<P> 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 that 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 along with Schedule EITC attached . </P> <P> EIC phases in slowly, has a medium - length plateau, and then 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 (although technically, since the EIC table moves by fifty - dollar increments, it is always preferable to have an extra fifty - dollar increment of salary or wages) considering the EITC alone . 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 . </P>

What is the purpose of the earned income tax credit