Need to bump this cuz I didnt get a clear answer: Turbo tax is not giving an EIC because passive losses from partnership activities are reducing w2 income to zero.
I know that generally passive losses are not netted against regular income. Can someone at least explain this paragraph from the Regs to me:
(2) Earned income. Earned income is reduced by any net loss in earnings from self-employment.
Are passive partnership losses called "net loss from self employment"?
Also, here is worksheet 1 from pub 596 Can someone please confirm that passive losses reduce the EIC?!
Investment Income If You Are Filing Form
1040 Keep for Your Records
Use this worksheet to figure investment income for the earned income credit when you file Form 1040.
Interest and Dividends
1. Enter any amount from Form 1040, line 8a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2. Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b . . . . . . . . . . . . . . . . 2.
3. Enter any amount from Form 1040, line 9a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report
your child's interest and dividend income on your return. (If your child received an Alaska Permanent
Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line.) . . . . . . . . . . . 4.
Capital Gain Net Income
5. Enter the amount from Form 1040, line 13. If the amount on that line is a loss,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.
6. Enter any gain from Form 4797, Sales of Business Property, line 7. If the
amount on that line is a loss, enter -0-. (But, if you completed lines 8 and 9 of
Form 4797, enter the amount from line 9 instead.) . . . . . . . . . . . . . . . . . . . . 6.
7. Substract line 6 of this worksheet from line 5 of this worksheet. (If the result is less than zero,
enter -0-.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Royalties and Rental Income From Personal Property
8. Enter any royalty income from Schedule E, line 23b, plus any income from the
rental of personal property shown on Form 1040, line 21 . . . . . . . . . . . . . . . 8.
9. Enter any expenses from Schedule E, line 20, related to royalty income, plus
any expenses from the rental of personal property deducted on Form 1040,
line 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Subtract the amount on line 9 of this worksheet from the amount on line 8. (If the result is less than
zero, enter -0-.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Passive Activities
11. Enter the total of any net income from passive activities (such as income
included on Schedule E, line 26, 29a (col. (g)), 34a (col. (d)), or 40). (See
instructions below for lines 11 and 12.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
12. Enter the total of any losses from passive activities (such as losses included
on Schedule E, line 26, 29b (col. (f)), 34b (col. (c)), or 40). (See instructions
below for lines 11 and 12.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
13. Combine the amounts on lines 11 and 12 of this worksheet. (If the result is less than zero,
enter -0-.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
14. Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Enter the total. This is your
investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
15. Is the amount on line 14 more than $3,300?
Yes. You cannot take the credit.
No. Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the
credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule
7, next).
Instructions for lines 11 and 12. In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss)
included on line 26 of Schedule E or any amount included in your earned income. To find out if the income on line 26 or line 40 of
Schedule E is from a passive activity, see the Schedule E instructions. If any of the rental real estate income (or loss) included on
Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26.
Worksheet
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Thank you!