Other earned income on Form 1040 is reported on Line 1h, a catch-all for four specific types of work-related compensation that don’t show up on a standard W-2 or fit the self-employment category. The four are union strike or lockout benefits, disability pensions received before minimum retirement age, excess elective deferrals to a retirement plan, and corrective distributions from a retirement plan. Whatever you enter on Line 1h flows into the Line 1z total that the IRS treats as your wages for tax purposes, and it counts toward earned income when calculating the Earned Income Tax Credit.
The Four Categories That Belong on Line 1h
The IRS instructions limit Line 1h to a short list:
- Strike or lockout benefits paid by a union in cash or property, unless the union clearly intended the payment as a gift.
- Disability pensions from an employer’s disability retirement plan, reported on Form 1099-R, received before you reach the minimum retirement age set by your employer.
- Excess elective deferrals to a retirement plan. For 2025 returns, the general limit is $23,500 for most plans and $16,500 for SIMPLE plans.
- Corrective distributions from a retirement plan, including the earnings on excess contributions or deferrals, as shown on Form 1099-R.
Everything on Line 1h is added to your W-2 wages and other wage-type income on Line 1z. That combined number is what the IRS looks at for the EITC.
Strike and Lockout Benefits
Money your union paid you during a strike or lockout is taxable compensation and belongs on Line 1h. The IRS treats these payments as wage substitutes. The narrow exception is a payment the facts clearly show was intended as a gift rather than a replacement for lost pay, which is uncommon.
Strike benefits also count as earned income for the EITC. The statutory definition in 26 U.S.C. § 32 includes “wages, salaries, tips, and other employee compensation” that is includible in gross income, and Line 1h amounts feed that calculation through Line 1z.
Your union should send a year-end statement showing total benefits paid. If you received a Form 1099-MISC instead, use that figure.
Disability Pensions Before Minimum Retirement Age
Payments from your employer’s disability retirement plan get treated as earned income only until you reach minimum retirement age, meaning the age at which you could have first drawn a regular pension if you weren’t disabled. Before that birthday, the payments go on Line 1h and count toward the EITC. On and after that birthday, the same payments move to Lines 5a and 5b and are taxed as pension income.
One boundary to know: disability payments from a private insurance policy you paid for yourself are not earned income for EITC purposes, even when they’re taxable. The earned-income treatment on Line 1h applies to employer-sponsored disability retirement plans, not personal disability insurance.
Check your Form 1099-R for the distribution code and confirm your age against the plan’s minimum retirement age before deciding which line the payment belongs on.
Excess Elective Deferrals and Corrective Distributions
Most workers never touch this category. It catches people who contributed to more than one employer retirement plan in the same year, or whose employer made a contribution error. If your combined 401(k), 403(b), or similar elective deferrals exceeded the annual limit, the excess amount is reported on Line 1h. It isn’t deductible, and it has to appear as income.
To spot it, compare Box 12 on every W-2 you received against the annual limit. Box 13’s “Retirement plan” box will be checked. When you had multiple employers, no single W-2 will show the excess on its own.
Corrective distributions work the same way. When a plan returns money to you because contributions or deferrals went over the limit, the returned amount plus its earnings is reported on Line 1h using the figures from your Form 1099-R.
What Doesn’t Belong on Line 1h
Line 1h is narrow, and several income types people expect to see there actually go elsewhere on the same page of Form 1040.
Taxable Scholarships and Fellowships
Taxable scholarship or fellowship income does not go on Line 1h. If the scholarship appears on a W-2, include it in the Line 1a total with your other W-2 wages. If it doesn’t appear on a W-2, report it on Schedule 1, line 8r, which then flows to Form 1040, Line 8 as other income.
A scholarship is tax-free only to the extent it covers tuition and required course-related expenses such as fees, books, and supplies. Amounts spent on room, board, or travel are taxable. Degree candidates report only the non-qualifying portion on Schedule 1, line 8r.
Nontaxable Combat Pay
Combat pay excluded from gross income under 26 U.S.C. § 112 stays excluded, but service members can elect to count it as earned income for the EITC. That election goes on Line 1i, not Line 1h. The nontaxable amount is shown in Box 12 of the W-2 with Code Q. Spouses filing jointly each make the election independently.
Medicaid Waiver Payments
Payments you received for providing in-home care to a family member under a Medicaid waiver may be excludable from income under IRS Notice 2014-7. Excludable amounts go on Line 1d, not Line 1h. As with combat pay, you can elect to include nontaxable Medicaid waiver payments as earned income for the EITC and the Additional Child Tax Credit, and each spouse who received them can make that election separately.
Why Line 1h Matters for the EITC
The practical reason to get Line 1h right is the Earned Income Tax Credit. The credit is calculated on earned income, which 26 U.S.C. § 32 defines as wages, salaries, tips, and other employee compensation includible in gross income, plus net self-employment earnings. Every dollar on Line 1h counts toward that definition because it feeds into Line 1z.
Some taxable income doesn’t qualify as earned income no matter where it appears. Pensions and annuities (including disability payments received after minimum retirement age), interest and dividends, Social Security benefits, unemployment compensation, alimony, child support, and jury duty pay are all excluded. Pay you earned while incarcerated, in a work release program, or in a halfway house is taxable but cannot be used to calculate the EITC. If you had both incarceration earnings and outside employment income in the same year, you have to separate the two.
Business losses cut the other way. If your Schedule C shows a net loss, that loss reduces your earned income for EITC purposes and offsets W-2 wages in the worksheet. You cannot pick and choose which expenses to report to keep the credit larger.
Documents to Have Before You File
Pulling the right paperwork before you start avoids the errors that draw IRS attention:
- Strike benefits: union year-end statement or Form 1099-MISC.
- Disability pensions: Form 1099-R, plus confirmation of the plan’s minimum retirement age and your current age.
- Excess deferrals: Box 12 amounts from every W-2, checked against the annual limit.
- Corrective distributions: Form 1099-R showing the returned amount and earnings.
If you’re claiming the EITC, the PATH Act requires the IRS to hold your refund until at least February 15. Most affected filers don’t see deposits until late February.