Host: What is Earned Income Credit?

Arthur Auerbach: The Earned Income Credit is a credit available to earners who are below a certain dollar threshold. Usually it's around the middle to upper 30's depending upon the year that you got under your preparation for your return. You have to have a dependent child living with you and this is to help you support your household. So the earned income credit is what's actually known as a refundable credit. The people who are eligible for the earned income credit need to know one very, very important thing. They should go to their employer, tell them that they are eligible for the earned income credit because you can have an adjustment on your withholding on your paycheck so that you get a higher amount in your paycheck each pay period instead of waiting until the end of the year and filing your return to get this credit. So that money is more important to you on a weekly or biweekly or monthly basis. When you file the tax return, you calculate your earned income credit, you subtract out how much that was already advanced to you if you will during the year and any excess or any additional amount you get as a credit on that year's filing. But the Earned Income Credit is very important to low income folks, particularly people where English might be your second language and they don't understand what might be available to them.