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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10100
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am on disability. I have 2 children and live with my

Customer Question

I am on disability. I have 2 children and live with my parents. I have no assets and receive no food stamps or child support. I received $20,000 for disability in 2014. This was the only source of income I had. I will sent a letter from the Social Security Administration which states, I may be eligible for an earned income text credit. I don't see how this is possible because my father claimed me for his income taxes is a dependent. I don't make enough money to support my children and I on my own so I live with them. I also cannot live on my own as part of my disability. I have memory loss and other anxiety associated problems etc...
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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How can I help you today?

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On the Earned Income Credit ... Social Security actually DOES consider retirement disabilty as "earned income" until you reach minimum retirement age.

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See this from IRS: (Here: http://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/Disability-and-Earned-Income-Tax-Credit)

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"What Disability Benefits Qualify as Earned Income for EITC?

IRS considers disability retirement benefits as earned income until you reach minimum retirement age. Minimum retirement age is the earliest age you could have received a pension or annuity if you did not have the disability:

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Let me know more about the exact type (the payer of) of disability you have, and we can go from there

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But this IS possible...

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Expert:  Lane replied 1 year ago.

By the way, after you reach minimum retirement age, IRS considers the payments your pension and not earned income.

Expert:  Lane replied 1 year ago.

OK, I still don't see you coming into the chat so I'll answer generally...

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Essentially if you have what is considered disability retirement (forced to retire early because of your conditions from a system such as the Federal Employees Retirement System) then yes, ...

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Your income IS considered as earned income for purposes of the Earned Income Tax credit

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However based on what you've said, you still may not qualify for the following reasons:

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From IRS Here: http://www.irs.gov/Credits-&-Deductions/Individuals/Earned-Income-Tax-Credit/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers

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What is EITC, Earned Income Tax Credit?

EITC, Earned Income Tax Credit, is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund.

EITC is also called EIC or Earned Income Credit.

Who can claim the credit and if I qualify, how do I get it?

To claim EITC on your tax return, you must meet all the following rules:

  • You, your spouse (if you file a joint return), and all others listed on Schedule EIC, must have aSocial Security number that is valid for employment
  • You must have earned income from working for someone else or owning or running a farm or business
  • Your filing status cannot be married filing separately
  • You must be a U.S. citizen or resident alien all year (If you are a nonresident alien married to a U.S. citizen or resident alien, see Publication 519, U.S. Tax Guide for Aliens)
  • You cannot be a qualifying child of another person
  • You cannot file Form 2555 or Form 2555 EZ (related to foreign earned income)
  • You must meet the earned income, AGI and investment income limits (income limits change each year), see EITC Income Limits for the tax year amounts
  • And you must meet one of the following:
    • Have a qualifying child (see who is a qualifying child below)
    • If you do not have a qualifying child, you must:
      • be age 25 but under 65 at the end of the year,
      • live in the United States for more than half the year, and
      • not qualify as a dependent of another person.

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So it appears that you have a good understanding here ... being a dependent of your father is the issue that would need to change

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Pleas let me know if this reconciles,, and/or whether you'd like to discuss further

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If this HAS helped, and you don't have additional questions on this, I'd appreciate a positive rating (by clicking the stars or smiley faces on your screen) ... that's the only way I'll be credited for the work here.
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Lane

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Expert:  Lane replied 1 year ago.

P.S.

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The other potential issue is your being a "QUALIFYING CHILD"

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For that there's normally an age requirement BUT that is waived for Total disability

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SO depending on whether you'd meet that COMPLETE and TOTAL disability definition the qualifying child of another may also be an issue here.

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Again, let me know if you have questions...

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Lane

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Expert:  Lane replied 1 year ago.

There are several things here that may or may not apply based on needing more information from you.

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I'll make what's called an "Additional Services" offer here (for the smalles amount possible - $5) in the event you'd like to discuss this over the phone ... might be much more efficient, given the amount of information here.

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Lane

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