What is the Earned Income Tax Credit (EITC)?

The Earned Income Tax Credit (EITC) is specifically designed as a tax benefit for working individuals and families with low to moderate income. The primary purpose of the EITC is to incentivize and support employment by reducing the tax burden on those who earn income through work, thereby providing a financial boost to help improve their economic situation.

Eligible individuals can receive a credit that may reduce their tax liability and potentially result in a refund. The amount of the credit depends on various factors, including income, marital status, and number of qualifying children. This structure encourages people to seek and maintain employment while also aiding those who may struggle financially, fulfilling its role as a targeted support mechanism for lower-income workers rather than a broad or universal scheme.

The other options reflect misunderstandings about the EITC’s purpose: it is not aimed at high-income earners, nor is it exclusively for the elderly or a blanket benefit for all taxpayers. Instead, it focuses specifically on rewarding work and alleviating financial pressures for individuals and families in lower income brackets.