What does the Earned Income Tax Credit (EITC) provide for eligible individuals?

The Earned Income Tax Credit (EITC) is designed to assist low to moderate-income working individuals and families by providing financial relief through a refundable federal income tax credit. This means that eligible individuals not only can reduce the amount of taxes they owe but can also potentially receive a cash refund if their credit exceeds the amount of tax owed.

The EITC is specifically targeted at helping those who earn wages from working but may struggle to make ends meet due to lower income levels. This tax benefit aims to incentivize work and provide additional financial support to families, making it an essential tool for reducing poverty and encouraging employment.

In contrast, other options do not accurately describe the nature of the EITC. For instance, a non-refundable tax credit would not allow for the possibility of a refund exceeding the tax owed, which is a crucial feature of the EITC. Tax deductions for home ownership do not pertain to the EITC, as they relate specifically to expenses incurred in purchasing or maintaining a home, while tax exemptions for business income focus on excluding specific income from taxation, which is not relevant to the EITC's purpose. Therefore, the selection emphasizing the refundable federal income tax credit reflects the correct nature and intent of the Earned