Deductions & credits

Basic Qualifying Rules

To qualify for the EITC, you must:

• Show proof of earned income
• Have investment income below $3,650 in the tax year you claim the credit
• Have a valid Social Security number
• Claim a certain filing status 
• Be a U.S. citizen or a resident alien all year

Earned income includes all the taxable income and wages you get from working for someone else, yourself or from a business or farm you own.

Types of Earned Income

• Wages, salary or tips where federal income taxes are withheld on Form W-2, box 1
• Income from a job where your employer didn’t withhold tax (such as gig economy work) including:
  • Driving a car for booked rides or deliveries
  • Running errands or doing tasks
  • Selling goods online
  • Providing creative or professional services
  • Providing other temporary, on-demand or freelance work
• Money made from self-employment, including if you:
  • Own or operate a business or farm
  • Are a minister or member of a religious order
  • Are a statutory employee and have income
• Benefits from a union strike
• Certain disability benefits you got before you were the minimum retirement age
• Nontaxable Combat Pay (Form W-2, box 12 with code Q)
  • If you claim nontaxable combat pay as earned income, it may increase or decrease the amount of your EITC. For more information, see Publication 3, Armed Forces Tax Guide.

Earned income does not include:

• Pay you got for work when you were an inmate in a penal institution
• Interest and dividends
• Pensions or annuities
• Social Security
• Unemployment benefits
• Alimony
• Child support

Note: 

If your earned income was higher in 2019 than in 2020, you can use the 2019 amount to figure your EITC for 2020. This temporary relief is provided through the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

To figure the credit, see Publication 596, Earned Income Credit.