Question

II have a question related to disability earned income tax credit — If I'm on disability, do I qualify for the EIC?

Answer

Regarding the Earned Income Credit (disability earned income tax credit), Social Security benefits aren’t considered earned income for the Earned Income Credit (EIC). However, other disability payments might qualify depending on both of these:

  • The type of disability payments you’re receiving
  • If you’ve reached your employer-plan’s minimum retirement age

If you retired on disability, taxable benefits from your employer’s disability retirement plan are earned income. This applies until you reach minimum retirement age. So, you can count that income for EIC purposes.

Your plan defines the minimum retirement age. Starting the day after you reach minimum retirement age, those disability retirement payments are taxed as pension payments. So, they’ll no longer be earned income for EIC purposes. At that point, you must have some other source of earned income to be eligible for EIC.

You might receive payments from a disability insurance policy that you paid premiums for. If so, those payments aren’t earned income for EIC purposes. This applies whether or not you’ve reached the minimum retirement age.

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