Third-party sick pay not qualified for EIC

[ChiHoang]

Married couple file jointly. Third-party sick pay is on box 1 of W-2 but not qualified for EIC. Where to enter to exclude it from EIC calculation ?

[Just-Lisa-Now-]

It can be eligible. are you sure its not?

Is it reported with Code J in Box 14? or it the little box 3rd part sick pay box just checked?

• W-2 Box 1: As long as the third-party sick pay is considered taxable income (shown in Box 1 of your W-2), it can generally be used to calculate the EITC.

[Terry53029]

If you are sure it is not counted for EIC, on the federal information worksheet in part IV earned income Credit information you quickzoom to enter amounts not considered earned income

[ChiHoang]

It's the third-party sick pay that is longer than 6-month rule; therefore it's not qualified for EIC. On the federal information worksheet in part IV, I quickzoom to enter amount not considered earned income, it gave me an error message " spouse earning should be blank, because filing status is not HOH"

[ChiHoang]

Can anyone help for my question ? thanks

[Terry53029]

It looks like it may be an error in the program. I have not had a client that has any income not considered earn income. I did a practice return, and the only way I got it to work properly was to over ride line 2B on the EIC work sheet

[ChiHoang]

Thank you. If anyone has other idea, please share. 

[ChiHoang]

Is Third-party sick pay reported on W-2 box 1 without social security and medicare tax (I think due to more than six month rules) considered as earned income  for EIC calculation ?

[TaxGuyBill]

---

@ChiHoang wrote:

Is Third-party sick pay reported on W-2 box 1 without social security and medicare tax (I think due to more than six month rules) considered as earned income  for EIC calculation ?

---

I haven't researched it, but I have the understanding that only pay after the six months avoids the no Social Security and Medicare tax, in which case, that is not earned income.

As you previously said, you may just need to override the worksheet.

[ChiHoang]

Any one knows for sure that no social security and medicare tax in box 3 and 5 makes income in box 1 of W-2 becomes unearned income. I know the 6-month rule of third party sick pay that after 6 months you're not allowed to take social security and medicare tax, but what IRS code says that income becomes unearned after 6 months and not counted for EIC calculation.  

[ChiHoang]

Any comments ?