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splicerkim
Returning Member

Did my earned income tax credit increase because of the unemployment tax break?

 
2 Replies
Bsch4477
Level 15

Did my earned income tax credit increase because of the unemployment tax break?

Possibly. Earned income credit is based not only on your earned income but also by your AGI. So a reduced AGI could give you more credit. 

Hal_Al
Level 15

Did my earned income tax credit increase because of the unemployment tax break?

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 

 

The EIC works on a "bell curve," rising as a worker's wages rise reaching a maximum when annual earnings are between $14,800 and $19,350 (Single with 2 or 3 children 2020) and then declining gradually until it phases out altogether. If your income is on the up slope of the EIC curve, less AGI will not increase your EIC. But if your income is on the down slope, less AGI will increase your EIC. See the curve (graph) at:

http://www.taxpolicycenter.org/briefing-book/key-elements/family/eitc.cfm

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