MFJ Client with 3 children has $45,000 of Unemployment income, and $25,000 wages. Why don't they get refundable EITC?

[NesteggBuilder]

EIC worksheet calculates the EIC with 3 qualifying children but then takes away the credit because AGI is

too high for EIC.   Shouldn't they get refundable EIC because Unemployment income is not used in

the calculation?  What am I missing?  There is no Income tax because of other credits but why no refundable EIC? 

Thanks to all,

CCnestegg

[Just-Lisa-Now-]

I don't understand why you keep saying "refundable EIC" EIC is always refundable...are you referring to the refundable portion of the ACTC?

[TaxGuyBill]

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@NesteggBuilder wrote:

because AGI is too high for EIC.   

Shouldn't they get refundable EIC because Unemployment income is not used in the calculation? 

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EIC is based on "Earned Income", but in many cases high AGI can reduce or eliminate it.

Taxable Unemployment is part of AGI, therefore it *IS* part of the calculation.

[PATAX]

@TaxGuyBill @NesteggBuilder @Just-Lisa-Now- Intuit / Pro Series has always done a good job on the earned income credit as far as my experience with it goes...

[NesteggBuilder]

Thanks for the response.   My confusion was whether taxable unemployment is part of AGI and denied

them the credit. So unemployment is not part of figuring the credit, but it is crucial in allowing the credit to be taken.   

[Just-Lisa-Now-]

Taxable UI is part of AGI. AGI is looked at as well as Earned Income when it comes to computing the EITC.

[TaxGuyBill]

As Lisa pointed out, the credit is first calculated using "Earned Income". 

*IF* AGI is over certain amounts, the preliminary credit is ALSO calculated using AGI, and then the actual credit is the LOWER of those two calculations.