Earned Income Credit - Combat Pay

[zeros]

Have very little reportable wages as most of the earnings were made while in Afghanistan and not subject to taxes. He is a family man and would be eligible for the EIC. Does the combat pay have to be added back to compute the EIC? He has no taxable income and a quite large EIC if he does not.

[RitaB]

Now that you mention it

Have very little reportable wages as most of the earnings were made while in Afghanistan and not subject to taxes. He is a family man and would be eligible for the EIC. Does the combat pay have to be added back to compute the EIC? He has no taxable income and a quite large EIC if he does not.

http://www.irs.gov/individuals/article/0,,id=150708,00.html

I feel like they oughta give US combat pay when we have a return with EIC, now that you mention it.

[FEDUKE404]

It is optional

http://www.irs.gov/individuals/artic...150708,00.html

I feel like they oughta give US combat pay when we have a return with EIC, now that you mention it.

Most tax software will have an area where you can include (or, by default, exclude) non-taxable combat pay in the calculations used for determining EITC.

As mentioned in the IRS link, there is no "correct" choice. You just have to run the numbers and choose the best one.

FE

[Bonnie]

You choose whichever is best for your client. They can figure EIC on taxable income without combat pay, or with the combat pay, whichever is best.