April 2024 CSQ

of the Tax Reduction Act of 1975. Over the
years, the EITC was expanded to include
increases in the maximum credit amount,
broader eligibility criteria, and additional
benefits for families with more children.
The EITC provides low to moderate-income working individuals and
families with a reduction in the amount of taxes owed or a refund if the
credit exceeds the tax liability. The EITC was designed to serve as a work
incentive to encourage individuals to seek and maintain employment,
thereby promoting workforce participation and reducing reliance on cash
assistance.
To be eligible for the EITC, a taxpayer must
have earned income from employment, selfemployment,
or certain other sources, and
meet certain income limits. In addition,
individuals can claim a larger amount of the
EITC if they care for a “qualifying child” in
their home for more than half of the year. A
“qualifying child” is defined as a child under
age 19 at the end of the tax year (or under age 24 if a full-time student).
The Child Tax Credit (CTC)
While the EITC is available to individuals with or without
minor children in the household, the credit is substantially
larger for those with children. The CTC, however, is
available only to families who will claim one or more
qualifying children as dependents when filing their tax
returns. A qualifying child must:
• Be under age 17 at the end of the year;
• Live with the parent for more than half the year; and
• Be properly claimed as a dependent on the parent’s tax return.
Parents can qualify for the full amount of the CTC if they meet all eligibility
factors and their annual income does not exceed $200,000.
Differential impacts of the EITC and CTC on parents who live apart
While the EITC and the CTC primarily benefit families with children, the
EITC and CTC do not apply equally to parents who live apart. Generally,