Unemployment is not considered “earned income” so you would not qualify for the Earned Income Tax Credit (EITC) if your only income in 2020 was unemployment. The IRS specifically says unemployment does not count for EITC.
As @AmyC said, the IRS allows you to use 2019 income if it was lower than 2020 income.
Earned income includes all the taxable income and wages you get from working for someone else, yourself or from a business or farm you own.
Types of Earned Income
- Wages, salary or tips where federal income taxes are withheld on Form W-2, box 1
- Income from a job where your employer didn’t withhold tax (such as gig economy work) including:
- Driving a car for booked rides or deliveries
- Running errands or doing tasks
- Selling goods online
- Providing creative or professional services
- Providing other temporary, on-demand or freelance work
- Money made from self-employment, including if you:
- Benefits from a union strike
- Certain disability benefits you got before you were the minimum retirement age
- Nontaxable Combat Pay (Form W-2, box 12 with code Q)
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
Refer to Earned Income and Earned Income Tax Credit (EITC) Tables
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