Why is EITC Important?
The Earned Income Tax Credit (EITC) is the federal government’s largest benefit for workers. For people who have earned income from working for someone or running a business or farm, it’s money that positively impacts change in their life, family and community.
We know four out of five eligible taxpayers receive their EITC. This means millions of taxpayers are putting EITC dollars to work for them. But missing that one in five means millions of people are not taking advantage of this valuable credit they earned. Almost a third of those who qualify for EITC will do so for the first time this year due to changes in their marital, parental, or financial status. That’s why reaching out through programs like this partnership with the ncIMPACT Initiative, The Jordan Institute for Families, and the UNC School of Social Work, Foundation for Health Leadership and Innovation is so important.
EITC is one of the Largest Antipoverty Programs
- Nationwide, as of December 2019, about 25 million taxpayers received about $63 billion in EITC. The average amount of EITC received nationwide was $2,476.1
- Approximately four of five people eligible for the EITC claim it.2
- EITC and the child tax credit (CTC), greatly reduce poverty for working families. These working family credits lifted an estimated 8.9 million people out of poverty in 2017, including 4.8 million or more than half of them children.3
- The cost of administering the EITC program ratio to claims paid is less than one percent.4
1Source: Calendar Full Year Report, December 2019.
2 Source: The national EITC participation rate is 78% (TY2016), estimated in cooperation with the Census Bureau. The TY2016 estimates based on the Current Population Survey (CPS) is 78%, while the TY2016 estimate based on the American Community Survey (ACS) is 78.6%.
3Source: Center on Budget and Policy Priorities, Policy Basics: The Earned Income Tax Credit, June 21, 2019.
4Source: House Committee on Ways and Means, Subcommittee on Oversight, Hearing on Improper Payments in the Administration of Refundable Credits, May 25, 2011.
Basic EITC Eligibility Requirements
Determining eligibility for EITC is complicated. You must make over 20 separate determinations. Basic qualifiers are outlined here. Refer to the EITC Home Page on irs.gov for more detailed information on who qualifies for EITC.
Who is missing out?
The IRS estimates that four out of five workers claim the EITC they earned. We want to help reach the potentially qualifying workers who miss out on thousands of EITC dollars every year. Our project is designed to help educate them about the tax credit and motivate them to join the four out of five who file and claim it. This includes workers who are:
- living in rural areas,
- receiving certain disability pensions or have children with disabilities,
- without a qualifying child,
- not proficient in English,
- grandparents raising their grandchildren, or
- recently divorced, unemployed, or experienced other changes to their marital, financial or parental status