Notice 2014-7, Earned Income Tax Credit

Forum|Forum|1 year ago
February 16, 2025
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My wife and I both have W-2s that are subject to Notice 2014-7. For the purposes of the calculating EITC , the TurboTax Deluxe online version provides the option of including both, either, or neither of this Income. In our situation, the optimal choice is to include only one of our incomes because if we use our combined wages we exceed the household limit. I gather this is legal because the software provides the option. My concern is that after reviewing the completed forms, I see no calculation for the IRS to refer to that explains how the value of the EITC was determined. Line one on the 1040 combines our income and it's later subtracted reducing our AGI, but nowhere are the values that were entered in the software reflected in the forms. Specifically, the single income used to calculate the EITC is not available for an agent to review. What's likely to happen is the IRS will reject the EITC based on either earned income being too high or AGI being too low. If we don't, in fact, qualify for the EITC, It's not clear to me why TurboTax presents an option to include only one of our non-taxable incomes. If we do qualify, it's not clear how the IRS is going to know this based on the way the forms are filled out. Is there anything I should add to filing to clarify this for the IRS, or is this wrong and needs to be changed before mailing it?

TurboTax Deluxe Online

Best answer by RobertB4444

Both of your incomes should be included in calculating whether you qualify for the EITC. The system gives you the option to exclude any income that is not actually earned income from the calculation even if it was paid out on a W2. That would be sick pay or severance bonuses - that kind of thing.

In your case since these are both medicaid waiver payments then you can exclude one or both of them from earned income. The system is allowing you to calculate this correctly. Use the one that gets the best result.

[Edited 2/18/25 11:54 AM PST]

@Yaba J Daba

RobertB4444Answer

[Edited 2/18/25 11:54 AM PST]

@Yaba J Daba

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Yaba J DabaAuthor

If that's case, is it possible to edit the return? Note that it's already been paid for and downloaded for file by mail, but not yet submitted to the IRS.

Thank you