For purposes of calculating the Earned Income Credit (EIC), unemployment is not included in earned income but is included in Adjusted Gross Income (AGI). If your AGI results in a lower EIC, you must use that amount. The TaxACT program will automatically do this calculation for you on the Form 1040 Earned Income Credit Worksheet.
For additional information, please refer to IRS Publication 596
or Worksheet A on page 56 of the IRS Instructions for Form 1040