According to the IRS, roughly one in five eligible workers fails to claim the Earned Income Tax Credit each year — leaving an estimated $7 billion in unclaimed refunds sitting on the table. For most of those workers, the reason isn’t carelessness. It’s that nobody ever told them they qualified.
Clarence Trujillo, 26, is one of those workers. A licensed plumber running a one-man operation out of Knoxville, Tennessee, Clarence had filed his taxes every year since he started his business. He paid what he owed. He kept his records. He just never knew the EITC applied to him.
I first connected with Clarence in late February 2026, through a referral from a social worker at the Knox County Community Services office. She had mentioned him carefully — there was a young man she thought I should meet, she said. He had been through a lot and was still trying to figure things out. When I sat down with Clarence at a diner on Kingston Pike on a cold Tuesday morning, he arrived ten minutes early with a worn paperback notebook and a short list of questions he had written out for me, just in case I needed help understanding his situation. That detail told me everything I needed to know about him before he said a single word.
A Business That Started Shrinking at the Worst Possible Time
Clarence started his plumbing business in 2021, at 21 years old, shortly after completing his apprenticeship and earning his license. In his first full year, he brought in roughly $54,000 in gross revenue — enough, after expenses, to keep the lights on and still send money to help his two adult children who had moved out of state after the death of his wife two years prior.
By 2023, work had started drying up. A handful of contractors he’d been subcontracting for reduced their project loads. A competitor opened nearby offering lower rates. Clarence’s gross revenue dropped to around $43,000 in 2024, and after business expenses — fuel, tools, liability insurance, supplies — his net self-employment income came in at approximately $16,200 for the year.
“I kept thinking it would turn around,” Clarence told me, turning his coffee cup in his hands. “Every slow month, I told myself next month would be different. I didn’t want to tell anybody how bad it was getting.”
The Emergency That Broke the Budget
In July 2024, Clarence spent a night in the emergency room at University of Tennessee Medical Center with severe abdominal pain that turned out to be a kidney stone. He had no health insurance. As a self-employed worker in Tennessee, he had looked at Affordable Care Act marketplace plans the previous open enrollment period and found the monthly premiums too steep once the enhanced subsidies — extended through 2025 by the Inflation Reduction Act — expired.
Tennessee is one of ten states that have not expanded Medicaid under the ACA, according to KFF’s Medicaid expansion tracker. Adults like Clarence — who earn too little to qualify for meaningful ACA marketplace subsidies but too much to qualify for traditional Medicaid — often fall into what policy analysts call the coverage gap. Clarence fell squarely into it. He paid the $8,400 hospital and specialist bills across two credit cards.
“I knew I was gambling every day going without insurance,” Clarence told me. “But I kept doing the math, and the premiums were more than I could manage. And then the one time something actually happened, it cost me everything I had saved.”
What the Social Worker Spotted That Three Tax Preparers Missed
The Knox County social worker who connected us had been reviewing Clarence’s finances as part of a standard assistance intake process. She noticed something immediately: he had never once claimed the Earned Income Tax Credit on any of his self-employed returns. His tax preparer — a friend who handled returns informally — had never flagged it.
The EITC is a refundable federal tax credit available to low- and moderate-income workers, including those who are self-employed. For tax year 2024, a single filer with no qualifying children could receive a maximum credit of $632, per IRS EITC guidelines. Self-employed workers qualify — but they must correctly account for the self-employment tax deduction when calculating their net earnings. That step trips up many informal preparers.
Clarence had left money unclaimed in 2022, 2023, and 2024. The IRS allows taxpayers to file amended returns up to three years after the original filing deadline, meaning two of those years were still recoverable.
The social worker referred him to a Volunteer Income Tax Assistance site in Knoxville — a program where IRS-certified volunteers prepare returns for free for qualifying taxpayers. Clarence made an appointment for January 2026 to address all three filing years at once.
Filing Amended Returns and What Actually Came Back
The VITA preparer worked through each year carefully. For 2022, Clarence’s net self-employment income had been roughly $29,000 — above the phase-out threshold for single filers with no qualifying children. He did not qualify for the EITC that year. That was a disappointment Clarence took in silence.
For 2023, his net income had dropped to approximately $19,400. He received a partial EITC of $214 on the amended return. For 2024, with net income around $16,200, his calculated credit came to $487. Combined, the two recoverable years yielded approximately $701 in refunds — a modest sum against an $8,400 credit card balance, but money Clarence had not expected to see.
The VITA preparer also helped Clarence set up a payment plan with the IRS for a small outstanding balance of $340 from a prior year, and connected him with a nonprofit credit counseling service to begin addressing the medical debt on his credit cards.
A Mixed Outcome — and What Still Keeps Him Up at Night
When I followed up with Clarence by phone in mid-March 2026, his 2023 amended refund had arrived. He had put it directly toward one of the two credit cards carrying his medical balance. The 2024 return was still processing. His credit counselor had opened negotiations with one of the card issuers to reduce the 22% APR — which, at that rate, was generating roughly $154 in interest charges every month against the remaining balance.
The larger problem — health insurance — had no resolution in sight. Tennessee’s coverage gap is not something a tax refund fixes. Clarence told me he had looked again at ACA marketplace options for 2026 and found that without the enhanced premium tax credits that expired after 2025, the monthly costs remained out of reach at his income level.
“I’m not complaining,” he said carefully. “I know I’m lucky it was a kidney stone and not something worse. But I also know I can’t afford for anything like that to happen again. And there’s nothing I can do about that right now.”
He had started putting $80 a month into a dedicated savings account for medical emergencies — not a real solution, but the only one available to him. He had also recently turned down a larger commercial job because it would have required hiring a helper and he didn’t want to take on payroll responsibility while his revenue was still uncertain.
“I’d rather stay small and keep control,” he told me, “than grow too fast and lose everything.”
That philosophy — cautious, protective, earned through loss — felt like the thread running through every part of Clarence’s story. He is generous to a fault with the people around him, quick to mention the social worker who helped him before mentioning himself, and he ended our conversation by asking if the story might help somebody else spot what he had missed. That was really all he wanted, he said.
The $701 in recovered refunds did not erase $8,400 in medical debt. It did not solve the coverage gap problem that half the country’s uninsured self-employed workers face in non-expansion states. But it was real money, and it came because one person in one county office looked at his paperwork closely enough to ask a question nobody had asked before.
Related: She Cosigned a Loan She Never Borrowed. Now She Owes Taxes on Debt She Never Spent.
Related: He Counted on His Tax Refund to Cover $4,800 in Medical Debt — Then the IRS Held It for 34 Days
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