Intuit Academy Tax Practice Exam

The Earned Income Tax Credit (EITC) is a refundable tax credit aimed at assisting low to moderate-income individuals and families. This means that the credit can not only reduce the amount of tax owed but can also result in a refund if the credit exceeds the tax liability. The primary goal of the EITC is to alleviate poverty by incentivizing work and easing the tax burdens on those with lower incomes.

While it is true that the EITC is especially beneficial for families with children—there are additional credits available for those households—the EITC is not solely designed for families with children; individuals without children can also qualify for the credit under specific income limits. This broadens the scope of who can benefit from this financial support.

In contrast, the other options provide inaccurate descriptions of the EITC. It is not a non-refundable tax credit nor is it catered exclusively to high-income earners, nor is it a tax deduction targeted at self-employed individuals. Each of these distinctions reinforces why designating the EITC as a refundable tax credit for low to moderate-income individuals is accurate and essential to understanding its purpose within the tax system.