Earned Income Tax Credit

A Tax Break for Working People

The Earned Income Tax Credit (EITC) is a refundable tax credit for families and individuals who have income from employment. It increases the amount refunded to a taxpayer or reduces the amount of tax owed. As of December 2020, about 25 million eligible workers and families received about $62 billion in EITC. The average amount of EITC received nationwide was almost $2500. However, the non-participation rate ranges from 17% (Vermont) to 27% (California) according to the latest available IRS statistics. You must file a tax return to claim your EITC.

Twenty-nine states, including New Jersey, maintain their own EITC program. New Jersey expanded their program for the 2020 tax year by lowering the minimum age requirement from 25 years to 21. An estimated 58,000 young wage earners could now receive the EITC credit.

Number of Qualifying ChildrenSingle/Head of Household or Widow(er), Income Must be Less ThanMarried Filing Jointly, Income Must be Less ThanMaximum Federal CreditMaximum NJ State Credit
No Child$15,820$21,710$538$215
One Child$41,756$47,646$3,584$1,434
Two Children$47,440$53,330$5,920$2,368
Three or More Children$50,954$56,844$6,660$2,664

EITC Assistant is an online tool to estimate if an individual or family may qualify by answering a number of questions. The IRS also publishes a one page fact sheet, IRS Notice 797, and a more detailed booklet, IRS Publication 596.

Free assistance to prepare and file your federal income tax return is available from a number of organizations and programs. United Way and H&R Block partner to offer MyFreeTaxes. All income levels are eligible to file both federal and state returns for free using MyFreeTaxes.com.

Also available is Free File. Taxpayers whose adjusted gross income (AGI) is $72,000 or less qualify for any IRS Free File partner offers. To use Free File you must start by going to Free File. If you go to a company’s website first, you may be charged a fee.

The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $57,000 or less, persons with disabilities and limited English speaking taxpayers who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals. The AARP Foundation Tax-Aide program offers free tax preparation to anyone, with a special focus on taxpayers who are 50 or older or who have low to moderate income.

The IRS provides a Find a Location for Free Tax Help page. The NJ 2-1-1 Partnership maintains a NJ Free Tax Assistance Locations page. South Jersey residents in Atlantic, Burlington, Camden, Cape May and Cumberland Counties, as well as residents in Philadelphia and Montgomery County, can get tax preparation help from the non-profit Campaign for Working Families.

Non-profits, advocacy groups and government agencies can participate in outreach efforts by promoting the NJ EITC Page and the NJ EITC Marketing Toolkit. Groups interested in conducting an outreach campaign or promoting EITC on social media should also visit the Center on Budget and Policy Priorities’ Tax Credit Outreach Kit.

Employers are encouraged to distribute copies of “Have You Told Your Employees About the Earned Income Credit (EIC)?”, IRS Notice 1015. New Jersey employers must give written notice to employees. The New Jersey Division of Taxation also publishes a statement for employees.

Smartphone users can download IRS2Go, an official IRS mobile app. You can use it to check your tax refund status, find free tax prepartion services, or even send a payment to Uncle Sam.

Sources: IRS, Center on Budget and Policy Priorities, NJ Division of Taxation, NJ Office of Legislative Services

Last updated: January 31, 2021

Copyright © 2021 by Michael R. Swayze