The limit on investment income for EIC was first instituted in 1996. It has always said "investment income."
Worksheet 1 in Pub. 596 shows what's included in investment income for the EIC limitation. It does not include Alaska PFD (Schedule 1 line 8f), unemployment (Schedule 1 line 7), or hobby income (Schedule 1 line 8i).
There is a Worksheet 2 for calculating how much of the child's income is included in investment income if Form 8814 is used and the child received the Alaska PFD. I haven't attempted to figure out exactly what the worksheet is doing, but if the Alaska PFD is the child's only income, none of it is included in investment income.
Maybe you are thinking of kiddie tax, which does use unearned income.
