Small Bsns loss on EIC?

[OverBsns]

What counts as Earned Income for EIC?

I'm using the EITC Assistant on the IRS website.  I'm confused and would appreciate help so I know what figures to put in to get an accurate EIC result.

My W-2 Income counts... yes it does.

My Schedule-C Income counts  ... yes it does.

My IRA distributions????? Do they count?

My loss on a partnership???? Does it count?

It's on a K-1.  Do I include it?  If I need to include it, where do I put it?  The IRS Assistant doesn't accept a negative number as the income?  The amount isn't much.  My W-2 and Schedule-C are more, so I still have a positive income.  Should I just reduce one of the others by this amount?  Should I just include the loss number in my business expenses on the IRS Assistant? Or so I not include this loss at all?

Then I know to include adjustments for 1/2 of Soc Sec I paid for my business income and for my  Sched-C business expenses.

I just don't know how close the EIC AGI relates to the AGI on the 1040.

Thank you for your help.

[ColeenD3]

You can just enter all your information into the program and you will be told if you qualify.

To claim the Earned Income Tax Credit (EITC), you must have what qualifies as earned income and meet certain adjusted gross income (AGI) and credit limits for the current, previous and upcoming tax years.

Types of Earned Income

• Wages, salary or tips where federal income taxes are withheld on Form W-2, box 1
• Income from a job where your employer didn’t withhold tax (such as gig economy work) including:
  • Driving a car for booked rides or deliveries
  • Running errands or doing tasks
  • Selling goods online
  • Providing creative or professional services
  • Providing other temporary, on-demand or freelance work
• Money made from self-employment, including if you:
  • Own or operate a business or farm
  • Are a minister or member of a religious order
  • Are a statutory employee and have income
• Benefits from a union strike
• Certain disability benefits you got before you were the minimum retirement age
• Nontaxable Combat Pay (Form W-2, box 12 with code Q)
  • If you claim nontaxable combat pay as earned income, it may increase or decrease the amount of your EITC. For more information, see Publication 3, Armed Forces Tax Guide.

Earned income does not include:

• Pay you got for work when you were an inmate in a penal institution
• Interest and dividends
• Pensions or annuities
• Social Security
• Unemployment benefits
• Alimony
• Child support

EIC

[OverBsns]

Thank  you ColleenD3.  I appreciate you responding.

So I do qualify.  My EITC credit will be different depending on whether I put in the numbers for my K-1 business loss and for the IRA distribution.  I know the program will figure it out for me, but I want to know how it is figured.  I'm trying to do it in the IRS assistant to see the results so I understand the numbers.

Do you know, does the IRA distributions count as income?

And does the K-1 Loss count?  (It is less than my W-2 income, so I still have a positive AGI).  If I can't include it, then, okay.  But if I can include it, where do I put it on the IRS Assistant, because it won't accept a negative income number even if including it means total income is still positive.

Thank you,

[ZoltanB45]

The K-1 will definitely affect your EITC.  There is a curve when figuring out how much credit you will receive based on income.  Here are some tables from the IRS site. EITC table

As the income goes down from the maximum allowed AGI, the greater credit you receive, up until a certain point where credit begins  to be reduced.

[OverBsns]

Thank you Zoltanb,

That's what I thought.  You've linked to some of the same tables I'm using. But when using the EITC on the website, I can't figure out how to input the negative number for the K-1 loss.  Do you know where I would include that number?

[MinhT1]

You can enter your Schedule K-1 by following these steps:

1. In TurboTax, open your tax return
2. Click on Federal in the left-hand column, then on Wages & Income on top of the screen
3. Scroll down and locate the section S-Corps, Partnerships, and Trusts and click on Show more
4. Click Start next to Schedule K-1
5. Choose the correct form for your Schedule K-1 (Form 1065, 1129S or 1041)