@twinsc wrote:
I am using a non-TT tax software to file my taxes. So my question is the tax software making that determination because the rental income comes from a rental building that is leasing to a business that I also own?
Yes, that is probably it. If I remember correctly, TurboTax does the same thing and allows the EIC. Whether or not that is correct or not is questionable.
One item of Investment Income is "passive" income. Most rentals are passive, but income from a self-rental is NOT passive. So I suspect that the program is seeing that and allowing EIC.
However, another item of Investment Income is "rents or royalties not derived in the ordinary course of a trade or business". So direct reading of the Tax Code, "rents" would disqualify EIC. However, the Worksheets from the IRS classify that category as rental income from "personal property" (which is legalese for non-real estate).
So in summary, the IRS worksheets allow EIC. Whether or not that would be upheld in Tax Court is questionable.
