Question

Which of the following are not considered earned income for EIC computations? a. Wages b. Tips c. Interest earned from a bank account d. Self-employed income

Answer 1

Answer:

The right answer is option (C).

Explanation:

Earned income can be defined as the income of a person which he earns by working and efforts.

Hence according to the question, the most appropriate answer is option (C) because interest earned from a bank account is not the result of any personal efforts and hence it is not considered as earned income for EIC.

While the other options are wrong because of the following reasons:

• Wages can be defined as the income a person gets after working for some company, hence it is considered as the earned income.

• Tips are also an outcome of personal efforts to make clients happy and hence it also considered as the earned income.

• Self-employed income can be defined as the income a person gets for his work as a freelancer and hence it also considered as the earned income.