Income and tax credits
The refund families never claim
Tax credits for families are claimed on a return — and families below the filing threshold often do not file, so the money sits unclaimed.
6 min read
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Income and tax credits
This category holds the largest single sum most families in it will receive in a year, and it is also the one most often left on the table. The reason is structural rather than complicated: the money is claimed on a tax return, and families whose income is low enough to qualify are frequently not required to file one — so they do not, and the money stays unclaimed.
Programs in this category
Each of these is a separate program with its own application and its own agency. Being enrolled in one does not enroll you in any of the others.
Earned Income Tax Credit
A refundable credit for working households, paid even if you owe no tax. Scales with earnings and number of children.
Run by · The IRS, claimed on your return
Child Tax Credit
A separate credit per qualifying child, with its own rules and partial refundability.
Run by · The IRS, claimed on the same return
Free tax preparation
VITA sites and IRS Free File — trained volunteers and free software, with no percentage taken from your refund.
Run by · IRS-supported nonprofits and partners
TANF
Monthly cash assistance for families with children, with work requirements and time limits, and often a gateway to other supports.
Run by · State human services agencies
Child support services
Help establishing, modifying, and collecting support. Available to any parent at low or no cost.
Run by · State and county child support agencies
File a return even if you are not required to
This is the entire mechanism. The Earned Income Tax Credit and the Child Tax Credit are claimed on a tax return. Families below the filing threshold often skip filing, which is reasonable and which forfeits the money.
For a family with children, the EITC can be one of the largest single payments received in a year. The Child Tax Credit is separate, has its own rules, and many families qualify for both.
Filing is the only route. There is no other application.
Free preparation, and what to avoid
VITA sites provide free preparation by trained volunteers for households under an income threshold. IRS Free File offers free online preparation. Both are free in a meaningful sense — no percentage of your refund, no fee taken off the top.
Products marketed around refunds — advances, refund transfers, prepaid card arrangements — carry fees that can consume a real portion of a credit designed to reach your household. The only thing they offer is speed, and the difference is weeks.
Returns can generally be filed for a limited number of prior years, so a credit missed two years ago may still be recoverable. A VITA volunteer can tell you which years remain open.
Two things that cause errors
Self-employment counts as earned income. Gig work, contract work, and cash work all count. Families sometimes assume the EITC requires a W-2 and rule themselves out.
Only one person can claim a child in a year. In shared custody, this is where errors and disputes arise. The residency test — living with you more than half the year — is the usual sticking point. Sorting it out in advance with the other parent is far easier than resolving it after both returns are filed, and an erroneous claim means repaying with interest.
TANF is smaller than the doors it opens
TANF provides monthly cash assistance to families with children, administered by states with wide discretion and amounts that differ enormously between them. It generally carries work requirements and a lifetime time limit.
Its more important function is often as a gateway. In many states, receiving TANF confers automatic or priority access to child care assistance, transportation help, and other supports — which can matter more than the payment itself.
Many states also run a separate, rarely advertised emergency or diversion payment: a one-time amount to resolve a specific crisis without opening an ongoing case, and without counting against the lifetime limit. Ask about it by name.
Child support services are for any parent
State child support agencies help establish parentage, obtain an order, modify one when circumstances change, and collect payments. These services are available to any parent at low or no cost, regardless of income and regardless of whether you receive other assistance.
The modification piece is missed in both directions. A paying parent whose income drops does not get an automatic reduction — the order stands until formally modified, and arrears build in the meantime. A receiving parent whose circumstances change may be entitled to more than the current order provides.
Where to confirm
Credit amounts, income limits, TANF rules, and child support procedures change annually and vary by state. Confirm with the IRS, a VITA volunteer, your state human services agency, or your state child support agency.
FamilyHelper is a private educational resource. We are not a government agency, not a tax preparer, and nothing here is tax or legal advice.
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Income and tax credits
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