As an example:
- I have $20,000 in Box 1 on my wife and my only W2
- I have $35,000 in Box 3 (reflecting significant pre-tax 401(k) deductions)
- Filing MFJ with no kids
For 2016, to claim EITC both earned income and AGI must be below $20,430 for a couple with no kids.
The IRS page for "what is earned income" includes:
Wages, salaries, tips, and other taxable employee pay;
My understanding is that AGI is reduced from the 401(k) contributions but what about earned income?
It reads to me that only W-2 income which shows in Box1 of a W-2 counts. Given the language similarity on the W-2 vs the IRS page, it sure seems this is the case but I cannot find anything authoritative anywhere about this.