Claiming the Earned Income Tax Credit? This is What the IRS Considers Earned Income
Per the IRS, earned income includes all the taxable income and wages you get from working or from certain disability payments.
Earning Income
There are two ways to get earned income:
- You work for someone who pays you; or,
- You own or run a business or farm.
Taxable Earned Income includes:
- Wages, salaries, tips, and other taxable employee pay;
- Union strike benefits;
- Long-term disability benefits received prior to minimum retirement age;
- Net earnings from self-employment if:
- You own or operate a business or a farm or
- You are a minister or member of a religious order (see Special Rules page for more information);
- You are a statutory employee and have income. (See definition of statutory employee on our Helpful Definitions and Acronyms for EITC page).
Nontaxable Combat Pay election. You can elect to have your nontaxable combat pay included in earned income for EITC. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EITC. See Publication 3. Armed Forces Tax Guide, for more information.
Examples of Income that are Not Earned Income:
- Pay received for work while an inmate in a penal institution
- Interest and dividends
- Retirement income
- Social security
- Unemployment benefits
- Alimony
- Child support.
About Capital Area Asset Builders
Capital Area Asset Builders (CAAB) is a non-profit organization whose mission is to create opportunities for low- and moderate-income individuals in the greater DC region to build financial security, savings, and wealth for the future.
Connect with CAAB via our social media platforms:
- Twitter: @CAAB_GreaterDC
- Facebook: https://www.facebook.com/CapitalAreaAssetBuilders
- LinkedIn: https://www.linkedin.com/company/capital-area-asset-builders
- Instagram: https://www.instagram.com/capitalareaassetbuilders/
About the DC EITC Campaign
The CAAB-managed DC EITC Campaign, is a citywide, cross-sector initiative that provides access to information on the EITC and connects Washingtonians with free tax preparation services throughout the District.
The DC EITC Campaign is made possible through the support from the DC Department of Insurance, Securities and Banking (DISB), Washington Gas, United Way of the National Capital Area as well as other key private sector partners.
