EIC and investment income
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Returning Member

EIC and investment income

If you have investment income more then $3650, you do not get EIC. Let’s say i have $4000 as interest income and i have previous year carryover loss of $5000 from stock. So does my investment income would be $4000-$3000 = $1000 or it’s remain same as $4000 and do not get any EIC? 

18 Replies
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Level 15

EIC and investment income

 
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Level 15

EIC and investment income

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Returning Member

EIC and investment income

Thank you! But i did not fill the forms yet. Just straight question. Looking for straight answer of the scenario I described. 

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Level 15

EIC and investment income

Q. So is my investment income  $4000-$3000 = $1000 or does it remain $4000 and I do not get any EIC? 

A. Simple answer: it remains $4000 and you do not qualify for EIC

 

Line 5 of the referenced worksheet says "Enter the amount from Form 1040 or 1040-SR, line 6. If the amount on that line is a loss, enter -0-

 

 

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Returning Member

EIC and investment income

Thank you!  Then where that loss applied?

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Returning Member

EIC and investment income

This is from turbotax
“If you have an overall net capital loss for the year, you can deduct up to $3,000 of that loss against other kinds of income, including your salary and interest income, for example.....”
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Level 15

EIC and investment income

It is on 1040 line 6 and subtracted off your total income and reduces your AGI Adjusted Gross Income.

 

You don't get a refund for losing money. It just reduces your total income so you get taxed on a lower amount.  If you were already getting back all that you could a loss won't increase it.  And by reducing your income it can reduce any credits you are getting.

 

2019 Capital Gains and Losses go on Schedule D then to 1040 line 6

 

And If you have a net loss for the year you can only deduct 3,000 (1,500 MFS) max on your tax return.  The rest you have to carryover to next year.  You have to report the carryover every year until it's used up.  You can't skip a year.

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Returning Member

EIC and investment income

But interest is invest income then loss on those investment also investment income in -ve. Isn’t it?

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Level 15

EIC and investment income

1099 INT interest income goes on 1040 line 2 and 1099 DIV dividends go on line 3.  Int&Div go on Schedule B.   They are separate from schedule D investment sales and capital gains.

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Returning Member

EIC and investment income

Correct. But when they calculate the investment income why can’t you subtract net loss from your investment income? Both are investment income. Isn’t it?

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Level 15

EIC and investment income

To qualify for the EIC credit?  Look at Worksheet 1 on this page.  It's very simple.  Just enter your 4,000 interest on line 1.  Then on line 5 you can't enter your loss.  It only lets you enter zero, not less.  So it is not subtracted from investment income to qualify for EIC.  Sorry.

https://www.irs.gov/publications/p596 

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Level 15

EIC and investment income

That is how they wrote the rules.  You have to ask your congressman.

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Returning Member

EIC and investment income

So basically you put your money on CD then you are screwed. Bank used your money and made lots of money and you loose your EIC. Always fool the people. 😔🤔

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Level 15

EIC and investment income

 
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