Help on EIC

[Burke]

Please tell me if I am incorrect. I believe clients filing MFJ qualify for EIC. Earned Income = $36,840. Line 38 (AGI) = $33,710. Two qualifying children. Investment income = $172. I am calculating $1,800. Software says "0."
Have checked everything.

[Gary2]

Do they satisfy the investment income requirement? What are the entries on lines 7-22?

[David1980]

Could be a check box marked or not marked or marked the wrong way somewhere too.

[appelman]

Do they all have SSN 's?

Not ITIN's!

[Gary2]

What's reducing the AGI? An adjustment or a loss above the line?

Keep in mind that the investment income calculation isn't the obvious one. Net capital losses or rental losses don't offset interest income, tax-exempt interest is added to investment income, etc.

Or it could be something like the children being QRs and not QCs.

Or even something more basic, like not answering the due diligence questions in the software.

[JohnH]

What software? Sometimes when i'm seeing an unexpected result in ATX, something will pop up in the error checking that gives me a clue. (usually I've checked a box that I should not have checked)

[S T]

Trying to duplicate

This is based on 2010?
You have earned income of $ 36,840 (wages?) Investment Income (Sched B?) of 172 - but then you have AGI of $ 33,710 (which is)??? What loss or adjustment do you have?

Without that info, I am showing AGI of $ 37,012 and standard deductions, 4 exemptions-
and presuming the kids are under age 19 or under age 24 if college. EIC of $ 1,758

On my software I have two screens to answer the due diligence EIC questions to make it work.

Sandy

[Gary2]

This is based on 2010?
You have earned income of $ 36,840 (wages?) Investment Income (Sched B?) of 172 - but then you have AGI of $ 33,710 (which is)??? What loss or adjustment do you have?

Without that info, I am showing AGI of $ 37,012 and standard deductions, 4 exemptions-
and presuming the kids are under age 19 or under age 24 if college. EIC of $ 1,758

On my software I have two screens to answer the due diligence EIC questions to make it work.

Assuming the $36,840 is correct (and it's certainly reasonable), then $1,800 is the amount I get from the 2010 EITC table.

[S T]

Investment

I entered the $ 172 on Sched B - so makes the difference???

Maybe we don't have the exact fact pattern???

EIC Worksheet in my Software shows 36,840 earned income for EIC of 1,800 , but then shows line 38 with the 172 added , line 38 is 37,012 for EIC calc, so reduces to 1,758 EIC credit

S

[Gary2]

Maybe we don't have the exact fact pattern???

Of course we don't - that was a given, based on AGI being lower than earned income. Until we get those details, we're just having fun speculating on whether it's a subtle point of tax theory, the mechanics of the software, or a data entry typo.

[appelman]

The EIC Worksheet is often the culprit.

If everything else is in order, look carefully at the interrogatories. It's easy to check the wrong box. (This is based on my experience supervising VITA preparers, where EIC is a big big deal.)

[S T]

Speculate

Well sometimes it is hard to speculate without the exact fact pattern and I have as much fun as the next

So answers - speculation- maybes - Someone tries to post fact/figures - I will usually try to replicate/duplicate - so we are missing something on this OP

Should be a simple puzzle like all of the posts coming toward us in late Jan-Feb on the dependents exemptions - but guess not.

Maybe Burke is just testing all of us to get us geared up for the New Tax Season! Gary2 are you testing us , and assisting us in "gathering" our wits about us for the upcoming season since the EITC is a major issue under the Fed program and scrutiny???

Good exercise to play with and see what the outcome will be!

Sandy

[FEDUKE404]

Check these

1 - If you are getting zero EITC, you need to check the relevant dependent data entry sheets...maybe even go through the Q&A? Most software now has additional questions relative to EITC only on the dependent data entry form. These are separate questions from those for mere dependency issues, and if all of the boxes are not checked your EITC reverts to zero.

2 - If you are getting the "wrong amount" I would think you need to carefully peruse the relevant EITC worksheet to see how you made it from $36,840 of earned income to $33,710 AGI. There is likely a "lesser of" issue at play there??

If you wish to provide relevant numbers, and whether 2010 or 2011, I can give it a whirl on my software.

FE

[Gary2]

Gary2 are you testing us , and assisting us in "gathering" our wits about us for the upcoming season since the EITC is a major issue under the Fed program and scrutiny???

Actually, it's more that I spent time late yesterday afternoon helping a colleague deal with a similar problem. Did you know, that for the purposes of the dependent care credit on Form 2441, earned income from self-employment isn't taken directly from the Sch. C or line 12, but must be reduced by the SE adjustment from line 27? I didn't, but I do now.

This falls into FE's #2 bullet, except that the software wasn't generating a separate worksheet for this subtraction. It took a bit more sleuthing to figure out why the income numbers on the 2441 didn't match our expectations. This put me in the mood for showing off familiarity with the EITC worksheet (two pages of worksheet in our software, and I had to teach students to do it by hand last year).

[ChEAr$]

Maybe eic is DENIED because preparer has not complied with that new fangled form IRS demands to be filed with return. You reckon?