The law requires a self-employed individual to report all income from self-employment and all the allowable expenses see reference above for more information.ĭetermine if your client is in the trade or business on a regular basis. Find the amount of nontaxable combat pay on Form W-2, in box 12, with code Q. The choice is your clients calculate which works best. But, your client cannot claim the full amount and half of the spouse's. If married, your client can claim the full amount of the nontaxable combat pay as earned income and your client's spouse choose zero. That means if single, your client cannot include only half of the amount to maximize the credit.
Your client's spouse can also choose separately to have his or her full amount of combat pay included in earned income. Long-term disability benefits received prior to minimum retirement ageĬombat Pay-Your client can choose to have the full amount of nontaxable combat pay included in earned income for EITC.Wages, salaries, tips and other taxable employee pay.It also includes certain other types of taxable income.
Earned income includes all the taxable income and wages from working either as an employee or from running or owning a business.
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