Earned income credit - interest income

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  • spanel
    Senior Member
    • Oct 2008
    • 845
    #1

    Earned income credit - interest income

    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
    Tags: None
    • New York Enrolled Agent
      Senior Member
      • Nov 2006
      • 1531
      #2
      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.

        Comment

        • Rapid Robert
          Senior Member
          • Oct 2015
          • 1983
          #3
          Originally posted by spanel
          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.

          "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
          "That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe Howard          ​

            Comment

            • spanel
              Senior Member
              • Oct 2008
              • 845
              #4
              Originally posted by Rapid Robert
              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

                Comment

                • ATSMAN
                  Senior Member
                  • Jul 2013
                  • 2415
                  #5
                  Is there a 1099-Int in the picture??
                  Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

                    Comment

                    • spanel
                      Senior Member
                      • Oct 2008
                      • 845
                      #6
                      Yes Sir

                      Chris

                        Comment

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