What is Earned Income? Earned income includes all the taxable income and wages you get from working or from certain disability payments. There are two ways to get earned income: You work for someone who pays you or You own or run a business or farm Taxable earned income includes: Wages, salaries, tips, and other taxable employee pay; Union strike benefits; Long-term disability benefits received prior to minimum retirement age; Net earnings from self-employment if: You own or operate a business or a farm or You are a minister or member of a religious order (see Special Rules page for more information); You are a statutory employee and have income. (See definition of statutory employee on our Helpful Definitions and Acronyms for EITC page). Nontaxable Combat Pay election. You can elect to have your nontaxable combat pay included in earned income for EITC. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EITC. See Publication 3. Armed Forces Tax Guide, for more information. Examples of Income that are Not Earned Income: Pay received for work while an inmate in a penal institution Interest and dividends Retirement income Social security Unemployment benefits Alimony Child support.
Posted on: Sun, 05 Oct 2014 02:58:47 +0000
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