The number of Earned Income Tax Credit (EITC) returns filed to the Internal Revenue Service (IRS) hit a record high in 2013, according to the agency’s most recent data.
There were more than 28.8 million EITC returns filed in 2013, which also returned a record amount in payouts totaling upwards of $68 billion.
Low-income workers can receive the benefit when they file an annual income tax return and their income is below a certain threshold. To be eligible, an individual must have an income below $39,000 to $53,300, depending on whether he is single or married.
The average benefit in 2013 was $3,074 for a family with children. The benefit could be higher—up to $6,143 for filers with three children—or as low as $281 for filers with no children.
According to the Congressional Research Service (CRS), the program began as a small, temporary measure to reduce the tax burden on working, low-income families. But now the program has grown into the nation’s "largest anti-poverty cash entitlement program."
From 2012 to 2013 alone, there were 973,521 more EITC returns filed, and payouts increased by $3,955,459,000.
The program was intended to encourage poor individuals to enter the workforce, but this has not happened for all workers.
For married workers, research has found that the EITC benefit has caused a percentage of married mothers to stay out of the labor force.
"Couples may decide, for example, that one spouse’s EITC is sufficiently large to allow the other spouse to stay out of the workforce and instead raise children," states CRS. "These couples could determine that having two earners would not only reduce their EITC, but may also increase the cost of other expenses, like child care, ultimately lowering their disposable income."
The benefit can also discourage some workers from working longer hours since they would receive the same monetary benefit regardless of hours worked.
"An increase in wages from the EITC means they can work less to achieve the same level of income," states CRS.
The program does increase workforce participation for single workers, but that is because these workers could not receive the benefit if they did not work.