IRS warns millions are missing an overlooked tax credit — here’s how to claim the cash

The Internal Revenue Service (IRS) is asking Americans to carefully check their tax returns this filing season, the agency said. The IRS warned that rushing through tax filing can lead to penalties, audits, delayed refunds, or missing out on free money. The agency confirmed that millions of Americans do not claim the Earned Income Tax Credit (EITC) even though they qualif. The EITC is meant for middle- and low-income workers and families.

What is EITC

The IRS said the credit was created to reward people “for their hard work.”The EITC is a tax credit that gives cash back, even if a person does not owe any tax. Every year, about 1 in 5 people who can get the EITC do not claim it. In 2024, around 23.5 million workers and families received EITC money. The total amount paid was about $68.5 billion. The average refund was about $2,916.

Many people used this money to pay for rent, home loans, food, childcare, travel, and utility bills. The IRS said many people miss this credit because they file their taxes too quickly or do not take help from a tax expert. Some taxpayers wrongly assume they do not qualify because the rules look confusing. The IRS Taxpayer Advocate Service said millions miss out on credits made to support work, reduce poverty, and help families. The service added that people miss the credit not due to mistakes, but because the rules are complex and help is limited.

IRS awareness push

To fix this, the IRS launched EITC Awareness Day on January 23, 2026. The IRS said local community events were held to educate taxpayers and help them claim the credit. According to the IRS website, there are six basic rules used to decide who qualifies for the EITC. To qualify, a taxpayer must have earned income, low investment income, and a valid Social Security number, as stated by The Sun. The IRS advised Americans not to file taxes until they collect all required tax documents. These documents include W-2 forms from employers.

They also include 1099 forms for income like unemployment pay, dividends, pensions, or retirement income. Gig workers may need forms such as 1099-K, 1099-MISC, or W-2. People who earned interest must have Form 1099-INT. The IRS also said taxpayers should keep records of digital asset transactions. Form 1095-A is required for those who used Health Insurance Marketplace coverage, according to the IRS. IRS letters and CP01A notices with Identity Protection PINs may also be needed.

How to get refund fast

Taxpayers must be US citizens or resident aliens for the full tax year to qualify. Those who filed Form 2555 for foreign earned income do not qualify, as noted by The Sun. The IRS said special rules apply for separated spouses who do not file jointly. There are extra rules for military members, clergy, and families caring for relatives with disabilities.

The IRS advised taxpayers to use the EITC Assistant tool on its website to check eligibility. The agency also urged people to e-file and choose direct deposit to get refunds faster. Most EITC refunds are expected to reach bank accounts by March 2. The IRS reminded Americans to watch for new deductions this season under the One Big Beautiful Bill (OBBB). The agency added that some lesser-known deductions, including for pet owners, may also apply this year.

FAQs

Q1. What is the IRS EITC tax credit?

It is a tax credit that gives cash refunds to low- and middle-income workers, even if they owe no tax.

Q2. Why are people missing the EITC refund?

Many people miss it because the rules are confusing or they think they do not qualify