The earned income tax credit is often overlooked by taxpayers who did not earn a significant salary the previous year, but lower wage earners can benefit.
The EITC is a federal income tax credit for people who held a job but earned less than $53,505 in 2016 and also meet the eligibility requirements of the IRS.
The EITC is considered a refundable credit and taxpayers could pay a lower amount in federal tax, pay no tax or even get a tax refund. Workers who do not have a qualifying child could be eligible for a smaller credit of up to $506 and the average amount the EITC adds is $2,400 to refunds, according to the IRS.
Whether taxpayers live in large metropolitan cities or more rural areas, the EITC can yield a maximum of a $6,269 refund for families with qualifying children.
Taxpayers who qualify for this credit either held down a job or owned or ran a farm or business. The eligibility varies on the number of children in the household, but single workers who are childless and earned less than $20,430 could qualify for a smaller credit.
Individuals who are not sure if they qualify, can estimate the amount of the credit by using the IRS EITC Assistant.
To receive the credit, all individuals must file a return whether or not they owe taxes. Filing electronically is the preferred method by the IRS. There are many free options, including the IRS Free File or community tax help websites.
In 2015, more than 26 million families and individuals received the EITC, consisting of 17% of all returns filed. Some people believe the credit is only available to people with children, but single individuals can still earn a credit, said Richard Lavina, CEO of Taxfyle, a Miami-based tax and accounting marketplace.
To qualify for the credit, individuals and their family members must be U.S. citizens with valid social security numbers, were a citizen or resident alien the entire year, did not have foreign income and must file a return as anything other than married filing separately, he said.
"If you are not claiming a qualifying child, you or your spouse must be born between 1950 and 1990, and you cannot be claimed as a dependent on anyone else's return," Lavina said. "As you can see, there are many factors to consider, but a fair amount of individuals and families that can qualify for the credit."
Millennials are similar to other taxpayers, among whom one in five people are eligible for the EITC fail to claim the credit, said Suzanne Shier, tax strategist at Northern Trust, a Chicago-based financial services company.
"The Millennials who are in early career positions with growing families or making a transition from a two-income family to a single income family with the arrival of children may find that they meet the eligibility requirements for the credit," she said.