The rules for claiming the earned income tax credit are complicated, and it’s easy to make mistakes when preparing a return that claims it.
Taxpayers who know they qualify for the credit are often afraid to claim it themselves, so they turn to you for help. However, due to the complexity of the credit, a significant number of taxpayers claiming it either have the credit amount reduced or are denied the credit entirely.
Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.
Q: Are clergy wages excludable from income for earned income tax credit (EIC) purposes?
A: If the minister is an employee, then their wages, tips and other compensation are included in income. Money earned by a non-employee minister is generally not considered earned income.
Q: Medicare waiver payments are excluded from income for EIC purposes. What are Medicaid waiver payments?
A: Medicaid waiver payments are payments from a state to an individual to take care of another individual who would otherwise be institutionalized.
Q: When calculating a taxpayer’s investment income for EIC purposes, is net or gross rental income included?
A: Generally, it is the net rental income that is considered for EIC purposes.
Q: If a taxpayer received their Social Security card in July, can they use the card to claim the EIC for the previous tax year?
A: The EIC can’t be claimed for prior tax years by filing an amended return using a newly issued Social Security number.
To learn more about understanding the earned income tax credit, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.
