topic 1040 AGI/EIC question in Retirement tax questions

1040 AGI/EIC question

Michalina — Wed, 10 Mar 2021 20:15:02 GMT

My husband and I are both retired. For 2020, my husband received a form 5498 indicating an IRA payout of $42,486. He also received a SSA-1099 for Social Security Benefits paid AND a W-2 (less than $2000 in earned income). I received a 1099-R for a Federal Pension/IRA payments (less than $25000). When completing our Federal 1040 these amounts appear as AGI. When trying to complete the Federal EIC it indicates that we have an AGI in excess of the amount for married-filing jointly.

In reading the qualifications for the EIC, it indicates "You must have income from earnings, such as from a job, your own business, or union strike benefits. Retirement, investment, and disability income do not count.

Are we incorrect in believing that the 1099-R, form 5498, and SSA-1099 payments are NOT "earnings" as indicated in the EIC qualifications?

Re: 1040 AGI/EIC question

ThomasM125 — Wed, 10 Mar 2021 20:49:57 GMT

The income sources you mention are not earned income for EIC purposes, so your assumptions are correct. However, your adjusted gross income can disqualify you for an EIC, even if it is not earned income. So, you need earned income to qualify, but you don't need earned income to be disqualified.

You mention that you are retired. If you are 65 years old or over, you would not qualify for an earned income credit. Also, you would not qualify if you don't have any dependents you claim and have over $21,920 of income. Further, if you have investment income of $3,650 or more, you would not qualify.

Re: 1040 AGI/EIC question

SweetieJean — Wed, 10 Mar 2021 20:56:14 GMT

Normal Retirement income does not qualify for EIC. His W-2 would qualify. But the EIC eligibility is two fold: Both the Earned Income and AGI must be less than the specified amounts. Your AGI is too high.