I prepared a tax return for an Amish client. He is not subject to SE tax due to Form 4029. I used Worksheet A when calculating his EIC (he is married with one child)

[Rachael222]

Earnings from wife w-2 job: $7,200.  Net earnings from self employment: $35,000.  IRS says the EIC calculation is wrong (they recalculated using ALL earned income from both W-2 and 1099 earnings, even though the 1099 earnings not subject to SE tax).  Which is accurate?

[Terry53029]

Can't say which is accurate without all details, but if you did not include 1099 income not subject to SE tax that is incorrect. From pub 517 "

Earned income. 

Earned income includes your:

1. Wages, salaries, tips, and other taxable employee compensation (even if these amounts are exempt from FICA or SECA under an approved Form 4029 or 4361); and

2. Net earnings from self-employment that are not exempt from SECA (you don't have an approved Form 4029 or 4361) that you report on Schedule SE (Form 1040), line 3, with the following adjustments.

   1. Subtract the amount you claimed (or should have claimed) on Schedule 1 (Form 1040), line 14, for the deductible part of your SE tax.

   2. Add any amount from Schedule SE (Form 1040), line 4b and line 5a.

[qbteachmt]

I found you this info:

IRM Procedures
• 21.6.3.4.2.7.3 (01‐25‐2016) ‐EITC SSN Requirements
• EITC is not allowed for "Amish" ,"Mennonite" ," Exempt Form 4029", or"conscience‐based objection" without a valid SSN, although the dependent exemptions and other credits may be allowed
• 21.6.3.4.2.7.4 (10‐01‐2016) ‐EITC Earned Income
• Form 4029 is approved –
• All wages, salaries, tips, and other employee compensation are earned income, even if FICA tax is not withheld
• Amounts received from self‐employment are not earned income
• Losses from Schedule C, C‐EZ, or F cannot be subtracted from wages

From: https://www.calt.iastate.edu/system/files/premium_video_files/Handling%20Tax%20Returns%20for%20Relig...

2017

http://www.calt.iastate.edu

And this from an ATX forum: "per IRC 32 and 1402, earned income for EIC and Add CTC does not allow income that is exempted from social security (ex. housing allowance) to be included in the definition of earned income for credit computation purposes" and "I am in the middle of Ohio's amish country and I do lots and lots of returns for 4029 Exempt clients. SE income that is exempt from SE tax is NOT qualifying income for EIC and Additional CTC."

And there is a similar reference here:

"Employee Minister Income

Even if you have an approved form to exempt your income from Social Security taxes, if you get income for working as a minister who is an employee, count it as earned income. This income includes:

• Wages
• Salaries
• Tips
• Other taxable employee compensation

To calculate your earned income, don’t subtract losses on Schedule C, C-EZ or F from wages on line 7 of Form 1040.

Non-Employee Minister Income

If you get income for working as a minister who is not an employee, don’t count it as earned income.  This income includes:

• Self-employed wages
• Fees for performing marriages
• Honoraria for delivering speeches

For more information about ministers and earned income, see Publication 596, Earned Income Credit."

Hope that helps.