However, as long as you worked or were otherwise self-employed during the same year you started receiving unemployment checks, you may still be eligible to claim the Earned Income Credit. Specifically excluded from this definition is any unemployment compensation you receive from your state. The IRS defines “earned income” as the compensation you receive from employment and self-employment. If you do, the credit can reduce your taxes, or even create a refund. There are other requirements you’ll also need to satisfy to claim the EIC. However, receiving unemployment benefits doesn’t mean you’re automatically ineligible for the credit. If you’re a US citizen or resident and you live abroad, you typically cannot receive the tax credit.Īs the name implies, to be eligible for the Earned Income Tax Credit you must “earn” income such as through employment. You are ineligible for the Earned Income Credit if you or your spouse (if filing jointly) was a nonresident alien at any time during the tax year.
You may be ineligible for the Earned Income Credit if your earned income and unemployment benefits exceed the maximum AGI when added together. The unemployment compensation you receive counts toward your AGI.
The applicable maximum AGI varies, depending on your filing status and the number of qualifying children.
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