United States General Accounting Office

GAO Report to the Chairman, Committee on

Finance, U.S. Senate

May 1997 EARNED INCOME

CREDIT

Claimants’ Credit

Participation and

Income Patterns, Tax

Years 1990 Through

1994

GAO/GGD-97-69

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-272879 

May 16, 1997

The Honorable William V. Roth, Jr.

Chairman, Committee on Finance

United States Senate

Dear Mr. Chairman:

This report responds to your continuing interest in the Earned Income

Credit (EIC)—a refundable tax credit available to low-income, working

taxpayers. As you requested, this report presents data on EIC participation

and income for EIC claimants that we tracked over a 5-year period.

Specifically, we analyzed, for tax years 1990 through 1994, EIC claimants’

patterns of claiming the credit, changes in their income in the years

following an EIC claim, and their income and filing status after leaving the

EIC. We also estimated the number of 1994 claimants of the EIC for families

with children who would and would not have been eligible for the credit in

1994 if the 1990 maximum income limit was still in effect.

Background The EIC is a refundable tax credit available to low-income, working

taxpayers. Congress established the EIC in 1975 to achieve two long-term

objectives: (1) to offset the impact of Social Security taxes on low-income

families and (2) to encourage low-income families to seek employment

rather than welfare.

EIC eligibility depends on taxpayers’ amount of earned income1 or, in some

cases, adjusted gross income (AGI).2

 Credit amounts depend on the number

of qualifying children who meet age, relationship, and residency tests. The

credit gradually increases with increasing income (the phase-in range),

plateaus at a maximum amount (the plateau range), and then gradually

decreases until it reaches zero (the phase-out range). Taxpayers with

earned income or AGI exceeding the maximum qualifying income level are

not eligible for the credit. Taxpayers with AGI falling in the credit’s

1

Earned income for calculating the EIC includes both taxable and nontaxable earned income. For the

EIC, taxable earned income includes (1) wages, salaries, and tips; (2) union strike benefits;

(3) long-term disability benefits received prior to minimum retirement age; and (4) net earnings from

self-employment. Nontaxable earned income includes (1) voluntary salary deferral such as 401(k)

plans or the federal thrift savings plan, (2) pay earned in a combat zone, (3) basic quarter and

subsistence allowances from the U.S. military, (4) housing allowances or rental value of a parsonage

for the clergy, and (5) excludable dependent care benefits.

2

In addition to taxpayers’ taxable earned income, AGI includes their taxable income from other

sources such as investments, alimony, and unemployment compensation. Beginning in tax year 1996,

taxpayers are to use a newly defined “modified AGI” to determine EIC eligibility and to calculate the

credit (see app. I for a definition of modified AGI).

Page 1 GAO/GGD-97-69 Earned Income Credit
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phase-out range are to receive the lesser amount resulting from using their

earned income or AGI in calculating the credit.

During the 5 tax years covered by our analysis, EIC coverage and benefit

rules were modified twice—in 1990 and again in 1993. In the 1990 Omnibus

Budget Reconciliation Act (OBRA), Congress made two major changes to

the EIC that took effect in tax year 1991. These changes (1) adjusted the

credit structure to grant different credit amounts to taxpayers with one

qualifying child and taxpayers with two or more qualifying children and

(2) added two supplemental credits—one for taxpayers with a child under

1 year of age and another for taxpayers who paid health insurance

premiums on policies covering their children. OBRA 1990 also allowed

taxpayers with a filing status of single to claim the credit and specified a

general increase in credit rates that was to be phased-in over a 4-year

period (the planned increase for 1994, however, was superseded by 1993

legislation).

OBRA 1993 made two changes in the credit’s structure that went into effect

in tax year 1994. First, to simplify EIC filing, the act repealed the

supplemental young child and health insurance credits. Second, the act

expanded EIC eligibility to include certain taxpayers without qualifying

children or “childless adults.”3 OBRA 1993 also increased, over a 3-year

period beginning in tax year 1994, the maximum credit for families with

children.

The maximum basic credit amount for EIC families with two or more

children was $953 in tax year 1990, $1,511 in tax year 1993 (reflecting OBRA

1990), and $2,528 in tax year 1994 (reflecting OBRA 1993). The maximum

credit for childless adults in tax year 1994 was $306.

Congress made three additional changes to the EIC in the Personal

Responsibility and Work Opportunity Reconciliation Act of 1996. First,

beginning with tax year 1996 returns, the act makes taxpayers with certain

investment income greater than $2,200 ineligible for the EIC, regardless of

their earned income or AGI. Second, the act created a “modified AGI” to be

used in calculating the credit. Modified AGI disregards certain losses from

3

These taxpayers may, in fact, be noncustodial parents or may live with a child who, for some reason,

cannot be claimed as an EIC qualifying child. Throughout the report, however, we refer to this group

of EIC claimants as “childless adults” as a simple means to distinguish them from EIC claimants who

have one or more qualifying children. We refer to this latter group as “EIC families with children.”

Page 2 GAO/GGD-97-69 Earned Income Credit
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investments and businesses. And third, the act denies the EIC to filers

without valid Social Security Numbers (SSN).4

Appendix I contains a more detailed discussion of EIC eligibility and credit

calculation rules for tax years 1990 through 1994—the years included in

our analysis—as well as for tax years 1995 and 1996.

Results in Brief From tax year 1990 through tax year 1994, 27.3 million taxpayers claimed

the EIC for families with children, at least once.5

 They made a total of

69 million claims totaling $73 billion (in 1996 dollars). About two-thirds of

these taxpayers claimed the credit at least twice during the 5-year period,

and about half claimed it in 3 or more of the 5 years.

To better understand taxpayers’ patterns of claiming the EIC, we separately

tracked tax year 1990 through 1993 claimants in the years following their

claims (up to and including tax year 1994) and averaged the results.6

 Most

EIC claimants, on average, took the credit at least one more time. In the 2

years following a claim, for example, about three-quarters of claimants

took the credit in at least 1 of the 2 years while the remaining one-quarter

did not claim the credit in either of the 2 years. Not only did most

taxpayers who claimed the EIC do so more than once, but many took the

credit several years in a row. On average, about half of the claimants in a

year took the credit in each of the next 2 years (that is, for at least 3

consecutive years).

Congress designed the EIC, in part, as an incentive for low-income

taxpayers to find and keep jobs rather than relying on welfare. We

estimated the proportion of EIC claimants who continued to file tax

returns, as a proxy for continued participation in the workforce. Using

income categories related to the EIC phase-in, plateau, and phase-out

4

Taxpayers were already required to provide valid SSNs for qualifying children.

5

Beginning in tax year 1994, the EIC was extended to low-income, working taxpayers who do not have

a child meeting the criteria for an EIC qualifying child. About 4 7million taxpayers claimed this type of

EIC in tax year 1994, 600,000 (confidence interval ± 18 percent) of whom had claimed the EIC for

families with children at some point between tax years 1990 and 1993. These 600,000 taxpayers are

included in the 27.3 million figure.

6

Throughout this report, we present average percentages for 1, 2, 3, and 4 years after a claim. Because

our data included only tax years 1990 through 1994, however, the basis for each estimate is different.

The estimates for the first year after a claim are averages based on 53.6 million claims made in tax

years 1990 through 1993; estimates for the second year after are averages based on 39.1 million claims

made in tax years 1990 through 1992; estimates for the third year after are averages based on

25.5 million claims made in tax years 1990 and 1991; and estimates for the fourth year after are based

only on 12.1 million tax year 1990 claims.

Page 3 GAO/GGD-97-69 Earned Income Credit
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ranges, we also estimated the extent to which claimants reported higher or

lower income in later years.7

 We found that most EIC claimants continued

to file a return over the 4 years following a claim—91 percent filed a return

in the first year, and 82 percent did so in the fourth year. On average, in the

first and fourth years after a claim, respectively, 25 and 36 percent of

claimants reported higher income while 21 and 29 percent reported lower

income or did not file a return.

When we tracked taxpayers who at some point stopped claiming the EIC,

we found that most filed a return in the first and second consecutive years

of not claiming the credit, but about one-third did not. Among taxpayers in

their first year not claiming the EIC, almost equal proportions reported

income within the EIC range and above the EIC limit. Among taxpayers in a

second consecutive year not claiming the credit, the proportion of those

reporting income above the EIC limit increased. About 40 percent of

taxpayers who filed a return in the first year they stopped claiming the EIC

also reported a change in filing status—predominantly from head of

household status to single or married filing jointly.

To qualify for the EIC in tax year 1990, taxpayers needed to have at least

one qualifying child and reported income less than $23,750 (in 1994

dollars). If this maximum income limit would have applied in tax year

1994, about 2 percent of 1994 claimants of the EIC for families with

children would not have been able to claim the credit because of income

above the eligibility threshold. These taxpayers claimed about $48 million8

in EIC in 1994, or about 0.2 percent of the total EIC for families with

children that year.

Objectives, Scope,

and Methodology

Our objectives were to (1) develop longitudinal data on taxpayers’

patterns of claiming the EIC, changes in EIC claimants’ income in the years

after an EIC claim, and claimants’ income and filing status after leaving the

EIC and (2) estimate the number of 1994 EIC claimants who would and

would not have been eligible for the credit if the 1990 EIC maximum

income limit was still in effect.

7

Throughout the report, “reported income” refers to either EIC earned income or AGI. For taxpayers

claiming the EIC, our income measure for that year was the actual income used to determine the

credit—either EIC earned income or AGI. For tax years in which taxpayers did not claim the credit,

and therefore did not report an EIC earned income amount, we used reported AGI as our income

measure.

8

Confidence interval is ± 27 percent of the reported value.

Page 4 GAO/GGD-97-69 Earned Income Credit
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We obtained and analyzed the Internal Revenue Service’s (IRS) Statistics of

Income (SOI) individual income tax databases for tax years 1990 through

1994, the most recent 5 years of data available at the time we began our

work. Each SOI database contains tax return information for a random

sample of taxpayers. Included in this sample are a subsample of taxpayers

who are included every year in which they file. From these longitudinal

records, we created a database of taxpayers who claimed the EIC in any 1

of the 5 years.9

 To get additional information on taxpayers who were not

included in the SOI sample in certain years, we asked IRS to match SSNs for

those taxpayers to primary and secondary (spouse) SSNs on the individual

masterfile (IMF). From this match, done in December 1996, we determined

if the taxpayer had not filed a return for the year in question, had filed as a

secondary filer on a joint return, or had filed too late to be included in the

SOI database. For those who had filed, we were able to obtain the AGI and

EIC amount, if any.

To identify patterns of claiming the EIC, we determined the years on and

off the EIC for each taxpayer in our database. We used this participation

data to estimate the percentage of EIC claimants who, over the 5-year

period, claimed the credit for 1, 2, 3, 4, or 5 years. To provide specific data

on EIC participation patterns, we estimated the proportion of EIC claimants

in each year who, in the 1 to 4 years following a claim, (1) claimed the

credit at least once more, (2) did not claim the credit again, or

(3) continued to consecutively claim the credit. We averaged the results

for 1 to 4 years after a claim across relevant tax years.

To track changes in the income of EIC claimants in the years after an EIC

claim, we used a series of income categories corresponding to the EIC

income ranges for each tax year and ranges for income above the EIC limit.

We then estimated the average proportion of EIC claimants whose income

stayed in the same range or moved among ranges in the years after an EIC

claim.

To describe the status of EIC claimants who at any point stopped claiming

the credit between 1990 and 1994, we determined, for the first and second

consecutive years off the credit, the proportion of former claimants who

(1) reported AGI either above or below the EIC limit, (2) claimed no

dependent exemptions, or (3) reported a change in filing status from the

year in which the EIC was claimed to the year the credit was not claimed.

We also determined the proportion who did not file a return.

9

Estimates of EIC claims and amounts from SOI data may differ from what taxpayers actually receive.

IRS examinations and other actions may make the actual EIC amount granted to a taxpayer different

from the amount claimed on the tax return.

Page 5 GAO/GGD-97-69 Earned Income Credit
B-272879 

Our analyses of consecutive years claiming and not claiming the credit and

changes in reported income were based on tracking EIC claimants in the

years following an EIC claim. For this type of analysis, we made separate

estimates for tax year 1990, 1991, 1992, and 1993 claimants and combined

the results across all years. For example, the average for EIC participation

or income the first year after a claim is based on claims first made in tax

years 1990, 1991, 1992, and 1993; estimates for the second year after a

claim are based on claims first made in tax years 1990, 1991, and 1992.

Estimates for the third year after a claim are based on claims made in tax

years 1990 and 1991; estimates for the fourth year after a claim are based

only on tax year 1990 claims.

To estimate the number of 1994 claimants of the credit for families with

children who would and would not have been eligible for the credit if the

1990 EIC maximum income limit was still in effect, we indexed the 1990 EIC

phase-in, plateau, and phase-out cutoffs to 1994 dollars and applied the

indexed cutoff points to the 1994 EIC claimants’ reported income. We also

estimated the amount of 1994 EIC claims made by claimants who reported

income above the indexed 1990 EIC limit.

All data presented in this report are estimates based on the SOI longitudinal

sample. Accordingly, we calculated confidence intervals at the 95-percent

confidence level to indicate the precision of the estimates included in the

body of the report. Unless otherwise noted, the confidence intervals for

percentages are less than ± 5 percentage points and for other statistics are

less than ± 10 percent of the reported value. A more detailed explanation

of our scope and methodology is included in appendix II. Detailed data

tables supporting our findings are included in appendix III.

We did our work in Washington, D.C., from June 1996 to March 1997 in

accordance with generally accepted government auditing standards. We

requested comments on a draft of this report from the Commissioner of

Internal Revenue or her designee and from officials at the Department of

the Treasury. The IRS National Director of Legislative Affairs responded in

an April 21, 1997, letter saying that the agency agreed with the draft report.

Economists from the Department of the Treasury’s Office of Tax Analysis

provided oral comments that were technical in nature and involved

presentation and definitional issues. We made changes to the report where

appropriate.

Page 6 GAO/GGD-97-69 Earned Income Credit
B-272879 

EIC Participation

Increased Steadily

From Tax Year 1990

Through Tax Year

1994

The number of taxpayers claiming the EIC and total program costs

increased steadily between tax years 1990 and 1994. In large part, this

growth reflects the impact of either eligibility or benefit expansions

implemented in tax years 1991 and 1994. Beginning in tax year 1991,

taxpayers were able to take advantage of the supplemental young child

and health insurance credits, separate credit rates for larger families, and

an increase in the basic credit. In tax year 1994, repeal of the supplemental

credits went into effect, but a childless adult credit and another general

increase in credit amounts for families with children were available.

As shown in figure 1, both the number of taxpayers claiming the credit and

EIC program costs (in 1996 dollars) increased steadily from tax years 1990

through 1994. Overall, 30.7 million taxpayers claimed the EIC at least once

between tax years 1990 and 1994. They made a total of 72.2 million EIC

claims totaling $74 billion (in 1996 dollars) over the 5-year period. Among

the tax year 1994 claimants were 4 million taxpayers who claimed the EIC

for childless adults, 600,00010 of whom had previously claimed the credit

for families with children at least once between 1990 and 1993.

10Confidence interval is ± 18 percent of the reported value.

Page 7 GAO/GGD-97-69 Earned Income Credit
B-272879 

Figure 1: EIC Costs and Number of

Claims, Tax Years 1990 Through 1994

1990 1991 1992 1993 1994

0

10

20

30

40

50

0

5

10

15

20

25

Claims (millions) Costs (1996 dollars in billions)

9

22

12

19

25

20

15

10

5

0

Tax year

EIC costs in constant 1996 dollars

Number of taxpayers claiming EIC

Source: GAO analysis of SOI data.

Many taxpayers who claimed the EIC did so more than once. As shown in

figure 2, from 1990 through 1994, about two-thirds of the 27.3 million

taxpayers who claimed the EIC for families with children at least once,11

claimed the credit two or more times. About half of the 27.3 million

taxpayers claimed the credit for 3 or more of the 5 years.

11These 27.3 million taxpayers made 68.8 million claims in tax years 1990 through 1994. The claims

totaled $73 billion in 1996 dollars.

Page 8 GAO/GGD-97-69 Earned Income Credit
B-272879 

Figure 2: Number of Years the EIC Was

Claimed in a 5-Year Period by

Taxpayers Who Claimed the EIC for

Families With Children at Least Once

in Tax Years 1990 Through 1994

1 of 5 2 of 5 3 of 5 4 of 5 5 of 5

0

5

10

15

20

25

30

35

32

22

17

13

16

Percentage of claimants

Number of years claiming the EIC

16% claimed

all 5 years

29% claimed at least 4 years

68% claimed at least 2 of the 5 years

46% claimed at least 3 of the 5 years

Note: Percentages are based on 27.3 million taxpayers who claimed the EIC for families with

children at least once between tax years 1990 and 1994. Because the childless adult credit was

only available for 1 of our 5 years, this figure excludes the 3.4 million taxpayers who claimed only

the childless adult credit in tax year 1994.

Source: GAO analysis of SOI and IMF data.

Page 9 GAO/GGD-97-69 Earned Income Credit
B-272879 

EIC Participation

Patterns

To better understand taxpayer’s patterns of claiming the EIC, we separately

tracked tax year 1990 through 1993 claimants in the years following their

claims and averaged the results.12 We found that most EIC claimants, on

average, took the credit at least once more. In the 2 years following a

claim, for example, about three-quarters of the claimants took the credit in

at least 1 of the 2 years while the remaining one-quarter did not claim the

credit in either of the 2 years. Not only did most taxpayers who claimed

the EIC do so more than once, but many took the credit several years in a

row. On average, about half of all claimants in a year took the credit in

each of the following 2 years (that is, for at least 3 consecutive years).

These participation patterns are reflected in figures 3 and 4.

12Throughout the report, we present average percentages for 1, 2, 3, and 4 years after a claim. Because

our data included only tax years 1990 through 1994, however, the basis for each estimate is different.

The estimates for the first year after a claim are averages based on 53.6 million claims made in tax

years 1990 through 1993; estimates for the second year after are averages based on 39.1 million claims

made in tax years 1990 through 1992; estimates for the third year after are averages based on

25.5 million claims made in tax years 1990 and 1991; and estimates for the fourth year after are based

only on 12.1 million tax year 1990 claims.

Page 10 GAO/GGD-97-69 Earned Income Credit
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Figure 3: Percentage of EIC Claimants

Who Did and Did Not Claim the Credit

Again, 1 to 4 Years After a Claim

One Two Three Four

0

20

40

60

80

100

73

78 81 83

27

22 19 17

Average percentage of claimants

Years after an EIC claim

Did not claim the EIC again in the intervening years

Claimed the EIC at least once more

Note: The first year average is based on 53.6 million claims made in tax years 1990 through 1993;

the second year average is based on 39.1 million claims made in tax years 1990 through 1992;

the third year average is based on 25.5 million claims made in tax years 1990 and 1991; and the

fourth year percentage is based on 12.1 million tax year 1990 claims.

Source: GAO analysis of SOI and IMF data.

Page 11 GAO/GGD-97-69 Earned Income Credit
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Figure 4: Percentage of EIC Claimants

Who Took the Credit for 2 to 5

Consecutive Years

Two or more Three or more Four or more Five

0

20

40

60

80

73

56

44

36

Average percentage claiming the EIC consecutively

Consecutive years claiming the EIC

Note: The 2 consecutive year average is based on 53.6 million claims made in tax years 1990

through 1993; the 3 consecutive year average is based on 39.1 million claims made in tax years

1990 through 1992; the 4 consecutive year average is based on 25.5 million claims made in tax

years 1990 and 1991; and the 5 consecutive year percentage is based on 12.1 million tax year

1990 claims.

Source: GAO analysis of SOI and IMF data.

Changes in EIC

Claimants’ Income in

the Years Following a

Claim

Congress designed the EIC, in part, as an incentive for low-income

taxpayers to find and keep jobs. We tracked EIC claimants’ reported

income in the years following a claim to estimate the extent to which their

reported income changed among EIC income ranges or moved above the

EIC maximum income limit. As a proxy for continued participation in the

workforce, we also estimated the proportion of EIC claimants who

continued to file returns, while recognizing that the filing of a return does

not necessarily mean that the taxpayer was working.

Page 12 GAO/GGD-97-69 Earned Income Credit
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The range of eligible income for the EIC is fairly broad. For tax year 1994

claimants with two or more qualifying children, for example, the phase-in

range included reported income below $8,400 while the phase-out range

included reported income up to $25,295. Table 1 shows the tax year 1990

through 1994 EIC income ranges for claimants with children that were used

in our analysis.13 For tax year 1994, about 60 percent of claimants with

qualifying children reported income in the phase-out range and 27 percent

reported income in the phase-in range.

Table 1: EIC Income Ranges for Tax

Years 1990 Through 1994 EIC income range

Tax year Phase-in Plateau Phase-out

1990 $1 - $6,799 $6,800 - $10,749 $10,750 - $20,263

1991 $1 - $7,099 $7,100 - $11,249 $11,250 - $21,249

1992 $1 - $7,499 $7,500 - $11,849 $11,850 - $22,369

1993 $1 - $7,749 $7,750 - $12,199 $12,200 - $23,049

1994 families with one

qualifying child $1 - $7,749 $7,750 - $10,999 $11,000 - $23,754

1994 families with two or

more qualifying children $1 - $8,399 $8,400 - $10,999 $11,000 - $25,295

Source: IRS EIC tables.

Figure 5 shows, for the 4 years following a claim, the extent to which

claimants’ reported income changed and the proportion of claimants who

did not file a return. The largest group of claimants in each year are those

who continued to report income in the same EIC range, although the

proportion declined over the 4 years. The proportion of claimants

reporting income in a higher EIC range or above the EIC limit increased, as

did the proportion of claimants who did not file a return. On average, in

the first and fourth years after a claim, respectively, 25 and 36 percent of

claimants reported higher income while 21 and 29 percent reported lower

income or did not file a return.

13See app. I, tables I.1 through I.5 for the phase-in rates, maximum credit amounts, and phase-out rates

associated with each income range.

Page 13 GAO/GGD-97-69 Earned Income Credit
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Figure 5: Changes in EIC Claimants’ Reported Income Relative to EIC Income Ranges, From 1 to 4 Years After an EIC Claim

0

10

20

30

40

50

60

9

12

55

15

10

13 13

45

16

14

16

12

40

16 16

18

11

36

18 18

Average percentage of EIC claimants

1 year later

2 years later

3 years later

4 years later

Did not file Lower Same Higher Over EIC limit

Number of years after a claim

EIC income range

Source: GAO analysis of SOI and IMF data.

Figures 6 and 7 show similar income patterns for phase-in and phase-out

range claimants separately. Among both subgroups of claimants over the

4-year period after a claim, the largest proportion continued to report

income in the same income category while the proportion of claimants

reporting higher income and the proportion not filing a return increased.

Page 14 GAO/GGD-97-69 Earned Income Credit
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Figure 6: Changes in Income for EIC Claimants Who Claimed the Credit With Reported Income in the Phase-in Range

0

10

20

30

40

50

60

19

48

18

13

3

23

37

17 18

5

27

31

14

21

7

28

26

11

26

9

Average percentage of phase-in range claimants

1 year later

2 years later

3 years later

4 years later

Did not file

Number of years after a claim

 Phase-in

(same range)

Plateau Phase-out Over EIC limit

EIC income range

Note: Totals for each year after a claim may not add to 100 percent due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 15 GAO/GGD-97-69 Earned Income Credit
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Figure 7: Changes in Income for EIC Claimants Who Claimed the Credit With Reported Income in the Phase-Out Range

0

20

40

60

80

3

7 8

66

16

7 8 8

56

21

10 9

7

51

24

12

9

5

49

25

1 year later

2 years later

3 years later

4 years later

Did not file

Number of years after a claim

 Phase-out

(same range)

Phase-in Plateau Over EIC limit

Average percentage of phase-out range claimants

EIC income range

Note: Totals for each year after a claim may not add to 100 percent due to rounding.

Source: GAO analysis of SOI and IMF data.

Although a larger percentage of phase-in range claimants changed income

categories in later years compared to phase-out range claimants, for EIC

families with children, the phase-in range is considerably narrower than

the phase-out range. On average, then, claimants in the phase-in range may

Page 16 GAO/GGD-97-69 Earned Income Credit
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have needed a smaller dollar change in income to move out of their range.

Also, it was possible for a taxpayer to report the same income in two

different tax years but have that income fall into two different EIC ranges

because of inflation adjustments and legislative action in 1993. For

example, the 1990 phase-in range included income under $7,710 in 1994

dollars; the 1994 phase-in range included income under $7,750 for families

with one qualifying child and under $8,400 for families with two or more

qualifying children.14

Taxpayers Who

Stopped Claiming the

EIC

To describe the status of EIC claimants who at any point stopped claiming

the credit between 1990 and 1994, we tracked claimants’ income in the

first and second consecutive years off the credit. As shown in figure 8, in

their first and second consecutive years off the EIC, most former claimants

filed a return, but about one-third did not. Almost equal proportions of

taxpayers in their first year off the credit reported AGI within the EIC

income range, reported AGI above the EIC income limit or did not file a

return. Among taxpayers who did not claim the credit for a second

consecutive year, the proportion of those reporting AGI above the EIC

income limit increased as did the proportion not filing.

14Differences in income range parameters were most noticeable from tax year 1993 to 1994. OBRA

1993 narrowed the plateau range and increased the phase-out range at both the upper and lower ends.

The differences from 1990 through 1993 were much smaller. (See table 1.)

Page 17 GAO/GGD-97-69 Earned Income Credit
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Figure 8: EIC Claimants’ Reported AGI

in the First and Second Consecutive

Years Off the EIC

0

10

20

30

40

50

32

36

32

26

39

35

Average percentage of claimants leaving the EIC

In EIC income range Above EIC income limit Did not file

First year off the EIC

Second consecutive year off the EIC

Reported AGI

Source: GAO analysis of SOI and IMF data.

Taxpayers can stop claiming the EIC for a variety of reasons: (1) their

income is above the eligibility threshold; (2) they are unable to claim a

qualifying child; (3) they do not claim the credit, although they are

qualified; (4) they leave the workforce; or (5) they do not file a return. We

were unable to determine, however, which reasons applied to the

taxpayers in our analysis who stopped claiming the EIC. Although we did

not have data on qualifying children for taxpayers who did not claim the

credit, we did have data on reported dependent exemptions. In the first

year off the EIC, 9 percent of the taxpayers reporting AGI under the EIC limit

did not claim any dependent exemptions. In the second consecutive year

off the EIC, 11 percent of those reporting AGI under the EIC limit did not

claim a dependent exemption. However, having no dependents would not

have necessarily disqualified someone from claiming the EIC because it

Page 18 GAO/GGD-97-69 Earned Income Credit
B-272879 

was possible to claim a child who was not a dependent as an EIC qualifying

child.

Changes in filing status, while generally not affecting EIC eligibility directly,

could also play a role in determining whether a taxpayer can claim the

credit. For example, a head of household EIC claimant who marries may

then have a combined income above the EIC limit. The majority of

taxpayers who stopped claiming the EIC and still filed a return reported the

same filing status—62 percent in the first year off the EIC and 58 percent

among those in the second consecutive year off. The remainder reported a

change in filing status that coincided with leaving the EIC. As shown in

table 2, a change from head of household status to single or married

accounted for most of the taxpayers who reported a change in filing

status. Almost all of the head of household EIC claimants whose filing

status changed to single or married filing separately continued to report

AGI under the EIC limit. Conversely, most of those whose filing status

changed to married filing jointly reported income above the EIC limit.

Table 2: Filing Status Changes From a

Year in Which the EIC Was Claimed to

the First Year Off the EIC

Filing status in the first year off the EIC

Filing status in the

year of the EIC

claima Single

Married

filing jointly

Married

filing

separately

Head of

household Total

Head of household 48% 30% 5% 83%

Married filing jointly 5 6 1 13%

Single 2 0 1 3%

Widow(er) 0 0 0 1 1%

Total 54% 32% 11% 3% 100%

Note 1: Percentages are based on approximately 3.8 million departures from the EIC that

coincided with a filing status change.

Note 2: Percentages may not add to totals due to rounding.

aTaxpayers with a filing status of married filing separately are ineligible for the EIC.

Source: GAO analysis of SOI and IMF data.

Page 19 GAO/GGD-97-69 Earned Income Credit
B-272879 

Tax Year 1990

Maximum Income

Limit Applied to Tax

Year 1994 Claimants

of the EIC for

Families With

Children

To qualify for the EIC in tax year 1990, taxpayers needed to have at least

one qualifying child and reported income of less than $23,750 (in 1994

dollars). As shown in table 3, if this income limit had applied to tax year

1994 claimants of the EIC for families with children, about 2 percent of

those who claimed the credit for families with children in tax year 1994

would not have been able to claim the credit because of income above the

eligibility threshold. These taxpayers claimed about $48 million15 in EIC in

1994, or 0.2 percent of the total EIC for families with children that year.

Table 3: Distribution Among EIC

Income Ranges for 1994 Claimants of

the EIC for Families With Children

Using 1994 and 1990 Income Limits

Tax year 1994 EIC claimants

using the 1994 eligibility rules

Tax year 1994 EIC claimants

using the 1990 eligibility rulesa

EIC income

range

Number of

1994 EIC

families with

children (in

millions)

Percentage of

claimants

Number of

1994 EiC

families with

children (in

millions)

Percentage of

claimants

Phase-in 3.9 26.7% 3.9 27.1%

Plateau 2.1 14.3 3.1 21.5

Phase-out 8.6 59.0 7.1 49.1

Above phase-out

point 0.3 2.4

Total 14.5 100.0% 14.5 100.0%

Note: Numbers and percentages may not add to totals due to rounding.

a1990 range breakpoints were indexed to 1994 dollars using the consumer price index for all

urban consumers (CPI-U) as reported by the Bureau of Labor Statistics and EIC indexing

methodology as prescribed by the Internal Revenue Code.

Source: GAO analysis of SOI data.

As agreed with your office, unless you publicly release its contents earlier,

we plan no further distribution of this report until 30 days from the date of

this letter. At that time, we will send copies to the Ranking Minority

Member of your committee and the Chairmen and Ranking Minority

Members of other interested congressional committees, the Secretary of

the Treasury, the Commissioner of Internal Revenue, and other interested

parties.

15Confidence interval is ± 27 percent of the reported value.

Page 20 GAO/GGD-97-69 Earned Income Credit
B-272879 

Major contributors to this report are listed in appendix IV. If you or your

staff have any questions, please call me on (202) 512-5594.

Sincerely yours,

James R. White

Associate Director, Tax Policy

 and Administration Issues

Page 21 GAO/GGD-97-69 Earned Income Credit
Contents

Letter 1

Appendix I 

EIC Eligibility Rules

and Amounts for Tax

Years 1990 Through

1996

26

Tax Year 1990 26

Tax Year 1991 27

Tax Year 1992 28

Tax Year 1993 29

Tax Year 1994 30

Tax Year 1995 30

Tax Year 1996 31

Appendix II 

Scope, Methodology,

and Precision of

Statistical Estimates

33

Methodology Used to Develop the Longitudinal Database 33

Scope and Methodology for the Data Analyses 34

Precision of the Statistical Estimates 36

Appendix III 

Detailed Data Tables

37

EIC Claims and Program Costs 37

EIC Participation Patterns 38

EIC Claimants’ Income in the Years Following a Claim 42

Taxpayers Who Stopped Claiming the EIC 57

Appendix IV 

Major Contributors to

This Report

64

Related GAO Products 68

Tables Table 1: EIC Income Ranges for Tax Years 1990 Through 1994 13

Table 2: Filing Status Changes From a Year in Which the EIC Was

Claimed to the First Year Off the EIC

19

 Table 3: Distribution Among EIC Income Ranges for 1994

Claimants of the EIC for Families With Children Using 1994 and

1990 Income Limits

20

Table I.1: EIC Calculations for Tax Year 1990 27

Table I.2: EIC Calculations for the Tax Year 1991 Basic Credit 28

Table I.3: EIC Calculations for the Tax Year 1992 Basic Credit 29

Page 22 GAO/GGD-97-69 Earned Income Credit
Contents

Table I.4: EIC Calculations for the Tax Year 1993 Basic Credit 29

Table I.5: EIC Calculations for Tax Year 1994 30

Table I.6: EIC Calculations for Tax Year 1995 31

Table I.7: EIC Calculations for Tax Year 1996 32

Table III.1: Total EIC Claims and Amounts, Tax Years 1990

Through 1994

37

Table III.2: Number of Taxpayers Claiming the EIC in a 5-Year

Period, by Number of Years Claiming the EIC and EIC Status in

Tax Year 1994

38

Table III.3: Patterns of Claiming the EIC, Tax Years 1990 Through

1994

39

Table III.4: Number and Percentage of EIC Claimants Who Did

Not Claim the Credit Again, 1 to 4 Consecutive Years After a

Claim, by Tax Year

41

Table III.5: Number and Percentage of EIC Claimants Who

Claimed the Credit for 2 to 5 Consecutive Years, by Tax Year

42

Table III.6: Reported Income of EIC Claimants, Averages for 1 to

4 Years After a Claim, Number and Percentage of Claimants by

Income Range

43

Table III.7: Reported Income of Tax Year 1990 EIC Claimants for

Tax Years 1991 Through 1994, Number and Percentage of

Claimants by Income Range

44

Table III.8: Reported Income of Tax Year 1991 EIC Claimants for

Tax Years 1992 Through 1994, Number and Percentage of

Claimants by Income Range

45

Table III.9: Reported Income of Tax Year 1992 EIC Claimants for

Tax Years 1993 and 1994, Number and Percentage of Claimants

by Income Range

46

Table III.10: Reported Income of Tax Year 1993 EIC Claimants for

Tax Year 1994, Number and Percentage of Claimants by Income

Range

47

Table III.11: Reported Income of EIC Phase-in Range Claimants,

Averages for 1 to 4 Years After a Claim, Number and Percentage

of Claimants by Income Range

48

Table III.12: Reported Income of Tax Year 1990 EIC Phase-in

Range Claimants, for Tax Years 1991 Through 1994, Number and

Percentage of Claimants by Income Range

49

Table III.13: Reported Income of Tax Year 1991 EIC Phase-in

Range Claimants for Tax Years 1992 Through 1994, Number and

Percentage of Claimants by Income Range

50

Page 23 GAO/GGD-97-69 Earned Income Credit
Contents

Table III.14: Reported Income of Tax Year 1992 EIC Phase-in

Range Claimants for Tax Years 1993 and 1994, Number and

Percentage of Claimants by Income Range

51

Table III.15: Reported Income of Tax Year 1993 EIC Phase-in

Range Claimants for Tax Year 1994, Number and Percentage of

Claimants by Income Range

52

Table III.16: Reported Income for EIC Phase-Out Range

Claimants, Averages for 1 to 4 Years After a Claim, Number and

Percentage of Claimants by Income Range

53

Table III.17: Reported Income of Tax Year 1990 EIC Phase-Out

Range Claimants for Tax Years 1991 Through 1994, Number and

Percentage of Claimants by Income Range

54

Table III.18: Reported Income of Tax Year 1991 EIC Phase-Out

Range Claimants for Tax Years 1992 Through 1994, Number and

Percentage of Claimants by Income Range

55

Table III.19: Reported Income of Tax Year 1992 EIC Phase-Out

Range Claimants for Tax Years 1993 and 1994, Number and

Percentage of Claimants by Income Range

56

Table III.20: Reported Income of Tax Year 1993 EIC Phase-Out

Range Claimants for Tax Year 1994, Number and Percentage of

Claimants by Income Range

57

Table III.21: EIC Claimants’ Reported Income in the First and

Second Consecutive Years off the Credit, Averages for Tax Years

1991 Through 1994, Number and Percentage of Departures by

Income Range

58

Table III.22: EIC Claimants Reporting the Same or Different

Filing Status in the First and Second Consecutive Years off the

Credit, by Income Range, Averages for Tax Year 1991 Through

1994 Departures From the Credit

60

Table III.23: Type of Filing Status Change From the Year of an

EIC Claim to the First Year off the EIC, by Income Range,

Averages for Tax Years 1990 Through 1994

62

Figures Figure 1: EIC Costs and Number of Claims, Tax Years 1990

Through 1994

8

Figure 2: Number of Years the EIC Was Claimed in a 5-Year

Period by Taxpayers Who Claimed the EIC for Families With

Children at Least Once in Tax Years 1990 Through 1994

9

Figure 3: Percentage of EIC Claimants Who Did and Did Not

Claim the Credit Again, 1 to 4 Years After a Claim

11

Page 24 GAO/GGD-97-69 Earned Income Credit
Contents

Figure 4: Percentage of EIC Claimants Who Took the Credit for 2

to 5 Consecutive Years

12

Figure 5: Changes in EIC Claimants’ Reported Income Relative to

EIC Income Ranges, From 1 to 4 Years After an EIC Claim

14

Figure 6: Changes in Income for EIC Claimants Who Claimed the

Credit With Reported Income in the Phase-in Range

15

Figure 7: Changes in Income for EIC Claimants Who Claimed the

Credit With Reported Income in the Phase-out Range

16

Figure 8: EIC Claimants’ Reported AGI in the First and Second

Consecutive Years off the EIC

18

Abbreviations

AGI adjusted gross income

CPI-U consumer price index for all urban consumers

EIC Earned Income Credit

IMF Individual Masterfile

IRS Internal Revenue Service

OBRA Omnibus Budget Reconciliation Act

SOI Statistics of Income

SSN Social Security Number

Page 25 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

The basic structure for calculating EIC amounts has remained the same

since 1990. The credit gradually increases with increasing income

(phase-in range), plateaus at a maximum amount (plateau range), and then

decreases until it reaches zero (phase-out range). For taxpayers with

income in the phase-in range, a 15 percent phase-in rate, for example,

means that for each additional $100 of earned income, the taxpayer

receives $15 in EIC until income reaches the top of the phase-in range. All

taxpayers with income in the plateau range receive the same (maximum)

EIC amount. For taxpayers with income in the phase-out range, a

10 percent phase-out rate, for example, means that for every additional

$100 in income, the credit is reduced by $10. If taxpayers’ earned income

or adjusted gross income (AGI) exceeds the maximum qualifying income

level, they are not eligible for the credit. When taxpayers’ AGI is in the

credit’s phase-out range, they receive the lesser amount resulting from

using their earned income or AGI in calculating the credit.

The rules regarding which taxpayers are eligible for the EIC and the

formulas used to calculate the credit have undergone several changes

since 1990. This appendix explains the specifics of EIC eligibility, how the

credit was structured, and how benefit amounts were determined16 for tax

year 1990 along with subsequent changes effective in tax years 1991

through 1996.

Tax Year 1990 To be eligible for the credit in tax year 1990, the following basic rules

applied.

• The taxpayer must have (1) filed as married filing jointly and have been

entitled to a dependent exemption under Internal Revenue Code section

151 for a child, (2) filed as a surviving spouse as determined under Internal

Revenue Code section 2(a), or (3) filed as a head of household as

determined under Internal Revenue Code section 2(b) with certain

modifications.

• The taxpayer’s child must have had the same principal place of abode as

the taxpayer for more than half of the tax year and that abode must have

been in the United States.

16The income breakpoints used in this report to define the EIC phase-in, plateau, and phase-out ranges

were taken from IRS EIC tables that taxpayers used to determine their credit amount. These

breakpoints may differ slightly from those calculated mathematically using the phase-in and phase-out

rates and maximum credit amount established by law.

Page 26 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

In addition, the taxpayer’s maximum allowable income (either earned

income or AGI) was $20,263. Table I.1 shows the details of how EIC amounts

were to be calculated for tax year 1990.

Table I.1: EIC Calculations for Tax Year

1990

EIC range

EIC calculation for families with

one or more children

Phase-in

Income range $1 - $6,799

Phase-in rate 14%

Plateau

Income range $6,800 - $10,749

Maximum credit $953

Phase-out

Income range $10,750 - $20,263

Phase-out rate 10%

Source: Internal Revenue Code and IRS EIC tables.

Tax Year 1991 In OBRA 1990, Congress made several changes to the EIC that took effect in

tax year 1991. The changes

• defined an EIC “qualifying child” to mean a child who (1) is an EIC

claimant’s son, daughter, adopted child, grandchild, stepchild, or foster

child; (2) is under age 19, or under age 24 and a full-time student, or any

age and permanently and totally disabled; and (3) lives in the claimant’s

home in the United States for more than half of the year (or all of the year

if a foster child);

• adjusted the credit structure to grant different credit amounts to taxpayers

with one qualifying child and taxpayers with two or more qualifying

children;

• added two supplemental credits—one going to taxpayers with a child

under 1 year of age and another to taxpayers who paid health insurance

premiums on policies covering their children;

• allowed taxpayers with a “single” filing status to claim the credit; and

• specified a general increase in credit rates that was to be phased in over 4

years (the planned increase for 1994 was superseded by 1993 legislation).

The supplemental credit structure was similar to that of the basic credit.

The supplemental credit for children under 1 year of age added

Page 27 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

5-percentage points to the phase-in rate and 3.57-percentage points to the

phase-out rate. Similarly, the health insurance credit added up to

6-percentage points to the phase-in rate and 4.285-percentage points to the

phase-out rate. The health insurance credit, however, could not exceed the

actual amount of health insurance premiums paid. Families with one child

taking both the supplemental credit for a young child and the maximum

supplemental credit for health insurance would have had an effective

phase-in rate of 27.7 percent and a phase-out rate of 19.785 percent.

Table 1.2 shows how the basic credit was to be calculated for tax year

1991.

Table I.2: EIC Calculations for the Tax

Year 1991 Basic Credit

EIC range

EIC calculation for families

with one child

EIC calculation for families

with two or more children

Phase-in

Income range $1 - $7,099 $1 - $7,099

Phase-in rate 16.7% 17.3%

Plateau

Income range $7,100 - $11,249 $7,100 - $11,249

Maximum credit $1,192 $1,235

Phase-out

Income range $11,250 - $21,249 $11,250 - $21,249

Phase-out rate 11.93% 12.36%

Note: In addition to the basic EIC credit, taxpayers may also have been eligible for a

supplemental health insurance credit of up to $428 and/or a supplemental credit for a child born

in 1991 of up to $357.

Source: Internal Revenue Code and IRS EIC tables.

Tax Year 1992 No major changes to the EIC were made effective for tax year 1992.

However, the phase-in and phase-out rate changes specified under OBRA

1990 were implemented. Table I.3 shows how the basic credit was to be

calculated for tax year 1992.

Page 28 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

Table I.3: EIC Calculations for the Tax

Year 1992 Basic Credit

EIC range

EIC calculation for families

with one child

EIC calculation for families

with two or more children

Phase-in

Income range $1 - $7,499 $1 - $7,499

Phase-in rate 17.6% 18.4%

Plateau

Income range $7,500 - $11,849 $7,500 - $11,849

Maximum credit $1324 $1,384

Phase-out

Income range $11,850 - $22,369 $11,850 - $22,369

Phase-out rate 12.57% 13.14%

Note: In addition to the basic EIC credit, taxpayers may also have been eligible for a

supplemental health insurance credit of up to $451 and/or a supplemental credit for a child born

in 1992 of up to $376.

Source: Internal Revenue Code and IRS EIC tables.

Tax Year 1993 No major changes to the EIC were made effective in tax year 1993. Table I.4

shows how the EIC basic credit was to be calculated and reflects the rate

changes mandated in OBRA 1990.

Table I.4: EIC Calculations for the Tax

Year 1993 Basic Credit

EIC range

EIC calculation for families

with one child

EIC calculation for families

with two or more children

Phase-in

Income range $1 - $7,749 $1 - $7,749

Phase-in rate 18.5% 19.5%

Plateau

Income range $7,750 - $12,199 $7,750 - $12,199

Maximum credit $1,434 $1,511

Phase-out

Income range $12,200 - $23,049 $12,200 - $23,049

Phase-out rate 13.21% 13.93%

Note: In addition to the basic EIC credit, taxpayers may also have been eligible for a

supplemental health insurance credit of up to $465 and/or a supplemental credit for a child born

in 1993 of up to $388.

Source: Internal Revenue Code and IRS EIC tables.

Page 29 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

Tax Year 1994 In OBRA 1993 and other legislation, Congress made several notable changes

to the EIC that went into effect in tax year 1994. These changes

• simplified EIC filing by eliminating the supplemental young child and health

insurance credits;

• expanded EIC coverage to include certain taxpayers without qualifying

children (i.e., “childless adults”);

• increased, over a 3-year period beginning in tax year 1994, the maximum

credit amounts for families with children; and

• denied the EIC for wages earned by prison inmates.

To receive the new EIC for childless adults, taxpayers (1) had to be at least

25 but less than 65 years old, (2) had to have income of less than $9,000,

and (3) could not be claimed as a dependent on another return. As shown

in table I.5, the EIC for childless adults was structured, like the credit for

families with children, with a phase-in, plateau, and phase-out range.

Table I.5: EIC Calculations for Tax Year

1994

EIC range

EIC calculation for

families with one

child

EIC calculation for

families with two or

more children

EIC calculation for

childless adults

Phase-in

Income range $1 - $7,749 $1 - $8,399 $1 - $3,999

Phase-in rate 26.3% 30.0% 7.65%

Plateau

Income range $7,750 - $10,999 $8,400 - $10,999 $4,000 - $4,999

Maximum credit $2,038 $2,528 $306

Phase-out

Income range $11,000 - $23,754 $11,000 - $25,295 $5,000 - $8,999

Phase-out rate 15.98% 17.86% 7.65%

Source: Internal Revenue Code and IRS EIC tables.

Tax Year 1995 Effective for tax year 1995, Congress

• extended the EIC to taxpayers living outside the United States because of a

military assignment if they meet all other criteria, and

• denied the credit to anyone who spent part of the tax year as a

nonresident alien.

Page 30 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

As reflected in table I.6, the second year of rate changes specified in OBRA

1993 were also implemented.

Table I.6: EIC Calculations for Tax Year

1995

EIC range

EIC calculation for

families with one

child

EIC calculation for

families with two or

more children

EIC calculation for

childless adults

Phase-in

Income range $1 - $6,149 $1 - $8,599 $1 - $4,099

Phase-in rate 34.0% 36.0% 7.65%

Plateau

Income range $6,150 - $11,299 $8,600 - $11,299 $4,100 - $5,149

Maximum credit $2,094 $3,110 $314

Phase-out

Income range $11,300 - $24,395 $11,300 - $26,672 $5,150 - $9,229

Phase-out rate 15.98% 20.22% 7.65%

Source: Internal Revenue Code and IRS EIC tables.

Tax Year 1996 Congress made three changes to the EIC in the Personal Responsibility and

Work Opportunity Reconciliation Act of 1996 (P.L. 104-193). These

changes

• denied the EIC to taxpayers with investment income greater than $2,200,

regardless of their earned income or AGI;

• created a “modified AGI” to be used in calculating the credit that excludes

certain losses from investments and businesses; and

• denied the credit to taxpayers without valid Social Security Numbers

(SSN).17

For most taxpayers, the investment income and modified AGI provisions

were effective for tax year 1996; for taxpayers using the EIC advance

payment option18 as of June 26, 1996, these two provisions are effective for

tax year 1997. The SSN provision was effective for all taxpayers for tax year

1996.

17Taxpayers were already required to provide valid SSNs for qualifying children.

18Taxpayers who expect to qualify for the EIC can, by filing a form with their employers, receive a

portion of their credit in advance as regular additions to their paychecks.

Page 31 GAO/GGD-97-69 Earned Income Credit
Appendix I 

EIC Eligibility Rules and Amounts for Tax

Years 1990 Through 1996

The investment income exclusion is basically an indirect wealth test

intended to eliminate certain taxpayers from the EIC program. Investment

income includes taxable and nontaxable interest, taxable dividends, net

rent and royalty income derived from sources outside the taxpayer’s

ordinary course of trade or business, capital gain net income, and passive

activity net income.19 The threshold is to be indexed for inflation.

“Modified AGI” for the purposes of the EIC means AGI determined without

regard to (1) net capital losses, (2) net losses from trusts and estates,

(3) net losses from rents and royalties derived outside the taxpayer’s

normal course of trade or business, and (4) 50 percent of net losses from

trades or businesses. The losses subject to the 50 percent exclusion are to

be computed separately with respect to sole proprietorships other than

farming, farming sole proprietorships, and other trades or businesses.

Table I.7 shows how the EIC was to be calculated for tax year 1996.

Table I.7: EIC Calculations for Tax Year

1996

EIC range

EIC calculation for

families with one

child

EIC calculation for

families with two or

more children

EIC calculation for

childless adults

Phase-in

Income range $1 - $6,299 $1 - $8,849 $1 - $4,199

Phase-in rate 34.0% 40.0% 7.65%

Plateau

Income range $6,300 - $11,649 $8,850 - $11,649 $4,200 - $5,299

Maximum credit $2,152 $3,556 $323

Phase-out

Income range $11,650 - $25,077 $11,650 - $28,494 $5,300 - $9,499

Phase-out rate 15.98% 21.06% 7.65%

Source: Internal Revenue Code and IRS EIC tables.

19The disqualified investment income test was added to the Internal Revenue Code by P.L. 104-7,

effective beginning with tax year 1996. The Personal Responsibility and Work Opportunity

Reconciliation Act of 1996, however, amended the disqualified investment income test by (1) adding

capital gain net income and net passive income (if greater than zero) to the definition of disqualified

investment income, (2) lowering the threshold from $2,350 to $2,200, and (3) indexing the threshold to

inflation after 1996.

Page 32 GAO/GGD-97-69 Earned Income Credit
Appendix II 

Scope, Methodology, and Precision of

Statistical Estimates

This appendix describes the methodology we used to construct the

longitudinal database that was the basis of our work and the specific

methodology for our data analyses. This appendix also includes data on

the precision of the statistical estimates included in the body of this

report.

Methodology Used to

Develop the

Longitudinal Database

We obtained and analyzed a longitudinal, random sample of tax returns

filed for tax years 1990 through 1994, the most recent 5-year period of data

available at the time we began our work. This longitudinal subsample20 is

part of a larger database generated by IRS’ Statistics of Income (SOI)

division.

From the longitudinal sample, we identified 6,141 taxpayers who claimed

the EIC in any 1 of the 5 years. The SOI databases for each tax year include a

small percentage of returns from earlier tax years, and we eliminated

returns for tax year 1989 or earlier. We also found 44 duplicate SSNs in the

sample. All of the associated tax returns were retained as separate returns

when the names and tax information showed these were separate

taxpayers.

For most taxpayers, all of the information for our analysis could be drawn

from the SOI database. However, information was not available on some

taxpayers, in some years after an EIC claim, usually because the taxpayer

did not file a return or because the taxpayer was included as a secondary

filer on another taxpayer’s return. To obtain information for those years,

we asked IRS to match SSNs for these taxpayers to primary and secondary

SSNs on the individual masterfile (IMF) and print transcripts for tax years

1991 through 1994. From these transcripts printed in December 1996, we

were able to complete information on AGI, EIC amount (if any), and filing

status (in some cases) for taxpayers who had filed as secondary filers on a

joint return or had filed too late to be included in the SOI database.21 We

classified taxpayers who did not have return information for a given tax

year either in the SOI database or on the IMF as not having filed a return that

year. We were not able to determine why a taxpayer did not file a return.

20The SOI “Continuous Work History Panel.”

21IMF data were used only in tracking forward taxpayers already having a weighted record in the SOI

database.

Page 33 GAO/GGD-97-69 Earned Income Credit
Appendix II 

Scope, Methodology, and Precision of

Statistical Estimates

Scope and

Methodology for the

Data Analyses

Our analyses included EIC claims made in tax years 1990 through 1994. In

addition, our analyses of consecutive years on and off the credit and

changes in reported income were limited to tracking EIC claimants in the

years following an EIC claim. For this type of analysis, we made separate

estimates for tax year 1990, 1991, 1992, and 1993 claimants and averaged

the results across all years. For example, the averages for EIC participation

or income in the first year after a claim were made on the basis of

approximately 54 million claims made in tax years 1990, 1991, 1992, and

1993; estimates for the second year after a claim were made on the basis of

39 million claims made in tax years 1990, 1991, and 1992. Estimates for the

third year after a claim were made on the basis of about 26 million claims

made in 1990 and 1991 and estimates for the fourth year after a claim were

made on the basis of approximately 12 million tax year 1990 claims. The

results for both the individual years and combined averages are given in

appendix III.

EIC Participation Patterns To identify patterns of claiming the EIC, we determined the years on and

off the EIC for each taxpayer in our database. We used this participation

data to estimate the percentage of all EIC taxpayers who, over the 5-year

period, claimed the credit for 1, 2, 3, 4, and 5 years. We also estimated the

percentage of EIC claimants for each tax year who, in the 1 to 4 years

following a claim (as appropriate), (1) claimed the credit at least once

more, (2) did not claim the credit again, or (3) continued to consecutively

claim the credit.

Some taxpayers who claimed the EIC for families with children between

1990 and 1993 claimed the credit for childless adults in tax year 1994. We

included all tax year 1994 EIC claims in our analysis, regardless of claim

type.

Changes in Income in the

Years Following a Claim

To track changes in EIC claimants’ income in the years after an EIC claim,

we created a series of income categories relative to the EIC income ranges

for each tax year. These categories were (1) negative AGI, (2) the EIC

phase-in range, (3) the EIC plateau range, (4) the EIC phase-out range,

(5) the EIC phase-out amount to 10 percent over that amount, (6) between

10 and 25 percent over the phase-out amount, (7) between 25 and

50 percent over the phase-out amount, and (8) 50 percent or more over the

phase-out amount.22 The income parameters for each category changed

22To simplify presentation in the body of this report, we collapsed all categories for income above the

phase-out point. Data using the detailed categories are included in appendix III.

Page 34 GAO/GGD-97-69 Earned Income Credit
Appendix II 

Scope, Methodology, and Precision of

Statistical Estimates

slightly from year to year to reflect the EIC cutoff points specific to each

tax year (see app. I for EIC income ranges by tax year). For each tax year,

we used taxpayers’ reported AGI (or earned income, if applicable, in the

years the taxpayer claimed the EIC) to assign their income to the

appropriate category. We then estimated the proportion of EIC claimants

whose income stayed in the same or moved among categories in the years

after an EIC claim.

Taxpayers who claimed the childless adult credit in 1994 and had

previously claimed the credit for families with children were included in

this analysis. To provide a common income measure across all years,

however, we disregarded childless adult credit ranges in 1994 and applied

all reported 1994 income to the ranges for families with one qualifying

child. To classify income for non-EIC claimants, we also used the income

parameters for families with one child.

Because the EIC is indexed for inflation, our income categories also, in

effect, account for inflation adjustments. A legislative change implemented

in tax year 1994, however, also adjusted the income ranges more than they

would have changed due to straight inflation adjustments. It is possible,

therefore, that the same reported AGI could fall into two different ranges

from one year to the next. This is a limitation of our analysis in terms of

identifying true change in income; however, our primary interest was in

tracking changes in income in the context of claiming the EIC.

Taxpayers Who Stopped

Claiming the EIC

To describe the status of EIC claimants who at any point stopped claiming

the credit between 1990 and 1994, we determined, for the first and second

consecutive years off the credit, the proportion of former claimants who

(1) reported AGI either above or below the EIC limit, (2) claimed no

dependent exemptions, and (3) reported a change in filing status from the

year of claiming the EIC to the year off the EIC. We also determined the

proportion who did not file a return. We did not attempt to obtain data on

why taxpayers did not file a return, e.g., left the workforce, death, etc.

1990 Rules Applied to 1994

Claimants

To estimate the number of 1994 EIC claimants of the credit for families

with children who would and would not have been eligible for the credit if

the 1990 EIC maximum income limit still would have been in effect, we

indexed the 1990 EIC phase-in, plateau, and phase-out cutoffs to 1994

Page 35 GAO/GGD-97-69 Earned Income Credit
Appendix II 

Scope, Methodology, and Precision of

Statistical Estimates

dollars23 and applied the indexed cutoff points to the 1994 EIC claimants’

reported income. We also estimated the amount of 1994 EIC claims made

by those claimants who reported income above the indexed 1990 EIC limit.

Precision of the

Statistical Estimates

All data presented in this report are estimates based on the SOI longitudinal

subsample. Accordingly, we calculated confidence intervals at the

95-percent confidence level to indicate the precision of the estimates

included in the body of the report. For example, we show in figure 4 that,

on average, 56.2 percent of EIC claimants took the credit for 3 or more

consecutive years. This estimate is surrounded by a 95-percent confidence

interval of ± 1.4 percent. This indicates that we are 95 percent confident

that the actual percentage is included in the range of 54.8 to 57.6 percent.

Unless otherwise noted, the 95-percent confidence intervals for all

percentages in the body of the report are less than ± 5 percentage points

and for other statistics are less than ± 10 percent of the reported estimate.

Sampling errors used to calculate the confidence intervals are based on

the assumption that the longitudinal database is a simple random sample

of 6,141 taxpayers. Sampling errors for tax returns from more than 1 year

take into account the fact that individual taxpayers can file as many as five

returns over the 5-year study period. These sampling errors come from a

cluster sampling formula that recognizes that tax returns are drawn in

clusters associated with each selected SSN. Sampling errors for our data

are included in appendix III.

Our estimates are based upon the SOI longitudinal subsample rather than

the full SOI database; consequently, estimates reported here differ slightly

from estimates generated using the full SOI sample. For example, in our

June 1996 EIC report,24 we reported 19.1 million 1994 claimants, using the

advance version of the full SOI database of approximately 7,800 EIC returns.

The estimate in this report is 18.5 million, using the longitudinal panel with

about 3,700 EIC returns. The estimates of the amount of EIC claimed by

taxpayers in this report may also differ from the EIC that taxpayers actually

received. IRS examinations and other actions may make the actual EIC

amount granted to a taxpayer different from the amount claimed on the

tax return.

23We used the CPI-U as reported by the Bureau of Labor Statistics and EIC indexing methodology as

prescribed by the Internal Revenue Code.

24Earned Income Credit: Profile of Tax Year 1994 Credit Recipients (GAO/GGD-96-122BR, June 13,

1996).

Page 36 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

This appendix presents the detailed data resulting from our analysis of the

longitudinal database. All data are estimates based on the sample.

Standard errors for each estimate are in parentheses in each table cell. The

standard error is a measure of the variability that is introduced by

sampling from the population of EIC claims. A 95-percent confidence

interval is calculated by multiplying the standard error by 1.96. For

example, in the first row of Table 1, the standard error of $136 million for

tax year 1990 indicates that the estimate of $7,233,000,000 is surrounded

by a 95-percent confidence interval of about ± $267,000,000

($136,000,000*1.96) and thus stretches from $6,966,000,000 to

$7,500,000,000.

EIC Claims and

Program Costs

Table III.1 shows the number of EIC claims and EIC amounts for tax years

1990 through 1994. Table III.2 provides data on the frequency with which

taxpayers claimed the EIC over the same 5-year period by EIC status in tax

year 1994.

Table III.1: Total EIC Claims and

Amounts, Tax Years 1990 Through

1994

Standard errors in parentheses

Tax Year

EIC amount

(dollars in millions)

Number of claims

(in thousands)

1990 $7,233

(136)

12,115

(192)

1991 10,926

(193)

13,395

(194)

1992 12,698

(221)

13,590

(195)

1993 14,935

(242)

14,545

(196)

1994a 20,687

(322)

18,550

(192)

Total $66,478

(756)

72,195

(564)

Note 1: Dollar values are not indexed.

Note 2: Dollars do not add to total due to rounding.

aThe 1994 total includes 14.5 million claims for the EIC for families with children totaling $20 billion

and 4 million claims for the childless adult credit totaling $0.7 billion.

Source: GAO analysis of SOI data.

Page 37 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.2: Number of Taxpayers Claiming the EIC in a 5-Year Period, by Number of Years Claiming the EIC and EIC Status

in Tax Year 1994

EIC status in tax year 1994

Number of claimants in thousands

Standard errors in parentheses

Number of years

claiming the EIC

in the 5-year

period between

tax years 1990

and 1994

Did not claim the

EIC for childless

adults

Claimed childless

adult credit and

claimed EIC at least

once from 1990 to

1993

Claimed childless

adult credit and

did not claim EIC

from 1990 to 1993

Claimed EIC

but type

unknowna

Did not file a

return in 1994 Total

1 of 5 years 6,535

(160)

3,410

(123)

2,100

(99)

12,045

(191)

2 of 5 years 4,590

(140)

290

(38) 0

75

(19)

1,075

(72)

6,030

(156)

3 of 5 years 3,690

(127)

140

(26) 0

35

(13)

700

(58)

4,565

(139)

4 of 5 years 3,220

(120)

75

(19) 0

60

(17)

305

(39)

3,660

(127)

5 of 5 years 4,260

(135)

90

(21) 0

55

(17)

4,405

(137)

Total 22,295

(175)

595

(54)

3,410

(123)

225

(33)

4,180

(134)

30,705

aThe SOI databases did not include information on some taxpayers, in some years after an EIC

claim. During our analysis of IMF transcripts for these taxpayers and years, we found that some

had made EIC claims, but the transcripts did not include EIC earned income amounts or data on

EIC qualifying children. Consequently, for tax year 1994 claimants reporting AGI under $9,000

(the income limit for childless adults), we were unable to precisely determine which taxpayers had

claimed the EIC for families with children and which had claimed the EIC for childless adults.

Source: GAO analysis of SOI and IMF data.

EIC Participation

Patterns

Table III.3 provides data on each possible EIC participation pattern for the

5-year period including tax years 1990 through 1994. Tables III.4 and III.5

provide specific data, by tax year, on claimants continuing to claim the EIC

in consecutive years and claimants not taking the credit again.

Page 38 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.3: Patterns of Claiming the

EIC, Tax Years 1990 Through 1994

Participation pattern

Number of taxpayers and claims in thousands

First year

claiming the

EIC during

the 5-year

period 1990 1991 1992 1993 1994

Number of

taxpayers

Total

number of

claims

madea

Tax year 1990

• 2,050 2,050

• • 340 680

• • 165 330

• • • 265 795

• • 160 320

• • • 60 180

• • • 135 405

• • • • 305 1,220

• • 1,280 2,560

• • • 265 795

• • • 135 405

• • • • 395 1,580

• • • 975 2,925

• • • • 345 1,380

• • • • 835 3,340

• • • • • 4,405 22,025

Subtotal 12,115 40,990

Tax year 1991

• 1,315 1,315

• • 185 370

• • 175 350

• • • 220 660

• • 585 1,170

• • • 160 480

• • • 640 1,920

• • • • 1,780 7,120

Subtotal 5,060 13,385

Tax year 1992

• 1,040 1,040

• • 315 630

• • 640 1,280

• • • 1,710 5,130

Subtotal 3,705 8,080

(continued)

Page 39 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Participation pattern

Number of taxpayers and claims in thousands

First year

claiming the

EIC during

the 5-year

period 1990 1991 1992 1993 1994

Number of

taxpayers

Total

number of

claims

madea

Tax year 1993

• 1,200 1,200

• • 2,185 4,370

Subtotal 3,385 5,570

Tax year 1994b

• 6,440 6,440

Total 30,705 74,465

Legend

 Bullet (•) indicates an EIC claim. A blank cell indicates no EIC claim.

Note: We did not include standard errors for the data in this table. The small values in some cells

are subject to large sampling errors because each sample taxpayer is inflated to represent about

5,000 taxpayers in the total population. The estimate of 60,000 taxpayers in the sixth line, for

example, comes from only 12 sample observations. The data from this table yield more accurate

estimates when aggregated, as they were for other analyses in this report.

aThe SOI databases did not include information on some taxpayers, in some years after an EIC

claim. During our analysis of IMF transcripts for these taxpayers and tax years, we found that

some had made EIC claims. These IMF-based claims are not included in the total number of

claims, based only on SOI data, for each tax year as shown in table III.1. The IMF-based claims

were used only in analyses of claimants’ EIC status in the years following their first SOI-based

claim and, thus, are included in this table.

bTax year 1994 total includes 3,410,000 taxpayers who claimed the credit for childless adults and

who had not claimed the EIC for families with children in tax years 1990 through 1994.

Source: GAO analysis of SOI and IMF data.

Page 40 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.4: Number and Percentage of EIC Claimants Who Did Not Claim the Credit Again, 1 to 4 Consecutive Years After a

Claim, by Tax Year

At least 1 year At least 2 years At least 3 years 4 years

Number of consecutive years not claiming the EIC again

Number of claimants in thousands

Standard errors in parentheses

Tax year

Total

claimants

Number of

former

claimants Percent

Number of

former

claimants Percent

Number of

former

claimants Percent

Number of

former

claimants Percent

1990 12,115

(192)

3,480

(124)

28.7%

(0.9)

2,820

(113)

23.3%

(0.9)

2,390

(105)

19.7%

(0.8)

2,050

(98)

16.9%

(0.8)

1991 13,395

(194)

3,900

(130)

29.1%

(0.9)

2,990

(116)

22.3%

(0.8)

2,560

(108)

19.1%

(0.8)

1992 13,590

(195)

3,500

(125)

25.8%

(0.8)

2,645

(110)

19.5%

(0.8)

1993 14,545

(196)

3,755

(128)

25.8%

(0.8)

Totala 53,645

(534)

14,635

(214)

27.3%

(0.5)

8,455

(175)

21.6%

(0.5)

4,950

(144)

19.4%

(0.6)

2,050

(98)

16.9%

(0.8)

Note: Blank table cells indicate tax years after 1994 that were not included in our analysis.

aPercentages are averages based on the following:

1 year off—53,645,000 (534,000) claims made in tax years 1990, 1991, 1992 and 1993;

2 consecutive years off—39,100,000 (437,000) claims made in tax years 1990, 1991, and 1992;

3 consecutive years off—25,510,000 (324,000) claims made in tax years 1990 and 1991; and

4 consecutive years off—12,115,000 (192,000) claims made in tax year 1990.

Source: GAO analysis of SOI and IMF data.

Page 41 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.5: Number and Percentage of EIC Claimants Who Claimed the Credit for 2 to 5 Consecutive Years, by Tax Year

At least 2 years At least 3 years At least 4 years 5 years

Number of consecutive years claiming the EIC

Number of claims in thousands

Standard errors in parentheses

Tax year

Total

claims

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

1990 12,115

(192)

8,635

(176)

71.3%

(0.9)

6,560

(161)

54.1%

(1.0)

5,240

(147)

43.3%

(1.0)

4,405

(137)

36.4%

(1.0)

1991 13,395

(194)

9,495

(181)

70.9%

(0.9)

7,490

(168)

55.9%

(1.0)

6,075

(156)

45.4%

(1.0)

1992 13,590

(195)

10,090

(184)

74.2%

(0.8)

7,930

(172)

58.4%

(0.9)

1993 14,545

(196)

10,790

(187)

74.2%

(0.8)

Totala 53,645

(534)

39,010

(562)

72.7%

(0.5)

21,980

(429)

56.2%

(0.7)

11,315

(281)

44.4%

(0.9)

4,405

(137)

36.4%

(1.0)

Note: Blank table cells indicate tax years after 1994 that were not included in our analysis.

aPercentages are averages based on the following:

2 consecutive years—53,645,000 (534,000)claims made in tax years 1990, 1991, 1992, and 1993;

3 consecutive years—39,100,000 (437,000) claims made in tax years 1990, 1991, and 1992;

4 consecutive years—25,510,000 (324,000) claims made in tax years 1990 and 1991; and

5 consecutive years—12,115,000 (192,000) claims made in tax year 1990.

Source: GAO analysis of SOI and IMF data.

EIC Claimants’

Income in the Years

Following a Claim

Tables III.6 to III.20 provide detailed data on the number of EIC claimants

and income levels in the years following a claim. Table III.6 shows

averages for all claimants across all tax years. Table III.11 shows averages

for phase-in range claimants across all tax years, and table III.16 shows

averages for phase-out range claimants across all tax years. Each of these

tables is followed by four parallel tables showing the supporting data by

tax year.

Page 42 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.6: Reported Income of EIC Claimants, Averages for 1 to 4 Years After a Claim, Number and Percentage of

Claimants by Income Range

1 year 2 years 3 years 4 years

Number of years after an EIC claim

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 4,720

(147)

8.8

(0.3)

5,040

(172)

12.9

(0.4)

4,010

(157)

15.7

(0.6)

2,140

(100)

17.7

(0.8)

AGI negative or missing 135

(27)

0.3

(0.1)

125

(26)

0.3

(0.1)

105

(25)

0.4

(0.1)

45

(15)

0.4

(0.1)

In a lower EIC range 6,205

(177)

11.6

(0.3)

4,790

(171)

12.3

(0.4)

2,965

(131)

11.6

(0.5)

1,265

(78)

10.4

(0.6)

In the same EIC range 29,365

(462)

54.7

(0.6)

17,485

(349)

44.7

(0.7)

10,160

(240)

39.8

(0.8)

4,385

(137)

36.2

(1.0)

In a higher EIC range 8,015

(204)

14.9

(0.3)

6,185

(191)

15.8

(0.4)

4,085

(154)

16.0

(0.6)

2,115

(99)

17.5

(0.8)

EIC limit to 10% over limit 1,645

(91)

3.1

(0.2)

1,390

(87)

3.6

(0.2)

820

(67)

3.2

(0.3)

375

(43)

3.1

(0.4)

10 to 25% over EIC limit 1,375

(82)

2.6

(0.2)

1,340

(87)

3.4

(0.2)

965

(72)

3.8

(0.3)

415

(45)

3.4

(0.4)

25 to 50% over EIC limit 1,010

(70)

1.9

(0.1)

1,130

(78)

2.9

(0.2)

860

(67)

3.4

(0.3)

510

(50)

4.2

(0.4)

50% or more over the EIC limit 1,175

(76)

2.2

(0.1)

1,615

(99)

4.1

(0.3)

1,540

(99)

6.0

(0.4)

865

(65)

7.1

(0.5)

Total 53,645

(534)

100.0% 39,100

(437)

100.0% 25,510

(324)

100.0% 12,115

(192)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 43 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.7: Reported Income of Tax Year 1990 EIC Claimants for Tax Years 1991 Through 1994, Number and Percentage of

Claimants by Income Range

1991 1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 1,050

(71)

8.7

(0.6)

1,620

(88)

13.4

(0.7)

1,910

(95)

15.8

(0.7)

2,140

(100)

17.7

(0.8)

AGI negative or missing 45

(15)

0.4

(0.1)

45

(15)

0.4

(0.1)

50

(16)

0.4

(0.1)

45

(15)

0.4

(0.1)

In a lower EIC range 1,695

(89)

14.0

(0.7)

1,620

(88)

13.4

(0.7)

1,760

(91)

14.5

(0.7)

1,265

(78)

10.4

(0.6)

 In the same EIC range 6,630

(161)

54.7

(1.0)

5,460

(150)

45.1

(1.0)

4,770

(142)

39.4

(1.0)

4,385

(137)

36.2

(1.0)

In a higher EIC range 1,515

(85)

12.5

(0.7)

1,610

(87)

13.3

(0.7)

1,635

(88)

13.5

(0.7)

2,115

(99)

17.5

(0.8)

EIC limit to 10% over limit 400

(44)

3.3

(0.4)

515

(50)

4.3

(0.4)

435

(46)

3.6

(0.4)

375

(43)

3.1

(0.4)

10 to 25% over EIC limit 280

(37)

2.3

(0.3)

400

(44)

3.3

(0.4)

470

(48)

3.9

(0.4)

415

(45)

3.4

(0.4)

25 to 50% over EIC limit 225

(33)

1.9

(0.3)

320

(40)

2.6

(0.3)

335

(41)

2.8

(0.3)

510

(50)

4.2

(0.4)

50% or more over the EIC limit 275

(37)

2.3

(0.3)

525

(51)

4.3

(0.4)

750

(60)

6.2

(0.5)

865

(65)

7.1

(0.5)

Total 12,115

(192)

100.0% 12,115

(192)

100.0% 12,115

(192)

100.0% 12,115

(192)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 44 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.8: Reported Income of Tax

Year 1991 EIC Claimants for Tax Years

1992 Through 1994, Number and

Percentage of Claimants by Income

Range

1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income

range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did

not file a

return

1,170

(75)

8.7

(0.5) 1,655

(88)

12.4

(0.6) 2,100

(99)

15.7

(0.7)

AGI negative

or missing

35

(13)

0.3

(0.1)

35

(13)

0.3

(0.1)

55

(17)

0.4

(0.1)

In a lower

EIC range

1,585

(87)

11.8

(0.6)

1,845

(93)

13.8

(0.7)

1,205

(76)

9.0

(0.6)

In the same

EIC range

7,405

(168)

55.3

(1.0)

6,010

(155)

44.9

(1.0)

5,390

(149)

40.2

(0.9)

In a higher

EIC range

1,780

(92)

13.3

(0.7)

1,910

(95)

14.3

(0.7)

2,450

(106)

18.3

(0.7)

EIC limit to

10% over

limit

505

(50)

3.8

(0.4) 515

(50)

3.8

(0.4) 385

(44)

2.9

(0.3)

10 to 25%

over EIC limit

315

(39)

2.4

(0.3)

465

(48)

3.5

(0.4)

495

(49)

3.7

(0.4)

25 to 50%

over EIC limit

260

(36)

1.9

(0.3)

360

(42)

2.7

(0.3)

525

(51)

3.9

(0.4)

50% or more

over the EIC

limit

340

(41)

2.5

(0.3) 600

(54)

4.5

(0.4) 790

(62)

5.9

(0.5)

Total 13,395

(194)

100.0% 13,395

(194)

100.0% 13,395

(194)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 45 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.9: Reported Income of Tax

Year 1992 EIC Claimants for Tax Years

1993 and 1994, Number and

Percentage of Claimants by Income

Range

1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 1,150

(74)

8.5

(0.5)

1,765

(91)

13.0

(0.6)

AGI negative or missing 30

(12)

0.2

(0.1)

45

(15)

0.3

(0.1)

In a lower EIC range 1,710

(90)

12.6

(0.6)

1,325

(80)

9.7

(0.6)

 In the same EIC range 7,535

(169)

55.4

(1.0)

6,015

(156)

44.3

(1.0)

In a higher EIC range 1,830

(93)

13.5

(0.7)

2,665

(110)

19.6

(0.8)

EIC limit to 10% over limit 400

(44)

2.9

(0.3)

360

(42)

2.6

(0.3)

10 to 25% over EIC limit 425

(46)

3.1

(0.3)

475

(48)

3.5

(0.4)

25 to 50% over EIC limit 250

(35)

1.8

(0.3)

450

(47)

3.3

(0.3)

50% or more over the EIC limit 260

(36)

1.9

(0.3)

490

(49)

3.6

(0.4)

Total 13,590

(195)

100.0% 13,590

(195)

100.0%

Note: Percentages do not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 46 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.10: Reported Income of Tax

Year 1993 EIC Claimants for Tax Year

1994, Number and Percentage of

Claimants by Income Range

Tax year 1994

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Claimant did not file a return 1,350

(80)

9.3

(0.5)

AGI negative or missing 25

(11)

0.2

(0.1)

In a lower EIC range 1,215

(76)

8.4

(0.5)

 In the same EIC range 7,795

(171)

53.6

(0.9)

In a higher EIC range 2,890

(114)

19.9

(0.7)

EIC limit to 10% over limit 340

(41)

2.3

(0.3)

10 to 25% over EIC limit 355

(42)

2.4

(0.3)

25 to 50% over EIC limit 275

(37)

1.9

(0.3)

50% or more over the EIC limit 300

(39)

2.1

(0.3)

Total 14,545

(196)

100.0%

Note: Percentages do not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 47 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.11: Reported Income of EIC Phase-in Range Claimants, Averages for 1 to 4 Years After a Claim, Number and

Percentage of Claimants by Income Range

1 year 2 years 3 years 4 years

Number of years after an EIC claim

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 2,880

(118)

19.0

(0.7)

2,510

(120)

23.4

(1.0)

1,835

(103)

26.7

(1.3)

885

(66)

27.9

(1.8)

AGI negative or missing 70

(19)

0.5

(0.1)

40

(16)

0.4

(0.1)

40

(16)

0.6

(0.2)

25

(11)

0.8

(0.4)

EIC phase-in range 7,150

(259)

47.1

(1.0)

3,.875

(177)

36.1

(1.2)

2,120

(115)

30.8

(1.4)

810

(63)

25.5

(1.7)

EIC plateau range 2,675

(115)

17.6

(0.7)

1,770

(98)

16.5

(0.8)

960

(71)

14.0

(0.9)

360

(42)

11.3

(1.3)

EIC phase-out range 1,995

(98)

13.1

(0.6)

1,965

(101)

18.3

(0.9)

1,440

(87)

20.9

(1.1)

815

(63)

25.7

(1.7)

EIC limit to 10% over limit 115

(24)

0.8

(0.2)

100

(22)

0.9

(0.2)

40

(14)

0.6

(0.2)

35

(13)

1.1

(0.4)

10 to 25% over EIC limit 70

(19)

0.5

(0.1)

125

(27)

1.2

(0.2)

85

(22)

1.2

(0.3)

35

(13)

1.1

(0.4)

25 to 50% over EIC limit 80

(20)

0.5

(0.1)

155

(28)

1.4

(0.3)

110

(23)

1.6

(0.3)

60

(17)

1.9

(0.5)

50% or more over the EIC limit 160

(28)

1.1

(0.2)

205

(34)

1.9

(0.3)

245

(37)

3.6

(0.5)

150

(27)

4.7

(0.8)

Total 15,195

(337)

100.0% 10,745

(269)

100.0% 6,875

(199)

100.0% 3,175

(119)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 48 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.12: Reported Income of Tax Year 1990 EIC Phase-in Range Claimants, for Tax Years 1991 Through 1994, Number

and Percentage of Claimants by Income Range

1991 1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claimants Percent

Number of

claimants Percent

Number of

claimants Percent

Number of

claimants Percent

Claimant did not file a return 635

(56)

20.0

(1.6)

775

(61)

24.4

(1.7)

865

(65)

27.2

(1.8)

885

(66)

27.9

(1.8)

AGI negative or missing 30

(12)

0.9

(0.4)

20

(10)

0.6

(0.3)

20

(10)

0.6

(0.3)

25

(11)

0.8

(0.4)

EIC phase-in range 1,495

(84)

47.1

(2.0)

1,160

(75)

36.5

(1.9)

1,060

(72)

33.4

(1.9)

810

(63)

25.5

(1.7)

EIC plateau range 570

(53)

18.0

(1.5)

565

(53)

17.8

(1.5)

485

(49)

15.3

(1.4)

360

(42)

11.3

(1.3)

EIC phase-out range 360

(42)

11.3

(1.3)

475

(48)

15.0

(1.4)

535

(51)

16.9

(1.5)

815

(63)

25.7

(1.7)

EIC limit to 10% over limit 25

(11)

0.8

(0.4)

35

(13)

1.1

(0.4)

25

(11)

0.8

(0.4)

35

(13)

1.1

(0.4)

10 to 25% over EIC limit 15

(9)

0.5

(0.3)

40

(14)

1.3

(0.4)

20

(10)

0.6

(0.3)

35

(13)

1.1

(0.4)

25 to 50% over EIC limit 25

(11)

0.8

(0.4)

35

(13)

1.1

(0.4)

25

(11)

0.8

(0.4)

60

(17)

1.9

(0.5)

50% or more over the EIC limit 20

(10)

0.6

(0.3)

70

(19)

2.2

(0.6)

140

(26)

4.4

(0.8)

150

(27)

4.7

(0.8)

Total 3,175

(119)

100.0% 3,175

(119)

100.0% 3,175

(119)

100.0% 3,175

(119)

100.0%

Source: GAO analysis of SOI and IMF data.

Page 49 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.13: Reported Income of Tax

Year 1991 EIC Phase-in Range

Claimants for Tax Years 1992 Through

1994, Number and Percentage of

Claimants by Income Range

1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claimants Percent

Number of

claimants Percent

Number of

claimants Percent

Claimant did not

file a return

695

(58)

18.8

(1.4)

850

(64)

23.0

(1.5)

970

(69)

26.2

(1.6)

AGI negative or

missing

15

(9)

0.4

(0.2)

10

(7)

0.3

(0.2)

20

(10)

0.5

(0.3)

EIC phase-in

range

1,725

(90)

46.6

(1.8)

1,425

(82)

38.5

(1.8)

1060

(72)

28.6

(1.7)

EIC plateau range 700

(58)

18.9

(1.4)

645

(56)

17.4

(1.4)

475

(48)

12.8

(1.2)

EIC phase-out

range

450

(47)

12.2

(1.2)

590

(54)

15.9

(1.3)

905

(66)

24.5

(1.6)

EIC limit to 10%

over limit

25

(11)

0.7

(0.3)

20

(10)

0.5

(0.3)

15

(9)

0.4

(0.2)

10 to 25% over

EIC limit

25

(11)

0.7

(0.3)

40

(14)

1.1

(0.4)

65

(18)

1.8

(0.5)

25 to 50% over

EIC limit

15

(9)

0.4

(0.2)

55

(17)

1.5

(0.4)

85

(21)

2.3

(0.6)

50% or more over

the EIC limit

50

(16)

1.4

(0.4)

65

(18)

1.8

(0.5)

105

(23)

2.8

(0.6)

Total 3,700

(128)

100.0% 3,700

(128)

100.0% 3,700

(128)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 50 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.14: Reported Income of Tax

Year 1992 EIC Phase-in Range

Claimants for Tax Years 1993 and

1994, Number and Percentage of

Claimants by Income Range

1993 1994

Tax year

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 700

(58)

18.1

(1.4)

885

(66)

22.9

(1.5)

AGI negative or missing 15

(9)

0.4

(0.2)

10

(7)

0.3

(0.2)

EIC phase-in range 1,940

(95)

50.1

(1.8)

1,290

(79)

33.3

(1.7)

EIC plateau range 695

(58)

18.0

(1.4)

560

(52)

14.5

(1.3)

EIC phase-out range 420

(46)

10.9

(1.1)

900

(66)

23.3

(1.5)

EIC limit to 10% over limit 25

(11)

0.6

(0.3)

45

(15)

1.2

(0.4)

10 to 25% over EIC limit 20

(10)

0.5

(0.3)

45

(15)

1.2

(0.4)

25 to 50% over EIC limit 15

(9)

0.4

(0.2)

65

(18)

1.7

(0.5)

50% or more over the EIC limit 40

(14)

1.0

(0.4)

70

(19)

1.8

(0.5)

Total 3,870

(130)

100.0% 3,870

(130)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 51 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.15: Reported Income of Tax

Year 1993 EIC Phase-in Range

Claimants for Tax Year 1994, Number

and Percentage of Claimants by

Income Range Tax year 1994

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Claimant did not file a return 850

(64)

19.1

(1.3)

AGI negative or missing 10

(7)

0.2

(0.2)

EIC phase-in range 1,990

(96)

44.7

(1.7)

EIC plateau range 710

(59)

16.0

(1.2)

EIC phase-out range 765

(61)

17.2

(1.3)

EIC limit to 10% over limit 40

(14)

0.9

(0.3)

10 to 25% over EIC limit 10

(7)

0.2

(0.2)

25 to 50% over EIC limit 25

(11)

0.6

(0.3)

50% or more over the EIC limit 50

(16)

1.1

(0.4)

Total 4,450

(138)

100.0%

Source: GAO analysis of SOI and IMF data.

Page 52 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.16: Reported Income for EIC Phase-Out Range Claimants, Averages for 1 to 4 Years After a Claim, Number and

Percentage of Claimants by Income Range

1 year 2 years 3 years 4 years

Number of years after an EIC claim

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 935

(68)

3.4

(0.2)

1,455

(90)

7.1

(0.4)

1,310

(88)

9.7

(0.6)

780

(62)

12.0

(0.9)

AGI negative or missing 45

(17)

0.2

(0.1)

40

(14)

0.2

(0.1)

55

(17)

0.4

(0.1)

20

(10)

0.3

(0.2)

EIC phase-in range 1,845

(95)

6.7

(0.3)

1,665

(96)

8.2

(0.5)

1,165

(81)

8.6

(0.6)

580

(53)

8.9

(0.8)

EIC plateau range 2,125

(102)

7.8

(0.4)

1,590

(94)

7.8

(0.4)

925

(70)

6.8

(0.5)

315

(39)

4.8

(0.6)

EIC phase-out range 18,130

(415)

66.1

(0.7)

11,335

(308)

55.6

(0.9)

6,880

(210)

50.8

(1.1)

3,190

(120)

49.1

(1.4)

EIC limit to 10% over limit 1,430

(85)

5.2

(0.3)

1,190

(81)

5.8

(0.4)

705

(62)

5.2

(0.4)

300

(39)

4.6

(0.6)

10 to 25% over EIC limit 1,200

(77)

4.4

(0.3)

1,100

(78)

5.4

(0.4)

735

(62)

5.4

(0.4)

335

(41)

5.2

(0.6)

25 to 50% over EIC limit 850

(64)

3.1

(0.2)

860

(68)

4.2

(0.3)

700

(60)

5.2

(0.4)

395

(44)

6.1

(0.7)

50% or more over the EIC limit 855

(64)

3.1

(0.2)

1,150

(82)

5.6

(0.4)

1,065

(81)

7.9

(0.6)

580

(53)

8.9

(0.8)

Total 27,415

(457)

100.0% 20,385

(369)

100.0% 13,540

(271)

100.0% 6,495

(160)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 53 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.17: Reported Income of Tax Year 1990 EIC Phase-Out Range Claimants for Tax Years 1991 Through 1994, Number

and Percentage of Claimants by Income Range

1991 1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 205

(32)

3.2

(0.5)

495

(49)

7.6

(0.7)

640

(56)

9.9

(0.8)

780

(62)

12.0

(0.9)

AGI negative or missing 5

(5)

0.1

(0.1)

5

(5)

0.1

(0.1)

25

(11)

0.4

(0.2)

20

(10)

0.3

(0.2)

EIC phase-in range 510

(50)

7.9

(0.7)

575

(53)

8.9

(0.8)

670

(57)

10.3

(0.8)

580

(53)

8.9

(0.8)

EIC plateau range 625

(55)

9.6

(0.8)

590

(54)

9.1

(0.8)

605

(54)

9.3

(0.8)

315

(39)

4.8

(0.6)

EIC phase-out range 4,175

(134)

64.3

(1.3)

3,465

(124)

53.3

(1.4)

3,025

(117)

46.6

(1.4)

3,190

(120)

49.1

(1.4)

EIC limit to 10% over limit 350

(42)

5.4

(0.6)

435

(46)

6.7

(0.7)

365

(42)

5.6

(0.6)

300

(39)

4.6

(0.6)

10 to 25% over EIC limit 250

(35)

3.8

(0.5)

330

(40)

5.1

(0.6)

390

(44)

6.0

(0.7)

335

(41)

5.2

(0.6)

25 to 50% over EIC limit 180

(30)

2.8

(0.5)

255

(36)

3.9

(0.5)

295

(38)

4.5

(0.6)

395

(44)

6.1

(0.7)

50% or more over the EIC limit 195

(31)

3.0

(0.5)

345

(41)

5.3

(0.6)

480

(49)

7.4

(0.7)

580

(53)

8.9

(0.8)

Total 6,495

(160)

100.0% 6,495

(160)

100.0% 6,495

(160)

100.0% 6,495

(160)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 54 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.18: Reported Income of Tax

Year 1991 EIC Phase-Out Range

Claimants for Tax Years 1992 Through

1994, Number and Percentage of

Claimants by Income Range

1992 1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Number of

claims Percent

Claimant did not

file a return

255

(36)

3.6

(0.5)

485

(49)

6.9

(0.7)

670

(57)

9.5

(0.8)

AGI negative or

missing

20

(10)

0.3

(0.1)

10

(7)

0.1

(0.1)

30

(12)

0.4

(0.2)

EIC phase-in

range

480

(49)

6.8

(0.7)

590

(54)

8.4

(0.7)

495

(49)

7.0

(0.7)

EIC plateau range 635

(56)

9.0

(0.8)

675

(57)

9.6

(0.8)

320

(40)

4.5

(0.6)

EIC phase-out

range

4,470

(138)

63.4

(1.3)

3,720

(128)

52.8

(1.3)

3,855

(130)

54.7

(1.3)

EIC limit to 10%

over limit

470

(48)

6.7

(0.7)

465

(48)

6.6

(0.7)

340

(41)

4.8

(0.6)

10 to 25% over

EIC limit

260

(36)

3.7

(0.5)

375

(43)

5.3

(0.6)

345

(41)

4.9

(0.6)

25 to 50% over

EIC limit

215

(33)

3.1

(0.5)

265

(36)

3.8

(0.5)

405

(45)

5.7

(0.6)

50% or more over

the EIC limit

240

(35)

3.4

(0.5)

460

(48)

6.5

(0.7)

585

(54)

8.3

(0.7)

Total 7,045

(165)

100.0% 7,045

(165)

100.0% 7,045

(165)

100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 55 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.19: Reported Income of Tax

Year 1992 EIC Phase-Out Range

Claimants for Tax Years 1993 and

1994, Number and Percentage of

Claimants by Income Range

1993 1994

Tax years

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Number of

claims Percent

Claimant did not file a return 215

(33)

3.1

(0.5)

475

(48)

6.9

(0.7)

AGI negative or missing 10

(7)

0.1

(0.1)

25

(11)

0.4

(0.2)

EIC phase-in range 460

(48)

6.7

(0.7)

500

(50)

7.3

(0.7)

EIC plateau range 595

(54)

8.7

(0.8)

325

(40)

4.7

(0.6)

EIC phase-out range 4,445

(138)

64.9

(1.3)

4,150

(134)

60.6

(1.3)

EIC limit to 10% over limit 340

(41)

5.0

(0.6)

290

(38)

4.2

(0.5)

10 to 25% over EIC limit 355

(42)

5.2

(0.6)

395

(44)

5.8

(0.6)

25 to 50% over EIC limit 220

(33)

3.2

(0.5)

340

(41)

5.0

(0.6)

50% or more over the EIC limit 205

(32)

3.0

(0.5)

345

(41)

5.0

(0.6)

Total 6,845

(163)

100.0% 6,845

(163)

100.0%

Note: Percentages do not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 56 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.20: Reported Income of Tax

Year 1993 EIC Phase-Out Range

Claimants for Tax Year 1994, Number

and Percentage of Claimants by

Income Range Tax year 1994

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

claims Percent

Claimant did not file a return 260

(36)

3.7

(0.5)

AGI negative or missing 10

(7)

0.1

(0.1)

EIC phase-in range 395

(44)

5.6

(0.6)

EIC plateau range 270

(37)

3.8

(0.5)

EIC phase-out range 5,040

(145)

71.7

(1.2)

EIC limit to 10% over limit 270

(37)

3.8

(0.5)

10 to 25% over EIC limit 335

(41)

4.8

(0.6)

25 to 50% over EIC limit 235

(34)

3.3

(0.5)

50% or more over the EIC limit 215

(33)

3.1

(0.5)

Total 7,030

(165)

100.0%

Note: Percentages do not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Taxpayers Who

Stopped Claiming the

EIC

Tables III.21 to III.23 provide data on taxpayers who at some point stopped

claiming the EIC. Table III.21 provides averages of the proportion of

taxpayers who stopped claiming the EIC and filed a return, by income

range, along with the proportion who stopped claiming the credit and did

not file a return in the year off the EIC. Table III.22 provides additional data

on changes in filing status for those who filed a return in the year off the

EIC. Table III.23 includes specifics on the type of filing status change, by

income range.

Page 57 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.21: EIC Claimants’ Reported

Income in the First and Second

Consecutive Years Off the Credit,

Averages for Tax Years 1991 Through

1994, Number and Percentage of

Departures by Income Range First year off the EIC

Second consecutive

year off the EIC

Number of departures from the EIC in thousands

Standard errors in parentheses

Income range

Number of

departures Percent

Number of

departures Percent

AGI negative or missing 135

(27)

0.9

(0.2)

75

(19)

0.9

(0.2)

In the EIC range 4,575

(143)

31.3

(0.9)

2,160

(100)

25.5

(1.1)

Up to 10% over the EIC limit 1,645

(91)

11.2

(0.6)

620

(55)

7.3

(0.6)

10 to 25% over the EIC limit 1,375

(82)

9.4

(0.5)

750

(60)

8.9

(0.7)

25 to 50% over the EIC limit 1,010

(70)

6.9

(0.5)

755

(61)

8.9

(0.7)

50% or more over the EIC limit 1,175

(76)

8.0

(0.5)

1,155

(75)

13.7

(0.8)

Did not file a return 4,720

(147)

32.3

(0.9)

2,940

(115)

34.8

(1.2)

Total Departuresa 14,635

(214)

100.0% 8,455

(175)

100.0%

aOf the 14,635,000 departures from the credit 1 year after a claim, 3,480,000 were from tax year

1990 to 1991, 3,900,000 were from tax year 1991 to 1992, 3,500,000 were from tax year 1992 to

1993 and 3,755,000 were from tax year 1993 to 1994. Of the 8,455,000 2-consecutive year

departures from the EIC, 2,820,000 were from tax year 1990 to 1992, 2,990,000 were from tax

year 1991 to 1993 and 2,645,000 were from tax year 1992 to 1994.

Source: GAO analysis of SOI and IMF data

Page 58 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Page 59 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.22: EIC Claimants Reporting the Same or Different Filing Status in the First and Second Consecutive Years Off the

Credit, by Income Range, Averages for Tax Year 1991 Through 1994 Departures From the Credit

Reported the same filing status Reported a different filing status Total

First year off the EIC

Number of claims in thousands

Standard errors in parentheses

Income range

Number of

departures Percent

Number of

departures Percent

Number of

departures Percent

AGI negative or missing 120

(25)

1.2

(0.3)

15

(9)

0.2

(0.1)

135

(27)

1.4

(0.3)

In the EIC range 2,165

(102)

21.8

(0.9)

2,410

(106)

24.3

(1.0)

4,575

(143)

46.1

(1.1)

Up to 10% over the EIC limit 1,345

(83)

13.6

(0.8)

300

(39)

3.0

(0.4)

1,645

(91)

16.6

(0.8)

10 to 25% over the EIC limit 1,165

(76)

11.7

(0.7)

210

(32)

2.1

(0.3)

1,375

(82)

13.9

(0.8)

25 to 50% over the EIC limit 780

(62)

7.9

(0.6)

230

(34)

2.3

(0.3)

1,010

(70)

10.2

(0.7)

50% or more over the EIC

limit

585

(54)

5.9

(0.5)

590

(54)

6.0

(0.5)

1,175

(76)

11.9

(0.7)

Total 6,160

(167)

62.1%

(1.1)

3,755

(130)

37.9%

(1.1)

9,915

(195)

100.0%

Page 60 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Reported the same filing status Reported a different filing status Total

Second consecutive year off the EIC

Nuumber of

departures Percent

Number of

departures Percent

Number of

departures Percent

60

(17)

1.1

(0.3)

15

(9)

0.3

(0.2)

75

(19)

1.4

(0.3)

850

(64)

15.4

(1.1)

1,310

(79)

23.8

(1.3)

2,160

(100)

39.2

(1.5)

485

(49)

8.8

(0.9)

135

(26)

2.4

(0.5)

620

(55)

11.2

(1.0)

625

(55)

11.3

(1.0)

125

(25)

2.3

(0.4)

750

(60)

13.6

(1.0)

510

(50)

9.2

(0.9)

245

(35)

4.4

(0.6)

755

(61)

13.7

(1.0)

645

(56)

11.7

(1.0)

510

(50)

9.2

(0.9)

1,155

(75)

20.9

(1.2)

3,175

(119)

57.6%

(1.5)

2,340

(104)

42.4%

(1.5)

5,515

(150)

100.0%

Source: GAO analysis of SOI and IMF data.

Page 61 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Table III.23: Type of Filing Status

Change From the Year of an EIC Claim

to the First Year Off the EIC, by Income

Range, Averages for Tax Years 1990

Through 1994

Single

Number of taxpayers in thousands

Standard errors in parentheses

AGI reported in the first

year off the EIC

Filing status in the year

of the EIC claim

Number

of claims Percent

Below the EIC limit Head of household 1,585

(87)

65.4

(2.2)

Married filing jointly 190

(31)

7.8

(1.2)

Single

Qualified widow(er) 15

(9)

0.6

(0.4)

Total 1,790

(92)

73.8

(2.0)

Above the EIC limit Head of household 210

(32)

15.8

(2.2)

Married filing jointly 10

(7)

0.8

(0.5)

Single

Qualified widow(er)

0 0.0

Total 220

(33)

16.5

(2.3)

All claims with a filing

status change

Head of household 1,795

(92)

47.8

(1.8)

Married filing jointly 200

(32)

5.3

(0.8)

Single

Qualified widow(er) 15

(9)

0.4

(0.2)

Total 2,010

(97)

53.5

(1.8)

Page 62 GAO/GGD-97-69 Earned Income Credit
Appendix III 

Detailed Data Tables

Married filing jointly Married filing separately Head of household Total

Filing status the first year off the EIC

Number

of claims Percent

Number 

of claims Percent

Number

of claims Percent

Number

of claims Percent

165

(29)

6.8

(1.1)

165

(29)

6.8

(1.1)

1,915

(95)

79.0

(1.9)

215

(33)

8.9

(1.3)

35

(13)

1.4

(0.5)

440

(47)

18.1

(1.8)

15

(9)

0.6

(0.4)

5

(5)

0.2

(0.2)

20

(10)

0.8

(0.4)

40

(14)

1.6

(0.6)

0 0.0 0

0.0 15

(9)

0.6

(0.4)

30

(12)

1.2

(0.5)

180

(30)

7.4

(1.2)

385

(44)

15.9

(1.7)

70

(19)

2.9

(0.8)

2,425

(107) 100.0%

960

(69)

72.2

(2.7)

25

(11)

1.9

(0.8)

1,195

(76)

89.8

(1.9)

10

(7)

0.8

(0.5)

20

(10)

1.5

(0.7)

40

(14)

3.0

(1.0)

70

(19)

5.3

(1.4) 0 0.0

20

(10)

1.5

(0.7)

90

(21)

6.8

(1.5)

0 0.0

0

0.0

5

(5)

0.4

(0.4)

5

(5)

0.4

(0.4)

1,030

(71)

77.4

(2.6)

35

(13)

2.6

(1.0)

45

(15)

3.4

(1.1)

1,330

(80) 100.0%

1,125

(74)

30.0

(1.7)

190

(31)

5.1

(0.8)

3,110

(119)

82.8

(1.4)

225

(34)

6.0

(0.9)

55

(17)

1.5

(0.4)

480

(49)

12.8

(1.2)

85

(21)

2.3

(0.5)

5

(5)

0.1

(0.1)

40

(14)

1.1

(0.4)

130

(25)

3.5

(0.7)

0 0.0 0 0.0

20

(10)

0.5

(0.3)

35

(13)

0.9

(0.4)

1,210

(77)

32.2

(1.7)

420

(46)

11.2

(1.2)

115

(24)

3.1

(0.6)

3,755

(130) 100.0%

Note: Percentages may not add to total due to rounding.

Source: GAO analysis of SOI and IMF data.

Page 63 GAO/GGD-97-69 Earned Income Credit
Appendix IV 

Major Contributors to This Report

General Government

Division

David Attianese, Assistant Director

Patricia McGuire, Assistant Director, Information Services

Deborah Parker Junod, Evaluator-in-Charge

Joanne Parker, Senior Social Science Analyst

Mary Phillips, Senior Evaluator

James Fields, Senior Social Science Analyst

Kim Wheeler, Graphics Specialist

Page 64 GAO/GGD-97-69 Earned Income Credit
Appendix IV 

Major Contributors to This Report

Page 65 GAO/GGD-97-69 Earned Income Credit
Appendix IV 

Major Contributors to This Report

Page 66 GAO/GGD-97-69 Earned Income Credit
Appendix IV 

Major Contributors to This Report

Page 67 GAO/GGD-97-69 Earned Income Credit
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Earned Income Credit: Noncompliance and Potential Eligibility Revisions

(GAO/T-GGD-95-179, June 8, 1995).

Earned Income Credit: Targeting to the Working Poor (GAO/GGD-95-122BR,

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Tax Policy: Earned Income Tax Credit: Design and Administration Could

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(268747) Page 68 GAO/GGD-97-69 Earned Income Credit
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