If you qualify for the Earned Income Credit (known as the EIC or EITC), you can receive hundreds or thousands of dollars in credits that reduce how much, dollar for dollar, you’ll pay in taxes. If the credit eliminates your tax bill completely, and there is some of the credit left over, you may get that extra money back in a refund.
Here’s an example. Joe and Julie have a 10-year-old child, Rory. Filing jointly, Joe and Julie earned $35,000 between their two jobs. Claiming Rory on their tax return, they received a total EIC of roughly $1,569. This was $1,569 less that they paid in taxes.
The following year, Julie got a raise at work, bumping up the money the couple made to $40,000. They still claimed Rory on their return, but because they made more money that year, their total EIC dropped to around $770.
When you qualify, the credit amount will go up as you earn more income, but once you earn too much, it will go down eventually to zero. TurboTax will not only tell you if you qualify for the EIC, it will figure out exactly how much you’ll receive in the credit.