Eic & nol - can it be true?

[TAXNJ]

Can it be where entitled to roughly $290 EIC ? Has anyone seen something similar?


SCENARIO:

Single Age 44

- NOL (FROM PRIOR YEAR BUSINESS) SAY $60,000
- Business Income $9,000 (Schedule C)
- Early IRA withdrawal of say $20,000 plus (10% penalty)
- Partnership Income say $1,800
- Itemized Deductions say$13,100
- Exemption $3,950
- State sponsored health care and food stamps
- Taxpayer not a qualifying child for EIC for another person and home in US for more than half of 2014

[Corduroy Frog]

EIC Survives

...given no other unfavorable circumstances which disallow. Does not appear the NOL would affect the current year situation.

And I'm not 100% on this NJ. From The Tax Book, page 16-5, Worksheet B is for self-employed people. The parameters of the EIC calulation all appear to come from primarily Schedule SE, and only secondarily from the 1040.

It further follows that NOLs are not allowed on Sch SE, as the IRS does not wish for collection of SE tax to be reduced by NOLs. I checked the rest of the TTB worksheet for any mention of NOLs and there is none. I would therefore conclude that if the client is otherwise entitled to EIC after gurgling and groaning thru the SE calculation, existence of a NOL would not deprive him of it. The EIC and NOL can thus co-exist on the same return with no interfacing effects.

[TAXNJ]

Yes. Based on the facts

Yes. Based on the facts In addition would have a client sign a statement that agrees with all the client documentation provided and of course the questions and answers for due diligence

Thanks for your comments

[TaxGuyBill]

If the AGI is less than $8150 (for a Single person with no kids, the amount varies for other situations), AGI is not used for EIC.

See Part 2 of Worksheet A and/or Part 6 of Worksheet B.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=58

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=60

[TAXNJ]

negative AGI - yes agree with worksheet support

If the AGI is less than $8150 (for a Single person with no kids, the amount varies for other situations), AGI is not used for EIC.

See Part 2 of Worksheet A and/or Part 6 of Worksheet B.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=58

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf#page=60

thanks for the reference.

Yes, the AGI in this scenario is a negative amount due to the NOL therefore as you mention "AGI is less than $8150 (for a Single person with no kids, the amount varies for other situations), AGI is not used for EIC."