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What is Earned Income

Earned Income includes all the taxable income and wages you get from working or from certain disability payments

Two Ways to get Earned Income:

1. You work for someone who pays you

2. 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 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

-You are a statutory employee and have income.

Nontaxable Combat Pay election. You can elect 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 non-taxable combat pay in earned income may increase or decrease your EITC.

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

  • Burglary!!!

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