I have used Turbo tax Home and business for over 12 years. This year IRS states we didn't qualify for EIC due to investment income. Why didn't Turbo tax calculate right?

[meli932000]

I can see our rental income has indeed increased. But why did Turbo tax allow the return to be filled out wrong by putting in the info wrong?

[Bsch4477]

Was the rental income passive income. Otherwise it would not affect your EIC. 

[AmeliesUncle]

Is the rental non-passive?  The most common scenario is a short-term rental where you Materially Participate.

There is a discrepancy with non-passive real estate income.

The worksheets in the IRS Publications indicate non-passive real estate income does NOT disqualify the Earned Income Credit.  That is why TurboTax allows it.

However, the actual law itself doesn't seem to say that.  It indicates non-passive real estate income CAN disqualify the Earned Income Credit (at least in certain cases).  The IRS has sent out notices denying the credit due to this.