Hello,

I want to roll over my wife’s simple IRA from her work into a Roth IRA. (IT is a Simple IRA, NOT a traditional IRA.) I know that it will then be counted as income. The question is, will that count towards earned income and affect our earned income tax credit (EITC)?

I am in grad school and have an income from a scholarship of about $1,400/month. That income does not count toward the EITC. My wife will only have worked a couple dozen of hours this year, earning less than $1000 total. Therefore, we’ve only “earned” like $600 dollars of income this year (2023). That means our EITC will be like $213. But, if we roll over the simple IRA from her old job (from several years ago) into a roth IRA, that will count as ‘earned’ income. Will the roll over boost our income and make us eligible for a greater EITC? We’ll be rolling over something like $12-$13K. Our total income will be like $29K. I know the EITC reaches its peak return of $3,733 (1 child) at an income of $10,950 and that it begins to decline at an income of about $26,350. (See IRS.gov’s “1040 TAX AND EARNED INCOME CREDIT TABLES”)

I suppose I’m just curious if anyone knows. I’ll probably need/want to do the rollover this year regardless of what the answer is. I suppose if you’re curious what the answer is, I can let you know what happens next year after I file my taxes.

Thanks!