Earned Income Tax Credit

Earned Income Tax Credit

Analysis and Proposals for Reform

The EITC has become the nation’s largest federal program to support low-income working families.  In 2003, it directly benefited 19.6 million working families, at cost of $34 billion, and each year it is responsible for lifting millions of people, including more than 2 million children, out of poverty.  It also provides an important incentive to work, increasing the effective wage for a single parent with one child by $1.25 an hour; a Treasury Department expert recently wrote that “the EITC encourages work, as well as alleviates poverty.”  In addition to the federal EITC, seventeen states  and the District of Columbia have adopted their own versions of the EITC, which “piggyback” on the federal EITC and thereby magnify its impact.

There is widespread agreement that the EITC is important and effective.  However, even among its supporters, there are several key concerns about its current structure and operation.

Get Free Tax Prep Help

The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs offer free tax help for taxpayers who qualify. To find a provider near you go to  http://irs.treasury.gov/freetaxprep/ and type in your zip code.