If you have investment income more then $3650, you do not get EIC. Let’s say i have $4000 as interest income and i have previous year carryover loss of $5000 from stock. So does my investment income would be $4000-$3000 = $1000 or it’s remain same as $4000 and do not get any EIC?
Q. So is my investment income $4000-$3000 = $1000 or does it remain $4000 and I do not get any EIC?
A. Simple answer: it remains $4000 and you do not qualify for EIC
Line 5 of the referenced worksheet says "Enter the amount from Form 1040 or 1040-SR, line 6. If the amount on that line is a loss, enter -0-
It is on 1040 line 6 and subtracted off your total income and reduces your AGI Adjusted Gross Income.
You don't get a refund for losing money. It just reduces your total income so you get taxed on a lower amount. If you were already getting back all that you could a loss won't increase it. And by reducing your income it can reduce any credits you are getting.
2019 Capital Gains and Losses go on Schedule D then to 1040 line 6
And If you have a net loss for the year you can only deduct 3,000 (1,500 MFS) max on your tax return. The rest you have to carryover to next year. You have to report the carryover every year until it's used up. You can't skip a year.
To qualify for the EIC credit? Look at Worksheet 1 on this page. It's very simple. Just enter your 4,000 interest on line 1. Then on line 5 you can't enter your loss. It only lets you enter zero, not less. So it is not subtracted from investment income to qualify for EIC. Sorry.