The basic EIC works on a "bell curve,"
rising as a worker's wages rise reaching a maximum when annual earnings are
between $ $14,040 and $18,340 (Single with 2 or 3
children 2016) and then
declining gradually until it phases out altogether. If your income is on the up
slope of the EIC curve more earned income will increase your EIC but if your
income is on the down slope, more income (of any kind) will reduce your EIC. See the curve (graph) at:
http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm
The
earned income credit is first calculated (actually looked up in a table) on
your earned income then it is calculated on your total income (AGI). You get
the lesser of the two calculated EIC numbers. See the EIC table at:
https://apps.irs.gov/app/vita/content/globalmedia/earned_income_credit_table_1040i.pdf
