The Earned Income Tax Credit: Knowledge Is Money
The federal Earned Income Tax Credit (EITC) is the largest cash transfer program for low-income parents in the United States.1 The refundable tax credit supplements wages and offsets taxes paid by low-income workers. Research suggests that the EITC has not only been effective in moving families over the poverty line, but has also encouraged work among single mothers.2 Recipients use money from the EITC for investments in education and savings as well as to help pay for daily living expenses and bills.3 The EITC is administered through the federal income tax system. To receive the credit, low-income workers must file a tax return, even if they are other-