Earned Income

What is Earned Income?

Earned income includes all the taxable income and wages you get from working.

There are two ways to get earned income:

You work for someone who pays you
or
You work in a business you own.

Taxable earned income includes:

• Wages, salaries, and tips;
• Union strike benefits;
• Long-term disability benefits received prior to minimum retirement age;
• Net earnings from self-employment.

Examples of Income that is Not Considered Earned:

• Interest and dividends
• pensions
• Social security
• Unemployment benefits
• Alimony
• Child support.

Source: Internal Revenue Service (IRS) website.
Do a web search for
“what is earned income?” site:www.irs.gov

Additional Information from the IRS:

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.