Originally Posted by jaarso81
We have small business which me and my wife material participate the day to day activity ( we work fully time in this business).
Since our income (on K-1) is not classified as passive do we qualify for the EIC?
Thanks in advance
it isearned income but it depends; Earned Income is income that is characterized by active actions designed to earn money.Depending on what the k-1 income, it can be either earned or unearned . For example, S Corp sch K-1 of 1120S reports only "Investment" Income and thus it is NOT and Earned Income.however,
income from partnerships of 1965, S corporations of 1120S, 1041 of trusts, and estates can only count as earned income if they are considered ?non-passive?.