I have a question related to earned income tax credit disability — If I’m on disability, do I qualify for the EIC?
If you’re considering taking the tax credit used by millions of Americans – the Earned Income Tax Credit (EIC) – then you probably want to know if you can claim it if you are on receiving disability payments.
Is Disability Earned Income?
- The type of disability payments you’re receiving,
- If you’ve reached your employer-plan’s minimum retirement age.
Note that Social Security Disability Insurance, SSI, or military disability pension benefits aren’t considered earned income.
Retired and Claiming Disability
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. It is the earliest age you would be able to receive a pension under the plan. 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.
More Help With Disability & Earned Income Tax Credit
Navigating the ropes of disability & Earned Income Tax Credit can be confusing, which is why we are here to help. Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to help you.
Learn about some of the weirdest, funniest tax deductions ever allowed by the IRS with H&R Block. You never know what wacky tax deduction could apply to you.
Whether you have to file state taxes depends on a few factors. In some cases, you may not be required to file state taxes if you only lived in the state a short time or if your income is below a certain level.
Learn more about the HSA versus the FSA and get tax answers at H&R Block.
From retirement account contributions to self-employment expenses, learn more about the five most common tax deductions with the experts at H&R Block.