Why don't we get more earned income credit?

[jessikortega]

My husband only earned 19,000 earned income last year, but we received $ 30,000 in unemployment benefits, and we only received $ 1,400 of earned income credit, why don't we qualify for more?  We have

[DMarkM1]

It appears you may have exceeded the adjusted gross income limits to qualify for the Earned Income Credit.  The unemployment counts in adjusted gross income. 

Here is a link with more information on the qualifications for the Earned Income Credit.

Your adjusted gross income (AGI) must be less than:

• $50,954 ($56,844 for married filing jointly) if you have three or more qualifying children,

• $47,440 ($53,330 for married filing jointly) if you have two qualifying children,

• $41,756 ($47,646 for married filing jointly) if you have one qualifying child, or

• $15,820 ($21,710 for married filing jointly) if you don’t have a qualifying child.

[bluedeb · Accepted solution]

To receive more for EIC, you would need a qualifying child.  To qualify for EIC, see the following:

Investment income limit: $3,650 or less

Maximum Credit Amounts
The maximum amount of credit you can claim

• No qualifying children: $538

• 1 qualifying child: $3,584

• 2 qualifying children: $5,920

• 3 or more qualifying children: $6,660

Earned income does not include:

• Pay you got for work when you were an inmate in a penal institution
• Interest and dividends
• Pensions or annuities
• Social Security
• Unemployment benefits
• Alimony
• Child support

[bluedeb]

The first post is not quite right.  Unemployment does not count for EIC.

[Jessik2823]

19,000 + 30,000 = 49,000 and 3 qualifying children 15, 9 and 1 year respectively, we still do not qualify?

[Jessik2823]

Or maybe receiving unemployment benefits doesn't allow you to receive more earned income credit?

[bluedeb]

@Jessik2823 As I stated above, you cannot include Unemployment income as income to qualify for the EIC.

[Jessik2823]

So the $ 19,000 that my husband earned from work doesn't count either?

[bluedeb]

@Jessik2823  The money your husband earned from work would count towards the EIC.  The credit goes by your Adjusted Gross Income.

[Jessik2823]

Does that mean that if you earn less you get less credit? because if I put in only the $ 19,000 if we qualify for $ 6000 in credit, but when I put in the $ 30,000 in unemployment benefits it reduces my credit to $ 1,400, I'm really confused !!

[VolvoGirl]

Yes it is phased out because of your AGI.  What was your income in 2019?  You might be able to use that.

The special lookback rule will allow lower income individuals to use their earned income from 2019 to determine their Earned Income Tax Credit and the refundable portion of the Child Tax Credit in 2020, since their lower 2020 income could reduce the amount they are eligible for.

You can look back and use your 2019 income for the EIC credit instead of 2020.  See this post  https://ttlc.intuit.com/community/taxes/discussion/i-m-at-a-section-asking-me-do-you-want-to-use-las...

[Hal_Al]

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 2019 EIC table at:

https://apps.irs.gov/app/vita/content/globalmedia/earned_income_credit_table_1040i.pdf 

At $49,000 total income, ~$1400 is the approximate calculated EIC  for married with 3 children.

At $19,000 earned income, ~$6500 is the calculated EIC

You get the $1400, because it is the lesser of the two amounts. 

[Jessik2823]

@Hal_Al Thank you, you clarified all my doubts !!