Qualified business income

[1_hambentley1]

I have rental properties that is my main source of income. I have selected these properties to be “qualified business income”. As I meet all the requirements. Would I than be eligible to receive the earned income credit?

[ThomasM125]

Not necessarily. Just because the properties qualify for qualified business income (QBI) treatment, doesn't mean they generate earned income. For that, you would have to qualify as a real estate professional and report your rental income on a schedule C as self-employment income. Otherwise it will be reported on a schedule E and be considered passive income which is not earned income for purposes of the earned income credit.

[1_hambentley1]

Interesting my next question is than if it’s on a schedule E, and qualified as business income treatment. Does that income count against me to qualify for the earned income credit.

“ as you can only have $11,000 of investment income. Otherwise you won’t qualify”

I have other earning income. In the past, I just have too much investment income to qualify for the earned income credit wondering if I have it as qualified business income that would then be allowed.

[ThomasM125 · Accepted solution]

Yes, residential rental income is considered investment income for earned income credit purposes, per this excerpt from an IRS article on the Earned income credit :

Even if it is QBI, it is still considered investment income for EIC purposes.