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MarjorieCPA
MarjorieCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 46
Experience:  Public Accounting for Small to Mid-Size firms, Individual and Small Business Tax
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My brother is a self-employed photographer, and most of his

Resolved Question:

My brother is a self-employed photographer, and most of his income is paid in cash, which he reports on Schedule C. He is a sole proprietor - not incorporated, but reports diligently all income and expenses. His wife works for a regular W-2 employer full time. Last year no one gave my brother any W-2 or 1099-MISC income, and in helping him do his taxes on Turbo Tax, it appears that they will not qualify for the EIC because it looks like he has no income and was not working - which he was. Is this correct? Is there a way to resolve this for 2010 or in the future? Thank you.
Submitted: 3 years ago.
Category: Tax
Expert:  MarjorieCPA replied 3 years ago.

MarjorieCPA :

Earned income includes all the taxable income and wages you get from working.


There are two ways to get earned income:




  1. You work for someone who pays you, or;



  2. You work in a business you own.



Taxable earned income also includes:




  • Wages, salaries, and tips;



  • Union strike benefits;



  • Long-term disability benefits received prior to minimum retirement age;



  • Net earnings from self-employment.



 

MarjorieCPA :

So, his net earnings from self-employment does count.

MarjorieCPA :

2010 Tax Year


Earned Income and adjusted gross income (AGI) must each be less than:



  • $43,352 ($48,362 married filing jointly) with three or more qualifying children

  • $40,363 ($45,373 married filing jointly) with two qualifying children

  • $35,535 ($40,545 married filing jointly) with one qualifying child

  • $13,460 ($18,470 married filing jointly) with no qualifying children


Tax Year 2010 maximum credit:



  • $5,666 with three or more qualifying children

  • $5,036 with two qualifying children

  • $3,050 with one qualifying child

  • $457 with no qualifying children


 

MarjorieCPA :

Be sure it's not an income limitation that is causing the program to reflex there not being an EIC on the tax return.

MarjorieCPA :

*reflex = reflect (sorry)

MarjorieCPA :

The lack of a W-2 or 1099 form won't have anything to do with the EIC calculation, what will matter is his net income from the business. If he has a loss, then he didn't earn anything. But his wife has W-2 income, which would eliminate that issue, so that is why I'm thinking maybe it's an income level issue?

MarjorieCPA :

If you are happy and I've answered your question, please "accept" my answer. I appreciate your business and if there is something else you need to be satisfied with the answer, please let me know! Thank you.

MarjorieCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 46
Experience: Public Accounting for Small to Mid-Size firms, Individual and Small Business Tax
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