Final answer:
To claim the Earned Income Tax Credit (EITC), a taxpayer must have a valid Social Security Number (SSN). The EITC provides a tax benefit that increases with earned income up to a certain point and is designed to support and incentivize work among low-income families.
Step-by-step explanation:
The type of taxpayer identification number required to claim the Earned Income Tax Credit (EITC) is a Social Security Number (SSN). To be eligible for the EITC, each person listed on the tax return must have a valid SSN issued by the Social Security Administration (SSA) that is valid for employment. This includes the taxpayer, spouse, and any qualifying children. The credit amount varies based on income, family size, and filing status. In order to claim the EITC, the tax filer's income and family situation must meet the criteria set by the Internal Revenue Service (IRS). For example, in 2021, a single parent with two children could receive a tax credit of $5,980 up to a modest income level.
The EITC is a key anti-poverty program that not only supports low-income families financially but also encourages work by providing greater tax benefits as earned income increases, up to a certain threshold. As income passes a maximum point, the tax benefit begins to phase out. With its inception in 1975, the EITC has since become one of the largest assistance programs for low-income individuals, effectively serving as a negative income tax by paying qualifying taxpayers more than what they owe in taxes.