> Taxpayer had no income during 2007 except non-taxable disability pay and
> $12,000 sick pay.  
>
> Taxpayer received a  W2 with $12,000 in box 1 and "Third Party Sick Pay"
> checked in box 13.
>
> Does the $12K sick pay count as earned income toward EIC?
>
> TurboTax sure thinks it does, even with box 13 checked, TT calculates a
> $4,700 refund (HOH), even though taxpayer paid and owed no tax for 2007.  
> I can't find anything in the Pubs that speak to sick pay counting (or
> not counting) toward EIC.  Taxpayer could sure use the extra $4.7K if
> this is correct.
>
> --
> -Ernie-
>
> --
> << ------------------------------------------------------- >> ...

> Taxpayer had no income during 2007 except non-taxable disability pay and
> $12,000 sick pay.
>
> Taxpayer received a W2 with $12,000 in box 1 and "Third Party Sick Pay"
> checked in box 13.
>
> Does the $12K sick pay count as earned income toward EIC?

> On Mar 29, 4:56 pm, Ernie Klein pacbell.net> wrote:
>

>> Taxpayer had no income during 2007 except non-taxable disability pay and
>> $12,000 sick pay.
>>
>> Taxpayer received a W2 with $12,000 in box 1 and "Third Party Sick Pay"
>> checked in box 13.
>>
>> Does the $12K sick pay count as earned income toward EIC?

>
> Long-term disability benefits received prior to minimum retirement age
> counts towards the EITC. Does sick pay fall into that category?

> On Mar 29, 7:56

> Taxpayer had no income during 2007 except non-taxable disability pay and
> $12,000 sick pay.
>
> Taxpayer received a W2 with $12,000 in box 1 and "Third Party Sick Pay"
> checked in box 13.
>
> Does the $12K sick pay count as earned income toward EIC?
>
> TurboTax sure thinks it does, even with box 13 checked, TT calculates a
> $4,700 refund (HOH), even though taxpayer paid and owed no tax for 2007.
> I can't find anything in the Pubs that speak to sick pay counting (or
> not counting) toward EIC. Taxpayer could sure use the extra $4.7K if
> this is correct.

> I later learned that the sick pay is actually a UNION benefit, so
> I called the IRS again. This time, even before I got to the point
> of it being a union benefit I was told that sick pay is never
> counted as earned income for calculating EIC.

> Ernie Klein pacbell.net> wrote:
>

>> I later learned that the sick pay is actually a UNION benefit, so
>> I called the IRS again. This time, even before I got to the point
>> of it being a union benefit I was told that sick pay is never
>> counted as earned income for calculating EIC.

> I was able to find one only tax court case that deals with the issue of
> sick pay and earned income, though not in the context of the earned
> income credit. In that case, Woodford v. Commissioner 71 T.C. 991
> (1979), the court held that sick pay is earned income unless
> specifically excluded by law.
>
> Sick pay is specifically determined to be earned income for withholding
> purposes under IRC

> Third party sick pay is paid by an insurance company whose
> premiums are paid as an employment benefit by the employer or in
> the case of the taxpayer I am talking about, by the employees
> union as a union benefit.

> Perhaps the best way to handle this is not to apply for the EIC at
> all but simply ask the IRS to figure the EIC by paper filing and
> writing "EIC" on the dotted line next to line 66a per the 1040
> instructions. That would put the onus on the IRS rather than the
> taxpayer to figure the correct EIC and do the right thing. (My
> guess is that the tax software the IRS uses to figure this would
> count this as earned income just like all the other tax programs
> do and the taxpayer would get the EIC credit without anyone giving
> it a second thought.) That way, if the taxpayer is ever audited
> and higher-ups say, on no, that is not allowed, the taxpayer can
> say, "I didn't do it -you did".

> Ernie Klein pacbell.net> wrote:
>

>> Third party sick pay is paid by an insurance company whose
>> premiums are paid as an employment benefit by the employer or in
>> the case of the taxpayer...