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EITC (earned income tax credit).

Is a retirement account considered investment income by the IRS? The IRS considers these as investment income:

  • Interest (both taxable and tax-exempt)
  • Dividends
  • Capital gain income
  • Some rent and royalty income
  • Net income from passive activities

The IRS says investment income greater than 3,400 will bar you.

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  • Are you withdrawing money from the account? If not (and it's a 401k or conventional IRA) then it shouldn't be considered income, no?
    – jamesqf
    Feb 19, 2016 at 5:43
  • @jamesqf I'm not withdrawing money Feb 19, 2016 at 6:27

2 Answers 2

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From the IRS page Do I Qualify for EITC?:

Your tax year investment income must be $3,400 or less for the year.

(Emphasis mine.)

It is not the size of your investment that affects the EITC; it is the amount of investment income that can disqualify you.

Also, "investment income" in this case means taxable investment income. Inside your retirement account, any earnings your investments make would not disqualify you for the EITC.

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  • A +1 for authoritative linked source. And a well deserved "accepted" answer. Feb 19, 2016 at 19:25
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As @jamesqf commented, EITC is triggered based on income. The existence of an asset isn't reported on your tax return, only taxable income you receive from it. Your question lists the main points of income, in the case of retirement accounts, the interest, dividend and gains are not taxed while in the account, only withdrawals for the traditional IRA or 401(k).

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