Every year, roughly one in five eligible workers skips a federal tax credit that can be worth thousands of dollars.
It is the Earned Income Tax Credit, and it has been on the books since 1975.
The credit is designed for people who work but do not earn a lot.
For the 2023 tax year, the maximum credit ranges from $600 for workers with no children up to $7,430 for families with three or more qualifying kids.
Even childless workers can qualify, a group that often assumes the credit is not for them.
The reason so many people miss it comes down to two things: confusion and paperwork.
Some workers think they make too little to file a return at all.
Others worry that claiming the credit will trigger an audit or a bill.
The IRS treats it as a refundable credit, which means if it is larger than what you owe, you get the difference back as a refund.
You need earned income from a job or self-employment, and your adjusted gross income has to fall under certain limits.
For the 2023 tax year, a single filer with three children can earn up to $56,838 and still qualify.
A married couple filing jointly can earn up to $63,398.
Those income ceilings drop sharply for smaller households.
If you earned more than $11,000 from interest, dividends, or capital gains, you are out.
That rule trips up some retirees and part-time investors who otherwise look eligible on paper.
Married couples generally must file jointly to claim it.
If you file separately, you lose the credit in almost every case.
This catches some couples who split their taxes for student loan or medical reasons.
The easiest way to check is to use the IRS's free online assistant, which walks you through a short set of questions.
Free tax preparation help is also available through the Volunteer Income Tax Assistance program if you earn under about $60,000, have a disability, or speak limited English.
Tax software handles the credit automatically, but only if you enter every income document.
One common mistake is leaving out a side gig.
If you drove for a delivery app or sold items online, that income still counts as earned income, and it can raise your credit rather than lower it.
Skipping it can cost you money or create a mismatch with IRS records.
Another trap is paying someone to "find" the credit for you.
Legitimate tax preparers do not charge a separate fee just to claim it.
If a preparer promises a bigger refund by inflating your income or inventing dependents, walk away.
That is fraud, and you are the one who signs the return.
If you missed claiming the credit in past years, you can usually amend returns going back three years.
That means a worker who skipped it in 2020, 2021, or 2022 may still have money waiting.
This credit is one of the few places where the tax code actively rewards showing up to work.
Checking takes minutes, and the refund can cover a car repair, a month of groceries, or a chunk of rent.
Final Thoughts
If you are not sure whether you qualify, find out before the filing deadline passes.