Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

EITC

Dodgerfan
Level 3

A taxpayer works for an employer and earns $55,000 in wages. He is out of work in February and files a worker's comp claim. He is paid as an employee for the entire year using his sick and vacation time while the worker's comp claim is being decided.  The tax return is filed with $55,000 in wage income. Subsequently, the worker's comp case is decided in the employee's favor and it is decided that the employee earned nontaxable worker's comp income for the time he was out of work.

A W-2C is issued showing $7,000 in wages. I am filing an amended return and the 1040 shows that the taxpayer is eligible for EITC based on the amended amount of income. I am not sure that this is correct. Does the worker's comp income make the taxpayer ineligible for EITC?

0 Cheers
1 Solution

Accepted Solutions
dkh
Level 15

workman's comp is not considered earned income 

here is IRS link for reference    https://www.irs.gov/government-entities/indian-tribal-governments/itg-faq-2-answer-what-income-is-co....

View solution in original post

0 Cheers
1 Comment 1
dkh
Level 15

workman's comp is not considered earned income 

here is IRS link for reference    https://www.irs.gov/government-entities/indian-tribal-governments/itg-faq-2-answer-what-income-is-co....

0 Cheers