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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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If a withdrawal was made from a trust account for a 19 year ...

Resolved Question:

If a withdrawal was made from a trust account for a 19 year old college student and all money was paid directly to the college for tuition and books, will the amount withdrawn be counted against them for earned income credit?
Submitted: 8 years ago.
Category: Tax
Expert:  Jon Andrews replied 8 years ago.

The withdrawal should not have any effect on the earned income credit. However, it is possible that the investment income earned by the trust could interfere with the EIC. They should also get full credit for the tuition deduction and or education credits related to those expenses.


Customer: replied 8 years ago.
does that mean that the trust would have had to earn the amount of the withdrawal to be counted as income? The entire trust is only worth about 20000 and she withdrew 8800 to pay for college expenses so would the trust have had to earn 8800 last year for it to be counted as investment interest charged against the EIC?
Expert:  Jon Andrews replied 8 years ago.

It depends somewhat on how the trust is structured and how the distribution was accounted for on the trust tax return. However, what you stated is basically correct - the trust's income that is attributed to her is what counts for EIC purposes. If the distribution was a corpus or principal distribution, it would not affect the EIC calculation.


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