Workers who are paid low wages — and in many cases are trying to raise children on overstretched paychecks — can qualify for a financial boost by claiming the earned income tax credit on their tax returns.

But oddly enough, many people don't know a thing about a credit that often can help them bring home a bigger tax refund.

Maybe, they're working in a low wage job and just had a baby in 2024. Someone with one qualifying child and a lower income could qualify for up to $4,213 for the federal earned income credit.

Or maybe, they lost a good paying job and now are struggling to get by working a few jobs here and there. Someone who does not have children, for example, can qualify for up $632 for the federal earned income tax credit on their 2024 federal income tax returns, if their income is low enough.

Life happens — and change means that you could qualify for a tax credit one year when you couldn't in the past.

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Every year, almost a third of those who qualify for EITC for the first time in their lifetime can claim the credit because of changes in their marital, parental or financial status, according to the Internal Revenue Service.

The money received after claiming the earned income tax credit, though, is life-changing, according to advocates.

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Last tax season, for example, a single mother with three daughters in metro Detroit "was really on the precipice, really on the edge of difficulty," according to Priscilla Perkins, president and CEO of the Accounting Aid Society, which prepares taxes for free for individuals who qualify.

The mother ended up getting $3,500 in a tax refund last year, thanks to the earned income tax credit and the child tax credit, Perkins said.

"That is absolutely life-changing for a mother right on the edge of things," Perkins said.

Not everyone who qualifies, though, knows about the credits or free tax help that's available.

Many who overlook the earned income tax credit end up leaving good money on the table by not filing a tax return to claim the credit.

The IRS estimates that one in five eligible taxpayers misses out on claiming the earned income tax credit.

Many low-income workers aren't required to file a tax return because their incomes are so low that they're not obligated to file a return. So, they don't bother. But the tax return hassle is worth it for families and individuals who qualify for the earned income tax credit.

You'd even get a refund if you didn't have taxes withheld from your paycheck, and don't owe taxes, if you qualify for the credit.

"Confusion regarding eligibility is a big reason that people don't claim it, causing them to be cautious to avoid creating an adverse situation with the IRS," said Matt Hetherwick, chief program officer for the Accounting Aid Society.

"Eligible filers move in and out of the eligibility window every year," he said.

People can misunderstand the rules, such as those involving eligibility of dependents, filing status and earnings. As a result, it's best to work with a trusted tax professional or work with tax software, if you're comfortable doing your own taxes.

How do you get free tax help?

In 2025, people who generally make $67,000 or less qualify for 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, said the free tax preparation coalition served 24,000 metro Detroiters who claimed more than $26 million in tax refunds last year.

Charlene Coates, 60, who lives on Detroit's east side, said she learned of the free tax help through Wayne Metro about four years ago through the Rossiter Block Club.

Coates, who was a medical assistant in pediatrics but is now disabled, said her taxes are already done this year and she's waiting for an expected $1,500 refund.

Hill-Fuqua, 62, said she would have had to pay hundreds of dollars to get her taxes done somewhere else. She worked for years as a social worker but has had three strokes, and Wednesday she was anticipating surgery in a few days.

"Things have changed, so here I am," said Hill-Fuqua, who has been getting her taxes done for free for the past three years. She doesn't qualify for the earned income tax credit. But she is still anticipating a $2,400 federal income tax refund and a $1,500 state income tax refund via direct deposit.

"That's money I can use to pay some bills," she said.

What's the earned income tax credit?

The federal earned income tax credit, which has been around for 50 years, is designed to give low-income wage earners a financial lift through the tax system. Advocates say the credit recognizes that extra costs associated with holding down a job can discourage low-income wage earners from working.

"The Tax Reduction Act of 1975 introduced EITC as a modest tax break to provide financial help to economically challenged families and encourage work," according to the IRS web page celebrating the 50th anniversary of the credit.

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The earned income credit is refundable — which means that even people who did not earn enough money to have taxes withheld can receive hundreds or thousands of dollars in a tax refund for the earned income credit.

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

Claiming the credit can reduce the tax owed or may lead to a much larger refund.

Under the Protecting Americans from Tax Hikes Act, the IRS is not allowed to issue a refund involving the earned income tax credit before mid-February. 

This year, the IRS told early filers that refunds from tax returns that claim the earned income tax credit and the additional child tax credit are expected to be available in taxpayer bank accounts or on debit cards by March 3. That's if tax filers e-file the return, opt for direct deposit and there are no other issues with the tax return.

What is the maximum amount for the EITC?

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

Some larger families with lower incomes can receive much more than the average figures.

The federal earned income tax credit hits a maximum of $7,830 for a lower wage worker with three or more qualifying children in 2024.

The dollar amount that households receive will vary significantly and depend on your pay, filing status, and the size of your family. You need to have worked in 2024. The IRS has four tests for what is defined as a "qualifying child" — based on age, relationship, residency and filing status. The rules can get complicated.

How do you claim the credit?

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

When it comes to the earned income credit, it's helpful to know:

• The child or children you claim for the credit must be related to you, but grandparents who are raising children can qualify.
• The child or children must live in the same home as you do for more than half of the tax year.

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

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

Contact personal finance columnist Susan Tompor: [email protected]. Follow her on X @tompor.