Work Comp

[Bjorn]

Is it possible to count Work Comp as earned income to get the earned income credit?

A modest income person was hurt at the Wal Mart and is on workers Comp. When I said she had no earned income and therefore no big refund coming shock was the understatement of the year.

Is she out of luck?

Mahola

[Black Bart]

W/C - No / Out of luck - Yes

From Pub. 596 (EIC), page 11:

Income That Is Not Earned Income:

...welfare benefits, workers' compensation benefits, unemployment compensation...

[Bees Knees]

Basically, under the new simplified rules, earned income can only include earned income that is reported as taxable on the tax return.

That rule was an attempt to simplify the rules.

Except....

Then they started adding exceptions to the rule, such as adding tax exepmt combat pay to the list, plus earnings from ministers that are exempt for income tax purposes but subject to SE tax, plus a special computation for Hurricane Victims, and so on....

[jainen]

EIC is a corporate subsidy

Some of my esteemed colleagues on this board don't like EIC. Here's why it is necessary. You work a dangerous job with a major corporation, and they only pay poverty wages. In its heart, EIC is a corporate subsidy.

[sea-tax]

Some of my esteemed colleagues on this board don't like EIC. Here's why it is necessary. You work a dangerous job with a major corporation, and they only pay poverty wages. In its heart, EIC is a corporate subsidy.

Well now I have heard it all !

[veritas]

Big Corportations

Yeah I hate those horrible corporations trying to make a profit and give it to those evil stockholders. Imagine the pretension of investing in equipment, inventory and hiring other companies who hire more employees who spend money with those awful corporations. The whole time our valuable, innovative and efficient government takes their share they worked so hard to earn and then INVEST it so wisely. I wish our government would take more of my money. Hopefully it will go to FEMA where everything is accounted for execpt maybe a few billion here or there. I know I would sleep better at night.