The Earned Income Tax Credit (EITC) sometimes called the Earned Income
Credit (EIC) 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. For example if you have no tax liability or the
credit reduces your tax liability to zero you would still get a refund
of the EITC.
In Oregon through June of 2006 IRS issued more than $364 million of
Earned Income Tax Credit to 211,434 Oregon residents for tax year 2005.
They also report that based on their records that up to 20 – 25%
of individuals and families who should get the credit fail to file a
tax return.
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.
