joanmcq Posted April 30, 2015 Report Posted April 30, 2015 I know this has been discussed before, but my search brought up every topic with 1099 in it, and I don't feel like searching through 159 pages of posts. Yes, even with advanced search.client has about 5k of pension, code 3 disability under normal retirement age. Does this qualify for EIC? No other wages, just social security income. Quote
Pacun Posted April 30, 2015 Report Posted April 30, 2015 No. It is not earned income because s/he is retired and also it comes from a pension. Quote
Joel Posted April 30, 2015 Report Posted April 30, 2015 (edited) Don't agree! See below from Pub 554Disability benefits. If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income.Taxpayer must still meet all of the other requirements for EICJoel Edited April 30, 2015 by Joel 6 Quote
RitaB Posted April 30, 2015 Report Posted April 30, 2015 (edited) Another consideration - if taxpayer paid the premiums for the disability policy, it is not earned income.http://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/Disability-and-Earned-Income-Tax-Credit Edited April 30, 2015 by RitaB 2 Quote
Gail in Virginia Posted April 30, 2015 Report Posted April 30, 2015 Another consideration - if taxpayer paid the premiums for the disability policy, it is not earned income.http://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/Disability-and-Earned-Income-Tax-CreditBut I think that if you paid the premiums for a disability policy it would not be reported on a 1099R because it would not be considered taxable income. And of course, large companies never make mistakes on the tax reporting of insurance proceeds. /s 4 Quote
RitaB Posted April 30, 2015 Report Posted April 30, 2015 (edited) Yes, it probably would not be on a 1099-R if paid thru employer. I have never seen an incorrect 1099-R. /s Edited April 30, 2015 by RitaB 1 Quote
Christian Posted April 30, 2015 Report Posted April 30, 2015 Speaking of Form 1099-R. I have a pet peave. Many times the the taxable part of the pension is indicated but then the taxable amount not determined box is also checked. Anyone have a clue why this would be? Quote
kcjenkins Posted April 30, 2015 Report Posted April 30, 2015 Speaking of Form 1099-R. I have a pet peave. Many times the the taxable part of the pension is indicated but then the taxable amount not determined box is also checked. Anyone have a clue why this would be?Because the person preparing the form has no real idea what is or is not taxable, so they check that box to cover their a__? 6 Quote
Pacun Posted April 30, 2015 Report Posted April 30, 2015 I know this has been discussed before, but my search brought up every topic with 1099 in it, and I don't feel like searching through 159 pages of posts. Yes, even with advanced search.client has about 5k of pension, code 3 disability under normal retirement age. Does this qualify for EIC? No other wages, just social security income.How old is the person? Quote
joanmcq Posted April 30, 2015 Author Report Posted April 30, 2015 50. The pension is actually received under a spousal remainder, although the client has always been disabled. His spouse died last year. Quote
joanmcq Posted April 30, 2015 Author Report Posted April 30, 2015 Speaking of Form 1099-R. I have a pet peave. Many times the the taxable part of the pension is indicated but then the taxable amount not determined box is also checked. Anyone have a clue why this would be?IRAs always have the taxable amount not determined box checked, because the custodian has no idea of the taxable amount. The only true pensions I've seen with the box checked are old ones from OPM, where you have to use the simplified method to determine the taxable portion. 2 Quote
SaraEA Posted May 1, 2015 Report Posted May 1, 2015 Wages are not reported on a 1099R, so no EITC. They may count if reported on a W2 with "third party" payer checked. This really helped a client who was facing pay back of his entire ACA advance credit. We had to do something to bring his income below 400% poverty level so thought of an IRA. The IRS has a safe harbor for IRA contribution eligibility--if it's on a W2 they will count it as earned income for IRA purposes. This client had a W2 for disability pay so qualified for a deductible IRA. Instead of paying back over $8k he was limited to $2500. Whew. Not sure if W2 disability counts for EITC though.You will notice that the "taxable amount not determined" box is checked on IRAs, not pensions. The reason is that the custodian has no idea if the taxpayer's contributions were deductible or not. All the custodian gets is the money, not the tax return or 8606. Quote
SCL Posted May 1, 2015 Report Posted May 1, 2015 i agree with joel.1099r, code 3, and under min retirement age (check the box on 1099r screen) gets amount to line 7 (earned income) and also generates an eic process.the other times you said this has been talked about confirmed line 7 and eic. 1 Quote
joanmcq Posted May 1, 2015 Author Report Posted May 1, 2015 Yes, it's definitely a line 7 situation with the 1099-R. But you see even on this board how varying the answers are.3rd party sick pay on W2 does qualify for EIC. 1 Quote
SCL Posted May 1, 2015 Report Posted May 1, 2015 Yes, it's definitely a line 7 situation with the 1099-R. But you see even on this board how varying the answers are.3rd party sick pay on W2 does qualify for EIC.lol, varying, yes. still, most of the 1099r answers on this thread were wrong. pay your money (none) and take your chances.and yes, 3rd party sick pay (box1/w2 & box 12/code j) also qualifies for eic. 1 Quote
Joel Posted May 1, 2015 Report Posted May 1, 2015 For several years I had a client that was on a disability pension. His wife was blind and they had a disabled son who lived with them. I was so happy for then to receive EIC up until the age 62 which was his normal retirement age!! 1 Quote
mcb39 Posted May 1, 2015 Report Posted May 1, 2015 Same theme, different form. Am I or am I not correct in thinking that Rental Income disqualifies taxpayer from EIC under the terms of excess investment income? Quote
RitaB Posted May 1, 2015 Report Posted May 1, 2015 Same theme, different form. Am I or am I not correct in thinking that Rental Income disqualifies taxpayer from EIC under the terms of excess investment income?You are correct. If net rental income is over $3,350 for 2014, no EIC. 1 Quote
mcb39 Posted May 1, 2015 Report Posted May 1, 2015 You are correct. If net rental income is over $3,350 for 2014, no EIC.The return I was working on disallowed it even though the net rental income was a negative. It took the gross before depreciation. My mind tells me he should not qualify since he also had a business loss; but a little bit of earned income from two small jobs. I am filing it without the EITC. Quote
Tax Prep by Deb Posted May 1, 2015 Report Posted May 1, 2015 If business loss is equal to or more than W2 earnings, no EIC because earned income is 0 or less. 1 Quote
SaraEA Posted May 2, 2015 Report Posted May 2, 2015 Wow. I did not know that disability reported on a 1099R code 3 was considered earned income if the taxpayer is under regular retirement age. This board is great! 2 Quote
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