Introduction
EIC Worksheet B calculates the earned income used when figuring the Earned Income Credit (EIC) for certain taxpayers. It is not the EIC table, and it is not Schedule EIC. Mixing them up is a common reason returns get flagged.
This guide is for Australian-based individuals with U.S. federal filing obligations, including self-employed taxpayers, statutory employees, and parents with qualifying children.
Timing matters. Tax year 2027 returns will generally be filed in 2028, and the 2027 Form 1040 Instructions and Publication 596 are not yet published.
Every line reference below comes from the 2025 edition, so confirm each figure against the official 2027 documents when they appear.
Key Takeaways
- Use Worksheet B only when the Form 1040 Instructions route you to it.
- Completing the worksheet does not establish EIC eligibility.
- Verify 2027 line numbers and limits; don't carry forward older ones.
- Reconcile earned income to Form 1040, schedules and income records.
What Is EIC Worksheet B and When Is It Used?
What Worksheet B does
Worksheet B combines self-employment, statutory employee and other Step 5 earnings, then calculates the EIC for taxpayers routed to it. It feeds the EIC table lookup and ends with a credit amount carried to Form 1040.
It is a calculation aid, not a claim form. It does not replace the eligibility review or Schedule EIC.
How Worksheet B differs from related EIC resources
| Resource | Role |
|---|---|
| Worksheet B | Calculates earned income and credit for Step 5 question 2 taxpayers |
| Worksheet A | The alternative route for taxpayers who answer "No" |
| Earned Income Credit Table | Converts the income amount into a credit by filing status and child count |
| Schedule EIC | Reports qualifying-child information |
The table never replaces the worksheet. Worksheet B supplies the number you look up.
When the IRS directs a taxpayer to use it
In the 2025 instructions, Step 5 question 2 asks whether you were self-employed, are filing Schedule SE as clergy or church employee, or are filing Schedule C as a statutory employee. A "Yes" sends you to Worksheet B.
Having qualifying children does not decide this. Worksheet choice follows Step 5 routing.
For joint filers, the instructions say to include your spouse's amounts with yours in Parts 1 through 3. The 2025 version does not call for separate worksheets per spouse. Confirm that joint-filer rule in the 2027 Form 1040 instructions before you file.
Who Should Complete Worksheet B for 2027?
Eligibility conditions to review first
Eligibility and worksheet use are separate questions. You might calculate earned income and still not qualify. Under the 2025 Publication 596 rules, review:
- Filing status (married taxpayers generally file jointly, with a separated-spouse exception)
- Valid Social Security numbers issued by the return due date
- Age 25 to under 65 if claiming without a qualifying child
- Qualifying child relationship, age and residence tests
- Not being another person's dependent
- Main home in the United States for more than half the year
- Investment income under the annual cap
For reference only, the 2026 investment-income cap is $12,200, per Revenue Procedure 2025-32. Do not treat it as a 2027 figure.
Information and records to gather
- Forms W-2 and 1099
- Business income and expense records
- Schedule C or F figures
- Schedule SE calculations
- Prior IRS notices
- Qualifying-child documentation
Australian-based filers
The worksheet applies U.S. federal tax rules, not ATO rules. Residence in Australia does not create or remove eligibility, but several U.S. rules bite hard for overseas filers:
- Filing Form 2555 bars the EIC entirely.
- A nonresident alien for any part of the year generally cannot claim it, unless married to a U.S. citizen or resident and electing resident treatment.
- The U.S. home and child-residency tests still apply.
How to Complete EIC Worksheet B Step by Step
Before entering figures
Work from the official 2027 worksheet and follow its headings and line order exactly. Until the IRS publishes the 2027 worksheet, use the 2025 line structure below as your reference.
For joint returns, combine both spouses' applicable amounts in Parts 1 through 3 as the instructions direct.
Enter income and permitted adjustments
2025 line structure:
- Part 1 (Schedule SE filers): Combine Schedule SE, Part I, line 3 with lines 4b and 5a, then subtract the line 13 deduction for half of self-employment tax (line 1e).
- Part 2 (self-employed, not filing Schedule SE): Schedule F line 34 and Schedule C line 31, plus applicable partnership K-1 amounts.
- Part 3 (statutory employees): Schedule C, line 1.
- Part 4: Add Step 5 earned income, then combine everything on line 4b.
- Parts 5 to 7: Carry line 4b to line 6, find the credit in the table, compare against AGI, and carry the result to Form 1040 line 27a.
Net losses reduce the combined total. If line 4b is zero or less, you cannot claim EIC. Part 2 excludes statutory-employee income, notary net profit and amounts exempt from self-employment tax.
Illustrative structure only: If a sole trader's Schedule C shows a net profit and no Schedule SE is required, that profit goes on line 2b, then flows to line 4b. Dollar thresholds are omitted here because the 2027 figures are not yet published.
Reconcile and carry the result forward
Compare line 4b with Form 1040 AGI. If they are equal, the earnings-based credit carries forward. If not, apply the low-AGI exceptions or run a second table lookup and use the smaller amount, as the instructions direct.
Then check for omitted, duplicated or misallocated income across Form 1040 and the schedules.
How to Calculate Earned Income and Use the EIC Table
Determine earned income
Publication 596 defines earned income as wages, salaries, tips, other taxable employee pay and net earnings from self-employment. It is not gross receipts, AGI or investment income.
These items are not earned income (though some still affect AGI or the investment-income test):
- Interest and dividends
- Pensions
- Unemployment compensation
For the self-employed, the flow runs from Schedule C or F, through Schedule SE, to the half-SE-tax deduction on the worksheet.
Compare the figures
Earned income, AGI, filing status, child count and investment income each affect the outcome independently. Under the 2025 instructions, if AGI differs from earned income but falls below the thresholds below, line 7 carries to line 11. Otherwise use the smaller amount:
- With children: $23,350 (single) or $30,470 (joint)
- Without children: $10,620 (single) or $17,730 (joint)
These are 2025 figures, not 2027 amounts.
Use the earned income table correctly
Find your "At least, But less than" income band, then the right filing-status and child-count column. Follow the printed lookup instructions exactly.
For reference, 2026 maximum credits are:
- $664 with no children
- $4,427 with one child
- $7,316 with two children
- $8,231 with three or more children
The IRS will publish the 2027 amounts when they are available.
Common Errors and Final Filing Checklist
Frequent Worksheet B mistakes
- Using a prior-year worksheet or line numbers
- Entering gross receipts instead of net earnings
- Counting income twice
- Skipping the half-SE-tax deduction
- Allocating income to the wrong spouse
- Omitting W-2 or 1099 income
- Claiming a child who doesn't qualify
The IRS estimated improper EITC payments at 27.3% (about $15.9 billion) in fiscal 2024, per TIGTA's report. That figure covers all improper payments, not only fraud.
Final review before filing
- Filing status is correct
- Social Security numbers match records
- Qualifying-child details are supported
- Earned income and AGI reconcile
- Investment income is under the cap
- Schedules are complete
In the 2025 edition, Worksheet B reads "Keep for Your Records," so it is not attached. Schedule EIC is attached when a qualifying child is claimed. Check the 2027 Form 1040 instructions to confirm the same attachment rules still apply.
Professional review for complex or cross-border situations
VJM Global's tax professionals prepare Form 1040 and 1040-NR returns and help Australian-based taxpayers with U.S. filing obligations organise records and review cross-border documentation. Professional support does not replace the official IRS eligibility rules.
Frequently Asked Questions
How do you calculate your earned income?
Follow the 2027 Worksheet B instructions, include the listed earned-income sources, and apply only IRS-authorised adjustments. Then reconcile the result with Form 1040 and your schedules.
What is the earned income table?
It is an IRS lookup table that converts an income amount into a credit. Use the 2027 table for your filing status, child category and income range.
What is EIC Worksheet B used for?
It calculates earned income and the credit when the Form 1040 instructions direct you to it, mainly for self-employment, clergy or statutory-employee income.
Who needs to complete EIC Worksheet B for 2027?
Check the taxpayer categories in the official 2027 instructions. Using the worksheet does not mean you qualify for the EIC.
Do you attach EIC Worksheet B to Form 1040?
In the 2025 edition, no. Keep it with your records and attach Schedule EIC where required. Confirm the 2027 instructions.
