EITC and IRC 131(c) payments

[nanahelenlopez]

There is discussion about this issue from 2016 and clarification of instruction for 2022 on this forum. However all the guidance assumes the TP has received a W-2 (or 1099). There is a subset of these individuals that do NOT receive a W-2 because their payments are not only exempt from income tax but are also exempt from FUTA and FICA because they care for family members. These individuals do NOT receive a W-2 because they have no withholding and IRS does not require issuance of a W-2 if there are no wothholdings. However, the payments qualify as earned income  for EITC, under the same rulings as those who DO receive W-2s. How are these payments to be handled in TT? Entering as "Other Income" then deducting  under 2014-7 does NOT result in payments counting as earned income for EITC. Creating a substitute W-2 would, but since there is no W-2 issued won't IRS reject this filing?

[Critter-3]

Ok ... look for this section at the end of the INCOME section and follow the interview screens...

[nanahelenlopez]

Thats great! Must be a new function of TT, havent seen it B4. You're SURE this will allow the income to be treated elegible for EITC? Is it available on ALL TT versions, including the "free" version?

[nanahelenlopez]

Also, my past experience has been that it will not e-file if total income is 0; therefore, if this is the ONLY source of income, must the offset be such that there is STILL at least a $1 AGI? Which means the offset has to be a maximum of actual earnings minus the amount of standard deduction, minus $1 (leaving a $1 AGI)

[Critter-3]

First this entry section  has been around for a few years and all of the downloaded versions have it however you may need to upgrade to the Deluxe version in the online program.  As for the zero income issue for efiling ... simply enter $1 of bank interest  to overcome this IRS restriction.  

Be aware that  the online TurboTax Free Edition is very limited to only simple returns--so be careful----if your return requires any of the schedules or extra forms then an upgrade to a paid version will be required.   https://turbotax.intuit.com/personal-taxes/online/ 

There are still eight various software providers who will participate in the Free File program but they will not be available until sometime in January----so if you want to use one of them---WAIT.  Since the IRS will not start accepting returns until late Jan and will not process returns with EIC or ACTC on them until mid February you can afford to be patient especially for free. 

Use this IRS site for other ways to file for free:

https://apps.irs.gov/app/freeFile/