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Tools for Understanding and Navigating the Earned Income Tax Credit

January 26, 2017

More than 26 million filers received approximately $65.6 billion in the Earned Income Tax Credit (EITC) during the 2016 tax filing season. Despite the numbers, the EITC remains one of the most overlooked refundable tax credits with 20 percent of eligible taxpayers not claiming for many reasons, including complexity. The confusion surrounding the EITC means one in five eligible taxpayers is missing out on up to $6,269 in tax credits.

To help increase eligibility awareness of this refundable credit, H&R Block Policy Perspectives developed a comprehensive information toolkit that provides answers to and resources on some of the most common questions about this important credit. Here are some highlights:

What is the Earned Income Tax Credit?

  • The EITC is a refundable tax credit for working people who have a low to moderate income. The credit is primarily geared toward benefiting working families and helps parents with children receive a larger credit than those without children.
  • An eligible person may receive the credit even if he or she does not owe or pay income taxes, but its size varies based on individual circumstances.

How do I claim this credit?

  • An individual who qualifies for the EITC should complete the following steps to claim the credit: gather documents and information, review the completed return for accuracy, file the return, and await his or her refund.
  • A new law implemented this tax season required the IRS to hold any refund with an EITC claim until February 15. The IRS begins releasing EITC refunds on February 15, however taxpayers may not have the refund deposited into their bank accounts or onto their debit cards until the following weeks.

Who qualifies for this credit?

  • While the IRS has clear guidelines on who qualifies for the EITC, an individual taxpayer’s situation is often complicated. The infographic hyperlinked above outlines scenarios for unmarried parents, individuals claiming an unrelated child, or a divorced couple with children and whether or not they would qualify for the credit.

Download all the documents in the toolkit here:

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