1 in 5 taxpayers are missing out on thousands with this tax credit

(NewsNation) — Millions of Americans with low-to-moderate income are eligible for the earned income tax credit, but the Internal Revenue Service estimates one in five taxpayers in this group don’t claim it on their tax returns.

They could be missing out on thousands of dollars.

How does one qualify for the earned income tax credit?

The EITC is a tax break for workers with a low income. To qualify, you must have earned income below a certain amount, have investment income below a certain limit, have a valid Social Security number and be a U.S. citizen or legal resident for all of the previous year.

Workers with or without children can claim this credit.

The IRS has a detailed list of eligibility requirements.

What is earned income?

Earned income includes money from working a job, whether for an employer or yourself. This includes freelancing and gig economy work, such as booked rides or deliveries and online sales.

It does not include interests or dividends, pensions or annuities, Social Security, unemployment benefits, alimony, child support or pay from work as an inmate under incarceration.

Income eligibility for earned income tax credit

For the tax year 2024, the maximum credit you can receive if you have no children is $632, while those with one qualifying child can receive up to $4,213. If you have two children, the maximum amount is $6,960. People with three or more qualifying children can receive up to $7,830.

Maximum income to be eligible to receive the EITC: