The IRS estimates that 25% of taxpayers who are eligible for the Earned Income Tax Credit fail to claim it. The EITC was created in 1975 to offset the burden of Social Security taxes and to serve as a work incentive. The amount of the credit varies but it is generally determined by income and family size.

A taxpayer may be able to take the credit for tax year 2006 if the taxpayer:

* has more than one qualifying child and earns less than $36,348 ($38,348 if married filing jointly),

* has one qualifying child and earns less than $32,001 ($34,001 if married filing jointly), or

* does not have a qualifying child and earns less than $12,120 ($14,120 if married filing jointly).

To help taxpayers and tax preparers to determine eligibility for the EITC, the IRS has an interactive tool, the EITC Assistant. Basically if the EITC exceeds the amount of taxes owed, then a refund is due. You may be eligible for the Earned Income Tax Credit even if you didn’t earn enough income to be required to file a return. But if you do qualify, you will have to file to receive your refund.