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tc2412
New Member

What qualifies as investment incomes when it relates to qualifying for the earned income credit?

I have withdrawn company matched shares, 401K & from an inherited Trust....do all of these refer to investment income when it comes to qualifying for the Earned Income credit

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Cindy0H
New Member

What qualifies as investment incomes when it relates to qualifying for the earned income credit?

Those withdrawals are not investment income. This is what the IRS defines as investment income for the Earned Income Credit:

  • Investment income includes:

    • Interest (both taxable and tax-exempt)
    • Dividends
    • Capital gain income
    • Some rent and royalty income
    • Net income from passive activities.

    If you are filing Form 1040, your investment income is the total of the amounts on lines 2a (tax exempt interest), 2b (taxable interest),3b, (ordinary dividends) and Schedule 1, Line 13, (capital gain or loss).



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Cindy0H
New Member

What qualifies as investment incomes when it relates to qualifying for the earned income credit?

Those withdrawals are not investment income. This is what the IRS defines as investment income for the Earned Income Credit:

  • Investment income includes:

    • Interest (both taxable and tax-exempt)
    • Dividends
    • Capital gain income
    • Some rent and royalty income
    • Net income from passive activities.

    If you are filing Form 1040, your investment income is the total of the amounts on lines 2a (tax exempt interest), 2b (taxable interest),3b, (ordinary dividends) and Schedule 1, Line 13, (capital gain or loss).



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