EITC Calculation with Self Employment Loss and W2 Wages

[kpangelinan]

The EIC Worksheet on my software calculated the "earned income" used in the eic calculation as a net of the "Earned income" and "Self Employment net (which was a loss)". This allowed them to qualify for EITC. If they didn't take the SE loss as part of the calculation, their earned income (W2 wages) would make them ineligible to take the EITC. Can someone show me where I can verify the correct way to calculate the correct income to be used in the earned income credit calculation? The IRS sent a letter back stating the wages disqualified them, discounting the losses from the business. Thanks for all the help on this!

[Gretel]

I had a similar problem, loss from Schedule C, then opted for optional SE and IRS disallowed EIC but they were wrong. There are worksheets for EIC in one of the Publications. If they also show that your software calculated correct then you just need to send IRS this worksheet.

[snowbird]

You will find the worksheet in the 1040 instructions .. May also be elsewhere.

http://www.irs.gov/pub/irs-pdf/i1040.pdf

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