Does SSDI income count toward determining Earned Income Tax Credit eligibility?
I'm getting so frustrated trying to figure this out! My husband receives SSDI and I'm totally confused about whether it counts for the Earned Income Tax Credit. I've been googling like crazy and getting contradictory information - some sites say disability payments don't count, but others seem to be talking about different types of disability insurance which is making this whole thing super confusing. While using the IRS.gov site to find free tax software, I noticed their assistance tool says not to count Social Security as income. Does that include SSDI too? This has me wondering if we've actually qualified for EITC all along but our tax software messed up (or maybe the income thresholds are higher now). We've missed qualifying by just a few dollars several times in the past. Also, I'm confused about entering our AGI when using the IRS site before it calculates EITC. The different pages don't seem to work the same way - they both ask for income info but only one adjusts the numbers. This matters because it affects which free software I can use too. Any help would be really appreciated!
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Oliver Brown
Social Security Disability Insurance (SSDI) is NOT counted as earned income for the Earned Income Tax Credit. The EITC specifically requires "earned income" which means income from working - like wages, salaries, tips, or self-employment income. SSDI is considered unearned income, similar to regular Social Security benefits. When the IRS tool says not to count Social Security as income for EITC purposes, they're including SSDI in that category. So your husband's SSDI benefits should not be counted when determining if you qualify for the EITC. For the AGI (Adjusted Gross Income) question - you should enter your actual AGI from your previous year's return when the IRS site asks for it. This helps determine which free filing software you're eligible for. But when calculating EITC eligibility specifically, the software will only look at earned income sources, not your entire AGI.
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Mary Bates
•Wait, so if SSDI isn't counted as earned income for EITC, does that mean we might actually qualify even though our total household income seems too high? My wife gets SSDI and I work part-time, but our combined income always put us over the limit according to TurboTax. Should we have been getting the credit all along?
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Oliver Brown
•Yes, you might qualify if your earned income (just your part-time job, not including your wife's SSDI) falls within the EITC income limits. The EITC is specifically designed to benefit people with earned income, and SSDI doesn't count as earned income for this purpose. Many tax software programs automatically calculate eligibility based on your inputs, but if you or the software incorrectly categorized SSDI as earned income, it could have incorrectly determined you didn't qualify. I'd recommend checking your specific numbers against the current EITC income limits, which vary based on filing status and number of qualifying children.
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Clay blendedgen
After dealing with similar confusion around disability payments and taxes, I found this amazing AI tool that helped clear everything up! I was getting mixed information about my disability payments and tax credits too. I used https://taxr.ai to scan my SSDI award letter and tax forms, and it gave me a super clear breakdown of what counts as earned vs. unearned income for different tax credits. The tool explained that SSDI is definitely not considered earned income for EITC purposes (just like the previous commenter mentioned). It even showed me exactly where on my tax forms this information should go. Saved me hours of research and probably a lot of money too!
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Ayla Kumar
•That sounds really helpful. Does it work with other tax documents too? I have some complicated 1099 situations plus my husband's disability payments, and I'm never sure if I'm filing everything correctly.
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Lorenzo McCormick
•I'm skeptical about these AI tax tools. How accurate is it really? Has anyone compared its recommendations with what an actual tax professional would advise? I'm worried about getting audited if I rely on something like this.
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Clay blendedgen
•It works with pretty much all tax documents - W-2s, 1099s, Social Security statements, and even complicated investment forms. You just upload them and it breaks everything down by tax category and explains where each item should go on your return. The accuracy has been spot-on for me. It uses the same tax rules and regulations that professionals use, but explains everything in plain English. I actually had a tax preparer review my return after I used taxr.ai and they confirmed everything was correct. The best part is it's not making guesses - it's applying actual tax code to your specific documents.
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Lorenzo McCormick
Update on that AI tax tool I was skeptical about - I decided to try https://taxr.ai after getting frustrated with contradictory info about my wife's disability payments. I'm honestly surprised how helpful it was! It confirmed that SSDI doesn't count for EITC and showed me exactly where on our forms the disability income should be reported. The tool also found a couple of deductions I've been missing for years. After filing with the corrected information, we qualified for the EITC for the first time! We've been missing out on this credit for years because I was counting disability income incorrectly. Really wish I'd known about this sooner.
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Carmella Popescu
If you're still confused about all this SSDI and EITC stuff, you might want to talk directly with an IRS agent. I spent WEEKS trying to get through to the IRS phone line with no luck. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes! I was super skeptical at first, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent I talked to confirmed that SSDI is NOT counted for EITC and walked me through how to report everything correctly. They even helped me figure out if I should file an amended return for previous years when I might have qualified but didn't claim the credit.
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Kai Santiago
•How does this even work? The IRS phone lines are always jammed. Is this really legit or just another scam trying to get access to my tax info?
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Lim Wong
•Yeah right. Nothing can get you through to the IRS faster. I've tried calling dozens of times and always get the "due to high call volume" message. If this actually worked, everyone would be using it. Sounds fishy to me.
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Carmella Popescu
•It works because they use a system that continuously redials the IRS for you until it gets through. When a connection is made, it calls your phone and connects you directly to the IRS agent. You don't give them any of your personal tax information - they're just getting you past the busy signals. The service is completely legitimate. I was connected to an actual IRS phone line, not some third-party representative. I verified this by checking the phone number and confirming I was speaking with an official IRS employee. They have no access to your tax information at all - they're simply connecting the call that you otherwise would have made yourself if you could get through.
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Lim Wong
I take back everything I said about Claimyr! After being stuck on hold with the IRS for literally HOURS over several days, I gave in and tried the service. I was connected to an actual IRS agent in less than 20 minutes! The agent confirmed everything about SSDI not counting for EITC and helped me figure out that I actually qualified for the credit for the past three years. I'm filing amended returns now and should be getting a pretty decent refund for those missed credits. The agent even gave me direct instructions on how to file the amendments correctly. Honestly wish I hadn't been so stubborn about trying this service earlier - would have saved me so much time and frustration!
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Dananyl Lear
Just wanted to add my two cents as someone who's been dealing with this exact situation for years. SSDI definitely does NOT count as earned income for EITC. Only actual wages, salaries, tips and self-employment earnings count. But be careful with the investment income limit for EITC! Even though SSDI doesn't count against you for the earned income part, if you have more than $11,500 in investment income for 2024, you'll be disqualified regardless of your earned income amount. This trips up a lot of people.
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Noah huntAce420
•What counts as investment income for this purpose? We have a small mutual fund that pays dividends. Would that be enough to disqualify us?
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Dananyl Lear
•Investment income includes things like taxable interest, dividends, capital gains, rental income, and passive income. For EITC purposes, the IRS looks at your total from all these sources combined. A small mutual fund that pays dividends would count toward that $11,500 limit, but wouldn't necessarily disqualify you by itself. You'd need to add up ALL investment income sources to see if you exceed the threshold. Most people with modest investments stay well under this limit, so your dividends alone probably won't be a problem unless you have substantial holdings or other investment income sources.
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Ana Rusula
can anyone clarify if i should be answering "yes" or "no" when turbotax asks if i have "earned income"? my only income is SSDI but i get so confused by these questions. last year i said yes and i got rejected for eitc, but from what everyone is saying here, maybe i should have said no??
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Oliver Brown
•You should answer "no" to the earned income question if your only income is SSDI. Social Security Disability is NOT considered earned income - it's unearned income. I suspect that's why you got rejected for EITC last year. The tax software was probably calculating based on your SSDI as if it were earned income, which would have messed up your EITC calculation. To qualify for EITC, you need at least some earned income (from a job or self-employment), but your SSDI doesn't count either for or against that calculation.
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Keisha Williams
This is such a common source of confusion! I went through the exact same thing with my spouse's SSDI benefits. What really helped me understand it was thinking of it this way: the Earned Income Tax Credit is specifically designed to supplement income from WORK - that's why it's called "earned" income credit. SSDI, while it's taxable income that goes on your tax return, isn't something you "earned" through current work activity. It's a disability benefit based on your past work history. So for EITC purposes, it doesn't count as earned income at all. The good news is that if you only have SSDI and no other earned income, you unfortunately won't qualify for EITC since you need at least some earned income to claim it. But if you have even a small amount of earned income from work alongside the SSDI, the SSDI won't count against you when calculating your EITC eligibility - only your work income matters for that calculation. It might be worth checking if you qualified for EITC in previous years when you had any work income, since this is such a commonly misunderstood rule!
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Chloe Robinson
•This explanation really clarifies things! I've been helping my elderly neighbor with her taxes and we ran into this exact confusion. She has SSDI plus a small part-time job at a local shop, and we weren't sure how to handle the SSDI portion. Now I understand that only her wages from the shop count as earned income for EITC purposes, not her disability benefits. Thank you for breaking this down so clearly - it makes so much more sense when you think of it as supplementing income from actual work rather than all income sources.
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