Earned income credit - interest income

[spanel]

Client qualifies for EIC except she received a huge sum of interest income ($6000). This was for all back child support (apparently they accrue it and pay the interest first. This cost my client $5500 this year. Doesn't seem right as this is not from something she owns (bank account, investment acct, ect) and cant even control. Any way to work around this???

Thanks

Chris

[New York Enrolled Agent]

Well $6,000 in interest is better than $5,500 in tax credit. IRC 32 doesn’t care where the investment income came from - if it’s in gross income then it it’s a eligibility factor.

[Rapid Robert]

Doesn't seem right as this is not from something she owns

But it is from something she owns - the back child support. If she didn't have a financial ownership, she wouldn't be receiving interest income.

[spanel]

But it is from something she owns - the back child support. If she didn't have a financial ownership, she wouldn't be receiving interest income.

Yes and no. She has no control over when and how she receives this additional money. I can see it both ways.

Chris

[ATSMAN]

Is there a 1099-Int in the picture??

[spanel]

Yes Sir

Chris