18a — Earned Income for Additional Credit Updated for tax year 2025

What this line means

Your total earned income used to calculate the additional child tax credit. Earned income includes wages, salaries, tips, and net self-employment income. It does not include investment income, Social Security benefits, unemployment compensation, or pension income. This amount drives the 15% calculation on line 20 that determines how much of the additional child tax credit you can receive.

Does this apply to you?

• You have excess CTC on line 15 and need to calculate the earned income-based limit on the refundable credit
• You have wages from a W-2, self-employment income, or both

Easy to overlook

Net self-employment losses reduce earned income If you have W-2 wages of $40,000 and a Schedule C loss of $10,000, your earned income for this line is $30,000. Self-employment losses directly reduce the earned income that drives the additional child tax credit. Filers with side businesses that lost money may see a smaller refundable credit than expected. ¹ [SOURCE: IRS Schedule 8812 instructions — earned income definition]

Earned income must actually be reported on your return You cannot use income you did not report. If you worked for cash and did not include it on your return, it does not count as earned income for the additional child tax credit. The IRS matches the earned income on this line against reported wages and self-employment income. ² [SOURCE: IRS Schedule 8812 instructions — what counts as earned income]

Watch out for this

Including investment income, Social Security, or unemployment benefits as earned income. Only wages, salaries, tips, and net self-employment income qualify. A retiree with $50,000 in pension income and $3,000 in part-time wages has only $3,000 in earned income for this calculation.

Related lines on your return

• Line 1z — Form 1040 — Total wages; a major component of earned income
• Line 18b — Schedule 8812 — Nontaxable combat pay election; can be added to earned income
• Line 19 — Schedule 8812 — Earned income minus $2,500; the threshold calculation