SSDI Does Not Count as Earned Income for EITC Purposes

Social Security Disability Insurance (SSDI) payments are not counted as earned income when you calculate your Earned Income Tax Credit (EITC). The IRS treats SSDI as a non-taxable benefit, which means it does not reduce your EITC and does not count toward the income thresholds that determine whether you can claim the credit at all.

This matters because the EITC is one of the largest tax credits available to people with low to moderate income, and many SSDI recipients also have other income sources—like part-time work, self-employment, or a spouse's wages—that do count. Understanding what income the IRS includes and excludes helps you know whether you have a valid EITC claim and how much the credit might be worth.

Key Takeaways

  • SSDI payments themselves are never counted as earned income for the EITC, even though you must report them on your tax return.
  • If you work part-time or are self-employed while receiving SSDI, that work income is what the IRS uses to calculate your EITC.
  • Your SSDI does count toward your total household income for purposes of determining whether you fall within the EITC income limits.
  • You must file a tax return to claim the EITC, even if your only income is SSDI and you owe no tax.

How the IRS Treats SSDI on Your Tax Return

SSDI is classified as a non-taxable benefit by the IRS. This means you do not owe federal income tax on the SSDI payments themselves, and you do not report them as income on the main part of your tax return (Form 1040). However, you still receive a statement (Form SSA-1099) showing the total SSDI you received during the year, and you must keep it with your tax records.

The distinction between "non-taxable" and "not counted" is important. Non-taxable means you do not owe tax on it. But for EITC calculations, the IRS goes further: SSDI is excluded entirely from the definition of earned income. Earned income is the only type of income that qualifies you for the EITC. If SSDI were your only income source, you would have zero earned income and would not be able to claim the credit.

If you have other income—wages from a job, net profit from self-employment, or income from a spouse—that income is what the IRS examines when calculating your EITC. Your SSDI amount does not reduce the credit, but it does affect your total household income, which can change which EITC amount you receive.

SSDI and EITC Income Limits

The EITC has income limits that change each year. For 2024, the limits depend on your filing status and whether you have may have access to children. If your total income—including SSDI, wages, self-employment income, and other sources—exceeds the limit for your situation, you cannot claim the EITC that year.

Because SSDI counts toward your total income for this purpose, a large SSDI payment combined with work income could push you over the limit. For example, if you are single with no children, the 2024 EITC income limit is $17,600. If you receive $12,000 in SSDI and earn $6,000 from part-time work, your total income is $18,000, which exceeds the limit and disqualifies you from the credit. The same $6,000 in work income alone would have may have access to you.

You can find the current year's income limits on the IRS website or by consulting a tax professional. The limits are adjusted annually for inflation.

When You Have Both SSDI and Work Income

Many SSDI recipients work part-time or are self-employed while receiving benefits. If this describes your situation, your work income is what counts as earned income for the EITC. The SSDI does not reduce the credit, but it does count toward your total household income.

The IRS requires you to report all income sources on your tax return. If you are self-employed, you report your net profit on Schedule C. If you have W-2 wages, they appear on your Form 1040. Your SSDI does not appear as income on the return itself, but the IRS knows about it from your Form SSA-1099, and it factors into the income calculation for EITC purposes.

If you have a spouse and file jointly, your spouse's income also counts as earned income if they work, and both your SSDI and their income count toward the household total. The EITC calculation uses whichever spouse's income is lower (if only one of you worked) or the combined total (if both worked).

Filing a Tax Return to Claim the EITC

You must file a federal income tax return to claim the EITC. Even if you have no tax liability—meaning you owe no tax—you should still file if you think you may have access to for the credit, because the EITC can result in a refund. This is called a refundable credit: if the credit is larger than any tax you owe, the IRS sends you the difference.

If your only income is SSDI, you have no earned income and cannot claim the EITC. But if you have any work income at all, even a small amount, you may may have access to. The IRS does not automatically send you the credit; you have to claim it on your return by completing Schedule EITC (Form 1040 Schedule EITC) or using tax software that walks you through the questions.

You can file on your own using free tax software (the IRS Free File program), through a tax professional, or by mailing a paper return. If you need help understanding whether you may have access to, the IRS Volunteer Income Tax information (VITA) program offers free tax preparation at community centers and libraries.

SSDI, EITC, and Other Tax Situations

If you receive SSDI and also have other non-work income—such as interest, dividends, or rental income—that income counts toward your total household income for EITC purposes but does not count as earned income. Only wages, self-employment income, and certain other work-related payments count as earned income for the credit.

Some SSDI recipients also receive Supplemental Security Income (SSI). Like SSDI, SSI is non-taxable and does not count as earned income for the EITC. However, it does count toward your total household income, just as SSDI does.

If you are married and file jointly, the IRS uses the lower of your two earned incomes (or the combined total if both of you worked) to calculate the EITC. If one spouse receives SSDI and the other works, only the working spouse's income counts as earned income, but both the SSDI and the work income count toward the household total.

Frequently Asked Questions

If I receive SSDI and work part-time, can I claim the EITC?

Yes, if your work income is within the EITC limits for your filing status. Your SSDI does not count as earned income, so your part-time wages are what may have access to you for the credit. However, your SSDI does count toward your total household income, which may reduce the credit amount or disqualify you if the total is too high.

Do I have to report my SSDI on my tax return?

You do not report SSDI as income on Form 1040, but you must keep your Form SSA-1099 with your tax records. The IRS receives a copy of the SSA-1099 and knows about your SSDI payments. You do not need to list it separately on your return.

What if my SSDI plus my work income exceeds the EITC income limit?

You cannot claim the EITC that year. The income limit includes all sources of income—SSDI, wages, self-employment, and other income. If your total exceeds the limit for your filing status, you are not may be able to access, even if your work income alone would have may have access to you.

Can I claim the EITC if SSDI is my only income?

No. The EITC requires earned income, and SSDI is not counted as earned income. You must have income from work—wages, self-employment, or other earned income—to may have access to for the credit.

Does my spouse's SSDI affect my EITC if we file jointly?

Your spouse's SSDI counts toward your total household income for EITC purposes, but it does not count as earned income. If your spouse works, their work income is what qualifies you for the credit. The SSDI reduces the credit amount by increasing your household income total.