earned Income Tax Credit (EITC), Definition(s) of

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The Earned Income Tax Credit (EITC) is a federal anti-poverty tax credit that is designed to supplement the earnings of low income workers by reducing or eliminating their taxes. The EITC is administered by the Internal Revenue Service. (Wirtz, 2003).

The Earned Income Tax Credit (EITC) is “a refundable federal income tax credit for low-income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When the EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return. The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.” (Internal Revenue Service, 2006).

Glossary Source: 

Internal Revenue Service. (2006). Earned Income Tax Credit: It’s easier than ever to find out if you qualify for EITC. Retrieved on May 16, 2006, from http://www.irs.gov/individuals/article/0,,id=96406,00.html.

Wirtz, R.A. (2003). Anti-poverty design: The cash-out option. Minneapolis, MN: Federal Reserve Bank of Minneapolis.