Hopefully this clarifies a few things:
*I've rounded the amounts to make it easier
Line 1 - I do not have any Wages, salaries, tips, W-2. I am Self-Employed. (0)
Line 5a & 5b - Inherited Deferred Comp Gross Distribution & matching taxable amount (1099-R line 1 & 2a being the same) (22,000)
Line 8 - My Self-Employment income from schedule 1 line 9 (5700)
Line 9 - Total of line 8 & line 5b (27,700)
Line 10a - Adj to income-Sch.1 line 22 (-400)
Line 10b - Adj to income-Charitable Contr. (-300)
Line 11 - Adjusted Gross Income (27,000)
Line 12 - Standard Deduction (26,100)
Line 15 - Taxable Income (900)
Line 16 - Tax (100)
Line 23 Self-Employment Tax from Sch.2 (800)
Line 24 Total Tax (900)
Line 25b - Federal Income Tax withheld (-4400)
Line 26 - Estimated Tax Payment (-800)
Line 27 - Earned Income Tax Credit based on AGI (0)
Line 33 - Total Payments (5200
My AGI is 27,000.
My EIC is 0
I understand that I had to pay the Federal tax on the Gross Distribution. But it's not like it was MY deferred comp account; It was inherited. I feel that this is affecting my taxes in a way that should/can be avoided with perhaps a workaround.
I feel like my AGI should not include the deferred comp inherited income. In other words, Inherited income shouldn't show up on my AGI.
Also, I feel like I should qualify for the EIC based on my actual Earned Income and not on the AGI which includes inherited income. If I had not inherited the 22000, my earned income of 5000 (5700-700 Adjustments) would have qualified me.
There must be some workaround!!!
Thank you!
