What does EITC mean in US Government?

This page is about the meanings of the acronym/abbreviation/shorthand EITC in the Governmental field in general and in the US Government terminology in particular.

Earned Income Tax Credit

Governmental » US Government

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Definition

What does EITC mean?

Earned income tax credit
The United States federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children. For a person or couple to claim one or more persons as their qualifying child, requirements such as relationship, age, and shared residency must be met. In the 2013 tax year, working families, if they have children, with annual incomes below $37,870 to $51,567 (depending on the number of dependent children) may be eligible for the federal EITC. Childless workers who have incomes below about $14,340 ($19,680 for a married couple) can receive a very small EITC benefit. U.S. tax forms 1040EZ, 1040A, or 1040 can be used to claim EITC without qualifying children. To claim the credit with qualifying children, forms 1040A or 1040 must be used with Schedule EITC attached.EITC phases in slowly, has a medium-length plateau, and phases out more slowly than it was phased in. Since the credit phases out at 21% (more than one qualifying child) or 16% (one qualifying child), it is always preferable to have one more dollar of actual salary or wages considering the EITC alone. (Investment income, however, is handled far less gracefully, as one more dollar of income can result in the sudden 100% loss of the entire credit.) If the EITC is combined with multiple other means-tested programs such as Medicaid or Temporary Assistance for Needy Families, it is possible that the marginal tax rate approaches or exceeds 100% in rare circumstances depending on the state of residence; conversely, under certain circumstances, net income can rise faster than the increase in wages because the EITC phases in.For tax year 2020, the maximum EITC benefit for a single person or couple filing without qualifying children is $538. The maximum EITC with one qualifying child is $3,584; with two children, it is $5,920; and with three or more qualifying children, it is $6,660. These amounts are indexed annually for inflation. The earned income tax credit has been part of political debates in the United States over whether raising the minimum wage or increasing EITC is a better idea. In a random survey of 568 members of the American Economic Association in 2011, roughly 60% of economists agreed (31.7%) or agreed with provisos (30.8%) that the earned income tax credit program should be expanded.

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"EITC." Abbreviations.com. STANDS4 LLC, 2021. Web. 11 Apr. 2021. <https://www.abbreviations.com/term/322322>.

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