How to Calculate Qualifying Income Credit While on Unemployment
The Earned Income Tax Credit is available for low to moderate income taxpayers to claim on their federal tax returns. If you qualify, this income credit can be extremely beneficial in maximizing your tax refund. The EITC is based on earned income, however you may still be able to claim it if you are on unemployment.
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Instructions
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Locate the EITC worksheet and tax table in the instruction booklet for Form 1040. You can download and print the 1040 instruction booklet by visiting the Internal Revenue Service website. If you are unable to download or print the booklet you can also order one by calling the IRS.
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Determine your eligibility to claim the EITC using the EIC worksheet. If you are eligible, also use the worksheet to determine the amount of your earned income. Do not include unemployment income as this is considered to be unearned income.
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Calculate your credit using Worksheet A to if you answered "No" to question 3 in step 5 on the EIC Worksheet. If you answered "Yes" to question 3 calculate your credit using Worksheet B.
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Complete Schedule EIC if you are claiming a qualifying child. Attach your completed and signed Schedule EIC to your tax return.
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Tips & Warnings
If you do not wish to calculate your own credit, you can choose to have the IRS calculate it for you.
If you have been disallowed the EITC in any year after 1996, you must file Form 8862 in order to claim the credit.
