Lesson Summary

A tax credit is a dollar-for-dollar reduction of the tax.
The earned income credit is a refundable tax credit for certain people who work and whose earned income and adjusted gross income is under a specified limit.

There are many rules that apply to the earned income credit.

At the same adjusted gross income level, taxpayers

• who file a joint return and have three or more qualifying children receive the highest earned income credit.
• who do not file a joint return and do not have a qualifying child receive the lowest earned income credit.

Taxpayers who are eligible can receive the earned income credit even if their tax is zero.