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Earned Income Credit (EITC)

A refundable tax credit for low-to-moderate-income working individuals and families, designed to reduce the amount of tax they owe and, for many, result in a tax refund.

Earned Income

Money received from working, such as wages, salaries, tips, and net earnings from self-employment, which is used to calculate eligibility for certain tax credits.

Lookback Provision

A rule that allows taxpayers to use income from a previous tax year instead of their current year's income to calculate a tax benefit, often when current income is lower.

Taxable Year

The annual period for which a taxpayer calculates their income and files a tax return, typically a calendar year for most individual taxpayers.

Internal Revenue Code of 1986

The main body of federal tax law in the United States, which the IRS enforces.