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It says I don't qualify for the EITC because I made too much. But if i deduct my unemployment, i should qualify. i thought unemployment didn't count as income for EITC?

 
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4 Replies
gloriah5200
Expert Alumni

It says I don't qualify for the EITC because I made too much. But if i deduct my unemployment, i should qualify. i thought unemployment didn't count as income for EITC?

Yes, unemployment benefits are not considered earned income for earned income credit purposes.

 

Earned income credit is subject to AGI income limitations and investment limits depending on filing status. For example, 

 

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.

In the calculation of earned income credit on a return, the IRS Publication 596 worksheet compares earned income and the amount of earned income credit which would be received for that amount against adjusted gross income on the return and the amount of earned income credit which would be received for that amount. 

 

The lesser of the two amounts is what you are entitled to unless your agi exceeds the limits, then it won't even complete the remainder of the worksheet.. 

 

For additional information please refer to:

 

IRS Publication 596

BOTS2020
New Member

It says I don't qualify for the EITC because I made too much. But if i deduct my unemployment, i should qualify. i thought unemployment didn't count as income for EITC?

Can I ask what may be a stupid follow-up?  In essence, the unemployment dollars do impact the earned income credit.  It's part of how AGI is calculated?   I don't see how one's "income" can be well below the EIC standard outside of UI yet UI does increase the AGI.    What am I not understanding?

JohnW152
Expert Alumni

It says I don't qualify for the EITC because I made too much. But if i deduct my unemployment, i should qualify. i thought unemployment didn't count as income for EITC?

Right, your unemployment affects your EIC.  Unemployment is included in your 2020 Adjusted Gross Income (AGI), which is part of the EIC calculation, and your AGI amount is too high.

The Earned Income Credit for 2020 is computed by comparing two amounts in the IRS's EIC table -- an amount based on earned income – which can be from either 2019 or 2020 -- and an amount based on your 2020 (AGI).  Whichever of these two amounts from in the table yields the smaller EIC amount will be used.

And, it wasn’t a stupid follow-up.  A lot of people are confused, especially this year.

BOTS2020
New Member

It says I don't qualify for the EITC because I made too much. But if i deduct my unemployment, i should qualify. i thought unemployment didn't count as income for EITC?

Thank you.  It's confusing b/c when you google "does UI impact ETC" is says "no" and only mentions the chart of thresholds but doesn't mention AGI.   Appreciate everyone's time.  

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