Individuals earning low wages—often while trying to care for children on tight budgets—may be eligible for financial aid by applying for the earned income tax credit on their tax returns.

Surprisingly, many remain oblivious about this credit that can significantly boost their tax refund.

For instance, if they’re earning a low income and just welcomed a baby in 2024, a parent with one qualifying child could be eligible for up to $4,213 in federal earned income credit.

Alternatively, someone who recently lost a well-paying job and is now juggling various low-paying positions might qualify for as much as $632 in federal earned income tax credit on their 2024 federal income tax returns if their earnings are sufficiently low.

Life changes can open the door to claiming a tax credit in one year, even if you didn’t qualify in the past.

According to the Internal Revenue Service, nearly a third of first-time filers for the EITC can claim the credit due to changes in their marital, parental, or financial situations.

Advocates emphasize that the funds received from the earned income tax credit can dramatically improve the lives of recipients.

For example, last tax season, a single mother with three daughters living in metro Detroit “was really on the edge of financial hardship,” as stated by Priscilla Perkins, president and CEO of the Accounting Aid Society, which offers free tax preparation for those who qualify.

Thanks to the earned income tax credit and the child tax credit, the mother received a $3,500 tax refund last year, Perkins noted.

“For a mother in a precarious position, that is absolutely life-changing,” Perkins said.

However, not everyone who qualifies is aware of the credits or the free tax assistance available.

Many eligible individuals miss out on the earned income tax credit by failing to file a tax return to claim it, leaving significant money unclaimed.

The IRS indicates that one in five eligible taxpayers does not take advantage of the earned income tax credit.

Because many low-income earners are not required to file a tax return due to their low income, they often skip the process. Yet, filing could be beneficial for those who qualify for the earned income tax credit.

Even if you didn’t have any taxes deducted from your paycheck and don’t owe any taxes, you could still receive a refund if you qualify for the credit.

“Confusion about eligibility is a major reason why individuals don’t claim it, as they want to avoid complications with the IRS,” explained Matt Hetherwick, chief program officer for the Accounting Aid Society.

“Eligible filers can move in and out of eligibility each year,” he noted.

People may misunderstand the rules regarding dependents, filing status, and earnings, which is why it is advisable to consult with a reliable tax professional or use tax software if you’re comfortable managing your own taxes.

How can you obtain free tax assistance?

In 2025, individuals earning $67,000 or less typically qualify for free services through the IRS’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs.

Megan Thibos, director of community impact innovation for United Way for Southeastern Michigan, mentioned that the free tax preparation coalition assisted 24,000 individuals in metro Detroit who claimed over $26 million in tax refunds last year.

Charlene Coates, 60, a resident of Detroit’s east side, shared that she discovered free tax assistance through Wayne Metro about four years ago through the Rossiter Block Club.

Previously a medical assistant in pediatrics but now disabled, Coates said her taxes are already filed, and she’s awaiting an anticipated $1,500 refund.

Hill-Fuqua, 62, remarked she would have to pay hundreds to have her taxes prepared elsewhere. Having worked as a social worker for years, she has suffered from three strokes and was facing surgery shortly after her visit.

“Things have changed, so here I am,” said Hill-Fuqua, who has benefited from free tax preparation for the past three years. Though she does not qualify for the earned income tax credit, she is expecting a $2,400 federal tax refund and a $1,500 state refund via direct deposit.

“That’s money I can use to pay some bills,” she expressed.

What is the earned income tax credit?

The federal earned income tax credit has existed for 50 years and aims to support low-income wage earners through the tax system. Advocates assert that this credit acknowledges that the additional costs associated with maintaining a job can deter low-wage workers from employment.

“The Tax Reduction Act of 1975 introduced the EITC as a modest tax break intended to provide financial support for economically disadvantaged families and promote employment,” according to the IRS webpage celebrating the credit’s 50th anniversary.

The earned income credit is refundable–meaning individuals who did not earn enough to have taxes withheld can still receive hundreds or even thousands in a tax refund through this credit.

As of December 2024, approximately 23 million workers and families received about $64 billion from the federal earned income tax credit, according to IRS statistics.

Claiming this credit can lower tax obligations or can lead to a significantly larger refund.

According to the Protecting Americans from Tax Hikes Act, the IRS cannot issue refunds that involve the earned income tax credit until mid-February.

This year, the IRS informed early filers that refunds associated with tax returns claiming the earned income tax credit and the additional child tax credit are expected to be deposited into taxpayer bank accounts or onto debit cards by March 3—provided the returns are filed electronically, direct deposit is chosen, and there are no issues with the tax returns.

What is the maximum amount you can receive from the EITC?

Nationwide, the average federal earned income tax credit for the 2023 tax year was $2,743.

Families with lower incomes may receive significantly more than this average, especially larger families.

In 2024, the federal earned income tax credit can reach up to $7,830 for a lower wage individual with three or more qualifying children.

The amount that households actually receive will vary widely based on income level, filing status, and family size. It is important to have worked in 2024 to qualify. The IRS has four criteria defining what constitutes a “qualifying child,” which includes age, relationship, residency, and filing status. These rules can be complex.

How do you claim the earned income tax credit?

To claim the credit, you must file a 1040 federal income tax return. If you are claiming the credit for a qualifying child, you also need to submit the Schedule EIC, Earned Income Credit with your return.

When claiming the earned income credit, keep the following in mind:

• The children you claim must be related to you; however, grandparents raising grandchildren can qualify.
• The child or children must live with you for more than half of the tax year.

For the 2024 tax year, part of the earned income tax credit is accessible for filers with three or more qualifying children who have an adjusted gross income up to $59,899 if single and $66,891 if married filing jointly.

For those without children, the cutoff income is up to $18,591 if single and $25,511 if married filing jointly.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.