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
  • 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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