SSDI Does Not Count as Earned Income for the Credit
Social Security Disability Insurance (SSDI) payments do not count toward your Earned Income Credit (also called the Earned Income Tax Credit or EITC). The IRS treats SSDI as a non-taxable benefit, which means it is excluded from the income calculation that determines whether you may have access to for the credit and how much you receive.
This distinction matters because the EITC is designed to reward people who work and earn wages. Only income you earn from employment—wages, salary, self-employment income—counts toward the credit. SSDI, by contrast, is a replacement for lost wages due to disability, not earned income itself.
The practical effect is that SSDI reduces your household's total income without reducing the income that counts for EITC purposes. This can actually work in your favor: you may have lower total income while still may have access to for the full credit based on your wages alone.
Key Takeaways
- SSDI payments are not counted as earned income, so they do not reduce your Earned Income Credit amount.
- Only wages, salary, and self-employment income count toward the EITC calculation.
- If you receive both SSDI and wages, you report only the wages on your tax return for EITC purposes.
- SSDI can lower your total household income without affecting your EITC, sometimes making you more likely to may have access to.
- You must file a tax return to claim the EITC, even if SSDI is your only income source.
How the IRS Counts Income for the EITC
The IRS defines earned income narrowly: it includes only money you receive from working. This covers W-2 wages from an employer, net self-employment income, and certain other work-related payments. SSDI, Supplemental Security Income (SSI), veterans' benefits, unemployment benefits, and interest or dividends are all excluded.
When you file your tax return to claim the EITC, you report your earned income on Schedule 1 (Form 1040). The IRS then uses that number to determine your credit amount. If you earned $15,000 in wages and received $12,000 in SSDI that year, the IRS counts only the $15,000 for EITC purposes.
This means your SSDI does not reduce the credit. It also means you cannot claim the EITC based on SSDI alone—you must have earned income from work to may have access to at all.
When You Have Both SSDI and Work Income
Many SSDI recipients work part-time or earn money through self-employment while receiving benefits. If this describes your situation, you report both your wages and your SSDI on your tax return, but only the wages count toward the EITC.
SSDI has its own earnings rules that limit how much you can work without losing benefits (the Substantial Gainful Activity limit), but those rules are separate from the EITC calculation. You can work within SSDI's limits and still claim the full EITC based on your earnings.
For example, if you earned $8,000 in wages and received $14,000 in SSDI, you would report both amounts on your return. The IRS would calculate your EITC based only on the $8,000, potentially giving you a credit of several hundred dollars depending on your filing status and whether you have dependents.
SSDI and Other Non-Earned Income That Does Not Affect the EITC
SSDI is one of several income sources that the IRS excludes from the EITC calculation. Understanding which income counts and which does not helps you know what to report.
| Income Type | Counts Toward EITC |
|---|---|
| W-2 wages from an employer | Yes |
| Self-employment income | Yes |
| SSDI payments | No |
| Supplemental Security Income (SSI) | No |
| Unemployment benefits | No |
| Veterans' disability benefits | No |
| Interest, dividends, or capital gains | No |
| Rental income | No |
If you receive multiple types of income, only the earned income portion counts for the EITC. This is why many people on SSDI who also work part-time can still claim a substantial credit.
Filing Your Tax Return to Claim the EITC
To claim the Earned Income Credit, you must file a federal income tax return, even if no taxes are owed. The IRS does not automatically send you the credit—you have to report your income and request it.
You can file on your own using tax software, through a tax professional, or at a free tax preparation site in your community (the IRS Volunteer Income Tax information program, or VITA, offers free help to people with lower incomes). When you file, you will report your SSDI on line 5b of Schedule 1, and your earned income on line 1.
The IRS will calculate your EITC based on your earned income alone. If you have a dependent child, you may also may have access to for the Additional Child Tax Credit, which is also based on earned income and works similarly to the EITC.
Income Limits and SSDI
The EITC has income limits that change each year. For 2024, the maximum earned income to may have access to ranges from about $16,000 (if you have no dependents) to about $57,000 (if you have three or more may have access to children). These limits are based on earned income only.
Because SSDI does not count toward the income limit, receiving SSDI can actually help you stay within the limit. If you earned $16,500 in wages and received $10,000 in SSDI, your total household income is $26,500, but your earned income for EITC purposes is only $16,500. Depending on your filing status and dependents, you might still may have access to for the credit.
Check the IRS website or a tax professional each year, since income limits adjust for inflation. The limits also vary based on your filing status (single, married filing jointly, head of household) and the number of may have access to dependents you claim.
Frequently Asked Questions
If I only receive SSDI and no wages, can I claim the Earned Income Credit?
No. The EITC requires earned income from work. SSDI alone does not may have access to. You must have wages, self-employment income, or other earned income to claim the credit.
Does SSDI count toward the income limit for the EITC?
No. Only earned income counts toward the income limit. SSDI is excluded, so you can receive SSDI and still may have access to for the EITC based on your wages, as long as your earned income is within the limit.
If I work part-time and receive SSDI, do I report both on my tax return?
Yes. You report both your wages and your SSDI on your tax return. The IRS uses only the wages to calculate your EITC, but you must report the SSDI as well so the return is complete and accurate.
Can SSDI affect my EITC if I am married and file jointly?
No. Your spouse's SSDI also does not count as earned income. Only combined earned income from both spouses is used to calculate the EITC for a joint return.
What if I received SSDI for part of the year and worked the rest?
Report your earned income for the months you worked and your SSDI for the months you received it. The IRS will calculate your EITC based on your total earned income for the year, regardless of when you received SSDI.