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Can annuity income be considered for Earned Income Credit?

📚 What This Guide Covers

This guide explains whether disability annuity income (Form 1099-R, Code 3) can be considered earned income for the Earned Income Credit (EIC).

🔍 Disability Income and EIC

If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age.

Key Requirements

  • Minimum Retirement Age: The earliest age at which you could have received a pension or annuity if you were not disabled.
  • Reporting: Taxable disability payments must be reported on the wages line of your tax return (e.g., Line 7 of Form 1040 or 1040A) until you reach minimum retirement age.
  • 1099-R Code 3: As long as the recipient is under their minimum retirement age, these distributions may qualify as earned income.

📝 Reference

For more details, see IRS Pub. 596, pages 10-11.

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