What’s the difference between the Earned Income Tax Credit and the Child Tax Credit?
Don’t leave unclaimed money on the table
You deserve to get the tax refund you’re owed. But, if you don’t know what you’re eligible for, you could be leaving thousands of dollars behind.
Tax credits are refunds and tax relief from the state and federal governments. Some credits offset the cost of pursuing your education, saving for your retirement, or installing solar panels on your home. Others are a lot less common (did you spend time serving on a jury?), including some you’ll likely never need to worry about (unless you’re planning to finance a major motion picture).
The Earned Income Tax Credit (EITC) and the Child Tax Credit are among the more common ways for working people and families to put money back in their pockets and get tax relief. But, while there is some overlap, there are different rules to qualify for each of them, and they work in different ways.
What is the EITC?
The EITC is money you’re owed for income you’ve already earned. In Connecticut, there is a federal EITC, along with a state one.
Depending on your income, if you qualify, you can receive hundreds or thousands of dollars. It’s money that you’ve worked for, but you can’t get it unless you claim it. You are able to backfile taxes to receive money you’re owed for the last few years. We have a quiz that will tell you if you could qualify, and our partners at Simplify CT can help you get started.
You don’t have to have dependents to qualify for the EITC. However, you will get a larger refund if you have them. Claiming the EITC won’t impact your benefits like SNAP, WIC, TANF, HUSKY, Medicaid, or CHIP.
What is the Child Tax Credit?
The Child Tax Credit is intended to offset the costs of raising your children. It’s worth up to $2,000 for your 2024 federal tax return. Connecticut has its own version, as well.
You have to meet seven requirements to claim the Child Tax Credit. Your child has to be under the age of 17. The other requirements revolve around the child’s relationship to you and where they live. The IRS has more information on what you need to qualify.
You can claim multiple tax credits if you have children. There are different benchmarks for each one, and they differ in how or if they put money back in your pocket . The Child Tax Credit, for instance, is different from the Additional Child Tax Credit, the Child and Dependent Care Credit, and the Credit for Other Dependents.
How the EITC and Child Tax Credit work together
You are able to claim both the EITC and the Child Tax Credit if you have children. However, they work in different ways.
The Child Tax Credit is considered a “related credit,” not a refundable credit. That means that it reduces what you owe in taxes, but that you don’t get any money back from the government when you file. Instead, the most it can do is reduce what you owe to $0.
The EITC, meanwhile, is money that the government owes you. You will get it as part of your tax return.
The credits have different requirements for dependents
You don’t qualify for the Child Tax Credit unless the dependents you’re claiming are under the age of 17.
The EITC is broader. You can claim your child for the EITC if they are under the age of 19 or are a full-time student under the age of 24. The age requirement doesn’t apply if your child is considered to be “permanently and totally disabled.”
The credits have different income requirements
To qualify for the EITC, you’re required to have earned income of less than a certain amount. That can include working for a company, running your own, performing gig work, making some money off investments, or doing freelance projects. We have a blog explaining what “earned income” for the EITC includes.
You are not required to have an income for the Child Tax Credit.
How do you know if you qualify?
You deserve the maximum refund you’re qualified for. The EITC puts money back in people’s pockets – that’s money you could use to help pay for rent, groceries, or to invest in your future. The Child Tax Credit gives families tax relief.
Twenty percent of eligible people in Connecticut haven’t claimed their EITC. That’s $100 million each year! Even if you didn’t file for taxes in 2021, 2022, or 2023, you can backfile and receive the money you’re owed for those years.
Our partners at Simplify CT can help you understand if you qualify for tax credits and help you file your returns for free. You can also file for free at Volunteer Income Tax Assistance (VITA) sites.
Take the quiz to see if you could qualify for the EITC.
