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tax question

post #1 of 7
Thread Starter 

2010 is the first year we had no "earned income"--no W-2s, just rentals (1099).

 

Last year we got a *huge* "refund" check.  About $1000 of it was actual refund, the rest was EIC, child tax credit, and whatever that employment credit was.

 

It occurred to me this year our check is going to be much less.  We aren't going to owe any taxes, because our income was low and we had lots of business expenses.    But am I right in thinking we don't qualify for the EIC for 2010? 

post #2 of 7

Here's a link to the IRS site giving information on EIC. This should tell you what you need to know. HTH!

http://www.irs.gov/individuals/article/0,,id=96406,00.html

 

post #3 of 7

Earned Income

This credit is called the "earned income" tax credit because, to qualify, you must work for yourself or an employer and receive income from that work. If you are married and file a joint return, only one of you needs to have earned income. If you are an employee, earned income includes all the taxable income you get from your employer.

Earned income includes all of the following types of income:

  • Wages, salaries, tips, and other taxable employee pay. Wages, salaries, and tips you receive for working are reported to you on Form W-2, box 1. You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040).
  • Nontaxable combat pay, if you elect to include it. You can choose to have your nontaxable combat pay included in earned income for the earned income tax credit. Choosing to include nontaxable combat pay in earned income may increase or decrease your EIC. If you make the election, you must include in earned income all nontaxable combat pay you received. If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own choice. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q.
  • Net earnings from self-employment. You may have net earnings from self-employment if:
    1. You own your business, or
    2. You are a minister or member of a religious order.
  • Gross income received as a statutory employee. You are a statutory employee if you receive a Form W-2 on which the "Statutory employee" box (box 13) is checked. You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). The amount on line 1 of Schedule C or C-EZ is earned income for the earned income credit.
  • Clergy Income (see below)
  • Strike benefits. Strike benefits paid by a union to its members are earned income.
  • Disability benefits. You receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age.

Earned income does not include any of the following types of income:

  • Investment Income
  • Taxable refunds
  • Alimony received
  • Unemployment compensation
  • Pay received for work while an inmate in a penal institution
  • Retirement income
  • Child support
  • Money or property that was inherited, willed to you, or received as a gift
  • Life insurance proceeds received because of a person's death
  • Section 8 Housing Allowance
  • Food Stamps
  • TANF and other welfare benefits

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 the EITC (except in certain cases described in Approved Form 4361 or Form 4029, below).

If you have an approved Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, amounts you received for performing ministerial duties as an employee count as earned income. This includes wages, salaries, tips, and other taxable employee compensation. Amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Examples include fees for performing marriages and honoraria for delivering speeches.

If you have an approved Form 4029, Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits, all wages, salaries, tips, and other taxable employee compensation count as earned income. However, amounts you received as a self-employed individual do not count as earned income. Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040.

Inmates cannot use the amounts received for work performed while an inmate at a penal institution as earned income for the EITC.

Retirement income is not included as earned income.

For more detailed information, see Publication 596, Earned Income Credit.

 

 

 

 

I don't see rental property listed here for earned income. It may help to ask a tax professional to make sure but my guess from this list would be that you don't have any 'earned income' and so wouldn't qualify for EIC.

post #4 of 7
Thread Starter 

Thanks, that helps. I just used the IRS calculator and because we had a net loss, it looks like we don't qualify for EIC.  Ah well.

post #5 of 7

Ya my refund wont be good either... I had very little earned income.  Ugh..

post #6 of 7

You won't qualify for the Earned Income Tax Credit, if you have no earned income.

post #7 of 7


you don't have to report all your expenses- you just have to report all your income.  you don't have to have a loss.
 

Quote:
Originally Posted by cappuccinosmom View Post

Thanks, that helps. I just used the IRS calculator and because we had a net loss, it looks like we don't qualify for EIC.  Ah well.

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