Qualified business income

Forum|Forum|2 years ago
March 27, 2024
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I have rental properties that is my main source of income. I have selected these properties to be “qualified business income”. As I meet all the requirements. Would I than be eligible to receive the earned income credit?

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Best answer by ThomasM125

Yes, residential rental income is considered investment income for earned income credit purposes, per this excerpt from an IRS article on the Earned income credit :

Even if it is QBI, it is still considered investment income for EIC purposes.

ThomasM125

Not necessarily. Just because the properties qualify for qualified business income (QBI) treatment, doesn't mean they generate earned income. For that, you would have to qualify as a real estate professional and report your rental income on a schedule C as self-employment income. Otherwise it will be reported on a schedule E and be considered passive income which is not earned income for purposes of the earned income credit.

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1_hambentley1Author

Interesting my next question is than if it’s on a schedule E, and qualified as business income treatment. Does that income count against me to qualify for the earned income credit.

“ as you can only have $11,000 of investment income. Otherwise you won’t qualify”

I have other earning income. In the past, I just have too much investment income to qualify for the earned income credit wondering if I have it as qualified business income that would then be allowed.

ThomasM125Answer

Yes, residential rental income is considered investment income for earned income credit purposes, per this excerpt from an IRS article on the Earned income credit :

Even if it is QBI, it is still considered investment income for EIC purposes.

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