Pastor EIC calculation

[Taxadvisor VA]

TP received a check from IRS saying EIC calculated was wrong on the tax return. Since Housing allowance is part and parcel of the SE tax calculation, should it not be also part of the earned income for EIC caclulation???

Has anyone come accross this change? ______________
If so what happended? _______________

If not do you agre with the housing allowance being included for EIC? ________

Thanks,

Taxadvisor VA

[kathyc2]

Minister’s housing. The rental value of a home or a housing allowance provided to a minister as part of the minister’s pay generally is not subject to income tax but is included in net earnings from self-employment. For that reason, it is included in earned income for EITC, unless you have an approved Form 4361 or Form 4029.

https://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/Special-EITC-Rules

[Taxadvisor VA]

EIC calculation response

Kathyc2,

Thank you for your response. I just spoke to client affected, as IRS did send them a check which did not include Housing Allowance as part of earned compensation, which is wrong. I did advise them to call IRS a 2nd time b/c 1st call said EIC was calculated wrong on the tax return.

Again thank you for your response and help.

Best Regards,

Taxadvisor VA