The Earned Income Tax Credit (EITC) is a refundable tax credit for people who work but do not have high incomes. Essentially, in order for someone to receive this credit at tax time, they have to have worked and they must file a federal tax return (even if they are not required to file). It is estimated that $51-70 million of the EITC goes unclaimed in Utah each year.
Frequently Asked Questions
What is the EITC?
- The Earned Income Tax Credit (EITC) is a tax credit for people who work but do not earn high incomes.
- A tax credit is a dollar-for-dollar reduction of taxes owed. EITC is a refundable credit, meaning workers can reduce their tax to zero and then receive a refund of any remaining credit. Workers keep more of what they earn!
- EITC can increase the effective wage of qualifying workers by more than $2/hour. That is money in workers pocket.
How do I get the EITC?
- To receive the credit a person must have earned income, meaning the person must work.
- The worker must file a tax return, even if they are not required to file one.
Am I qualified and how much EITC will I get?
- Income, marital status and family size determine the amount of EITC.
- The income amounts and the amount of EITC are adjusted for inflation each year.
- Current income limits and credit amounts can be found on the IRS website. Easily find out if you are eligible for EITC by answering questions and providing basic income information using the EITC Assistant on irs.gov. The EITC Assistant also estimates the amount of your EITC!
- You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return
Why does the government have the EITC?
- EITC is one of the largest Federal anti-poverty initiatives. The intent is to lift families and individuals out of poverty.
- The Federal EITC was established by Congress in 1975 to offset the burden of Social Security and Medicare taxes on low-income taxpayers, to supplement wages for low-wage workers, and to make employment more attractive than welfare.
- The EITC was expanded in 1986 with President Reagan calling it "the best antipoverty, the best pro-family, the best job creation measure to come out of Congress."
How does EITC impact us in Utah?
- IRS estimates four of five eligible taxpayers claim and get their EITC, that means one in five eligible Utah taxpayers is missing money, possibly thousands of dollars, that is rightfully theirs!
- Many Utah households fail to file for the EITC because they are not aware of the credit, they don't earn enough to be required to file taxes (which means they can't receive the credit, because of language barriers.
- EITC is a financial boost for working people in a recovering economy and it brings Federal dollars to Utah's recovering economy.
As a community partner how can I help make sure the EITC is claimed by all eligible Utahns?
- Promote the EITC by using your communication network so more eligible people receive it, bringing more dollars into your local community.
- Network with employers, government agencies, social service organizations, etc. in your community who have a vested interest in reaching and educating low-to-moderate income workers about EITC.
- Sponsor a free tax preparation site in your community to prepare tax returns for those who cannot prepare their own and cannot afford professional help.
- Distribute flyers to recruit volunteers and reach tax filers.
- Host a link on your website to UtahTaxHelp.org.
- Encourage community leaders in the public, private and non-profit sectors to join the effort.
- Advocate for legislation that supports working families, such as state Earned Income Tax Credit, and to invest in our coalition.
- Educate your community about the coalition's services, help them claim tax credits and work toward financial stability.