HFINANCIAL
Level 3
‎02-21-2022 01:11 PM

Why is 2021 UI Income being adding to earned income to calculate EIC income when Client has both Unemployment income and wages?  I know UI is added to AGI (fed taxable income) but IRS instructions state it is not used to calculate EIC.  What am I missing?  I do not see where AGI income is used to calculate EIC but only used to verify AGI is under limits.

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Just-Lisa-Now-
Level 15
Level 15
‎02-21-2022 01:28 PM
EITC uses both earned income and AGI in its calculation. If you follow the money down the EITC worksheet you should see how its calculated.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
singh
Level 7
‎02-21-2022 02:32 PM

Unearned income not calculated for EIC and CTC. Go to Federal Information Worksheet. Scroll down to

Part III. Click on " Earned Income Credit worksheet". This will take you to the details of Earned  income and unearned income calculation for EIC and CTC, which is auto fill. eg. If my earned income is $30,000 and Unemployment is $9000.00 only $30,000 is calculated on the worksheet for EIC/CTC.

TaxGuyBill
Level 15
‎02-21-2022 02:48 PM

Pay close attention to #3 and #5.

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=44

 

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HFINANCIAL
Level 3
‎02-24-2022 06:11 PM

So I have learned that when AGI is greater than Earned Income, the AGI is used to determine the EIC.  Doesn't happen too often, but it happened to this client.  Thanks everyone!!!