Eitc

[tonia2021]

I am calculating the EITC for a client of mine who is a minister. I always prepare the EITC worksheets by hand to see if the computer is calculating this correctly (because of the different rules for clergy).

The client also served as the Guardian/Conservator for their parent. My undertanding is that this income isn't subject to SE tax. My question is whether or not it should factor into the EITC calculations. As far as I am concerned, it is earned income.

Thanks

[Koss]

Earned Income

Are you saying that your client received compensation for serving as the guardian/conservator of the parent?

And you want to determine whether that compensation is earned income for purposes of calculating the earned income credit...

How is this income reported? Did your client receive a Form 1099-MISC? Box 3 or Box 7?

Where are you reporting it on the return?

What leads you to the conclusion that it is not subject to SE tax?

I'm not saying that it IS subject to SE tax. But I'd like to understand more about this source of income...

BMK

[tonia2021]

The IRS publication dealing with taxable and nontaxable income and TBB page 3-19 both say that taxpayers that serve as executors, PRs, and other fiduciaries for friends or family members report fees on line 21, Form 1040, not subject to SE tax.

This income wasn't reported on any information reports (W2/1099). The client just brought in a statement showing the income. Yes, the taxpayer is the conservator/guardian for her father.

I put that income on Line 21 - not subject to SE tax. My program doesn't pick this income up as earned income when calculating the EITC.

[Koss]

Line 21

It's not earned income for purposes of EIC.

It would be earned income if your client was in the trade or business of performing fiduciary services. But if that were the case, he would have to report the income on Schedule C, and it would be subject to self-employment tax.

On a theoretical level, I can see why you think it should be earned income, because it certainly seems like your client is performing services and receiving compensation for those services. But classifying it as income that is not subject to self-employment tax pulls it outside the scope of the definition of earned income for purposes of EIC.

Same issue arises with jury duty pay.

BMK