The Earned Income Tax Credit (EITC) is a refundable tax credit for families and individuals who have income from employment. It increases the amount refunded to a taxpayer or reduces the amount of tax owed.
As of December 2020, about 25 million eligible workers and families received about $62 billion in EITC. The average amount of EITC received nationwide was almost $2500. However, the non-participation rate ranges from 17% (Vermont) to 27% (California), according to the latest available IRS statistics. You must file a tax return to claim your EITC. Twenty-nine states, including New Jersey, maintain their own EITC program. New Jersey expanded their program for the 2020 tax year by lowering the minimum age requirement from 25 years to 21. An estimated 58,000 young wage earners could now receive the EITC credit.
Income Limits and Maximum EITC Credits
| Number of Qualifying Children | Single/Head of Household or Widow(er), Income Must be Less Than | Married Filing Jointly, Income Must be Less Than | Maximum Federal Credit | Maximum NJ State Credit |
| No Child | $15,820 | $21,710 | $538 | $215 |
| One Child | $41,756 | $47,646 | $3,584 | $1,434 |
| Two Children | $47,440 | $53,330 | $5,920 | $2,368 |
| Three or More Children | $50,954 | $56,844 | $6,660 | $2,664 |
EITC Assistant is an online tool to estimate if an individual or family may qualify by answering a number of questions. The IRS also publishes a one page fact sheet, IRS Notice 797 and a more detailed booklet, IRS Publication 596.
Free assistance to prepare and file your federal income tax return is available from a number of organizations and programs. United Way and H&R Block partner to offer MyFreeTaxes. All income levels are eligible to file both federal and state returns for free by using MyFreeTaxes.com.
Also available is Free File. Taxpayers whose adjusted gross income (AGI) is $72,000 or less qualify for any IRS Free File partners offer. To use Free File you must start by going to Free File. If you go to a company’s website first, you may be charged a fee.