I have a special needs brother. In the past he qualified for earned income tax credit. I am trying to figure out why no credit this year. Is a distribution from an inherited IRA considered investment income? It is not listed on the investment income smart worksheet, and the worksheet shows he is eligible for the EITC. So I cannot figure out what else would be limiting him from getting the EITC. On the 1040, Line 17, Turbo Tax printed "NO" for EITC. He has about $7,000 of earned income and interest and dividends well below the $3,500 investment income threshold.
The tax year 2018 Earned income and adjusted gross income (AGI) must each be less than $15,270.
Ugh. Earlier version of Turbo Tax showed he received the EITC (did not have the limit at the total income level). So I used the info to determine distribution from a special needs trust. I have some flexibility, but of course undistributed is then taxed at the trust with unfavorable rates. Not that much money but for him, $400 matters!
Just realized earned income IS less than $15,270. And AGI is lower. Total income is $16,000 however (reduced by IRA contribution to get AGI below $15,000).
I still don't understand why turbo tax is limiting the EIC. Earned Income and AGI are below $15,270. I looked at paper forms and answered the questions and it appears the EIC should be allowed. How can I find out if this is a bug in the turbo tax software?
Did you accidentally say he could be claimed as a dependent?
No, did not accidentally check the dependent box, but in the process of looking for checked boxes, I found it! There was a place to answer "none of the above" and now that it is checked, my brother gets the EITC as my research showed he should. Thank you to all who replied!