@Twostates
You cannot legally convert unearned income into earned income by pretending it was earned from working and paying SE tax on it. That would constitute tax fraud, if you used it to collect tax benefits such as enabling an IRA contribution or collecting EIC; or it might be considered Social Security fraud, if you used it to earn Social Security credits.
As a matter of fact, one common form of income tax fraud is to create a schedule C and declare a minimum amount of cash self-employment income, such as from mowing lawns. This can sometimes allow the fraudster to collect more earned income credit as a bogus refund than they pay in SE tax. This type of tax fraud has been prosecuted in the past.
While you can certainly prepare a tax return to make it look as though you have self-employment income and pay SE tax on it, it’s not legal to do so.
