Yes, we're married and filing jointly, both with excludable Medicare waiver payments on separate W-2 forms. Where, though, on the tax filing will the IRS see that only one income was being counted for the EITC? Line one on the 1040 combines our earned income, which is too high for the credit, and then it's all subtracted on Schedule 1, line 8, lowering our AGI and effectively removing all of our earned income. While TurboTax Deluxe provides the option of including either, both, or neither as earned income in the EITC section, I don't see where the IRS can see that calculation in that actual tax forms. It factors in the value of the credit on the 1040, but there doesn't seem to be form, schedule, or worksheet that shows the IRS how that figure was arrived at. It seems likely that the EITC will be rejected by the IRS based on our earned income being too high or the AGI being too low, even though we should have the option of excluding or including that income for the EITC under notice 2014-7.
