Are non-taxable VA benefits used in any way for the EIC calculation?

[mikeburg]

I have a client who earned $9,000 as an investigator who also received along with his wife, $48,000 (between the two of them) in non-taxable VA disability. They have one dependent child.

Is the $48,000 non-taxable VA disability used in any way to limit their earned income credit on the $9,000 of Schedule C income?

Thank you for any information. mikeburg

[Burke]

It is an Earned Income Credit as it is based on earned income. The VA benefits do not appear anywhere on the tax return, so are not considered in modified AGI. But be very careful about the $9K if it is Schedule C income, in that you MUST deduct all legitimate expenses he incurred performing this work.

[mikeburg]

Will do!

Will do! Thanks for the reminder. I really appreciate you guys. mikeburg