Margaret CPA in OH Posted February 4, 2022 Report Share Posted February 4, 2022 I just prepared my own return and was so surprised to see that we qualify for EIC! I didn't recall that now over 65 can qualify so read up on it. We seem to meet all the requirements given that so much of our SS isn't included and we live off of much savings. In 2022 my husband begins his retirement draws so surely can't happen again. Most of my IRA RMDs go for QCDs but I am just a bit uncomfortable thinking something must be wrong. Can it be real? 2 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted February 4, 2022 Report Share Posted February 4, 2022 Yes it can. Also, consider making a Roth IRA contribution, including Spousal Roth, to get the Retirement Savers Credit. I have an older client who works just enough each year to max out the Roth, just so they can get the credit. It's hard to pass up on free money! 6 Quote Link to comment Share on other sites More sharing options...
kathyc2 Posted February 4, 2022 Report Share Posted February 4, 2022 I'm thinking the over 65 is just for 2021 unless they pass additional legislation. Abby, the RSC wouldn't apply as to get EIC,AGI is already below the standard deduction. Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted February 4, 2022 Author Report Share Posted February 4, 2022 Free money - well, our taxes are going to really jump this year so a one time thing, i guess. Adding to my Roth is a good plan with unexpected money. Thanks for affirming this is correct. 4 Quote Link to comment Share on other sites More sharing options...
Sara EA Posted February 5, 2022 Report Share Posted February 5, 2022 The expanded EITC is for 2021 only. If congresspeople can stop making faces at one another long enough to get some work done, they may choose to extend it. Actually, now that full retirement age has been extended to 66-67 years for some cohorts, another thing that needs changing is the age for Medicare. Hey congress, people are still working at age 65 so why shouldn't they get EITC like 64 year olds? Many employers make employees go on Medicare at 65 and the work plan becomes secondary insurance, an unnecessary hassle because people have to write checks for their Medicare because they aren't yet collecting SS. Margaret, if you are a CPA making little enough to qualify for EITC, you really have to raise your prices! 4 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted February 5, 2022 Report Share Posted February 5, 2022 6 hours ago, Abby Normal said: Yes it can. Also, consider making a Roth IRA contribution, including Spousal Roth, to get the Retirement Savers Credit. I have an older client who works just enough each year to max out the Roth, just so they can get the credit. It's hard to pass up on free money! I love that Retirement Savers Credit. If you work it right, you can almost get as much back as you put into an IRA. 4 Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted February 5, 2022 Author Report Share Posted February 5, 2022 Sara EA, thanks for your concern about my rates but I have only about 45 clients, work only during the season, all 1040 with just a sprinkling of rentals or small Sch. C's. I downsized from businesses and payrolls, etc. about 10 years ago when my other CPA retired. I make enough money to cover expenses and pay for dive trips and a little extra. I take no new clients unless referred and are maybe extended family members and lose about as many as gained annually, usually to simpler returns. At 75 with a license expiring end of this year, I just may call it. Or not and go for 3 more years. I enjoy the 10 or so weeks of work and keeping the little gray cells somewhat active. And I love my clients. The biggest reasons for the low income last year are tiny home office deduction, nearly all free CPE from online webinars, QCD's from my RMDs, living off savings while my husband waited to begin his RMDs this year, and very little taxable SS for us. As I mentioned, 2022 will be a killer year for taxes as his income shoots way up and 85% of our SS will be taxable. We will never be in the EIC situation again which was why I questioned it. I agree with your other observations about Medicare, etc. Some things, well, a lot of things, just don't make sense - like me qualifying for EIC when we actually have a lot of nontaxable income in SS. But I will follow the recommendation and add to my Roth. One of them return 23.86% last year and the other was 18.36%. I'll go with the higher one knowing that past performance is no guarantee of future returns. Since inception in 1999, it has an 8.94% average so I'm okay with that! 8 Quote Link to comment Share on other sites More sharing options...
Sara EA Posted February 6, 2022 Report Share Posted February 6, 2022 Margaret, it sounds like you have what few do: Enough. You don't need to make the big bucks, or hustle for more and more clients, or earn 80% in the market each year. You have what you need and are comfortable with, which is enough. Good for you. This concept came from Warren Buffet before he was richer than God. He was at a party with many zillionaires and someone asked him if he wasn't a bit envious. He replied no, because he had what none of them would ever have, Enough. 5 1 Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted February 6, 2022 Author Report Share Posted February 6, 2022 Thanks, Sara, for these words. Yes, we have enough. Enough to be comfortable with a paid off house and no debt. We have always lived pretty far below our means which, at times, annoyed our son. But, at 41 now, he is the same way. He maxes out his 401k and Roth every year. We still have fun (my dive trips, husband's golf) and share with church and many organizations because we live with older clothes, furniture, cars, etc. that still serve us fine. Funny, I don't even know what you mean by 'earn 80% in the market' so guess I don't! The best thing is that all our final arrangements are paid for and we believe that our son will have to provide nothing for our care. Unless we happen to live to about 125 or so. We tease him that he might have to choose the home but not pay for it. Actually we are hoping to move to a single level home within a year or two so as to make it the last one. Time will tell! 2 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 11, 2022 Report Share Posted February 11, 2022 Reviving this b/c I was surprised to see one of my long-retired clients qualify for the EIC this year. He receives a state fireman's pension of $1,500 each year that falls under the IRS ruling that these plans are "length of service award programs" (LOSAP) and are like deferred supplemental wages to be reported on Form W-2. So, a usually fast and easy return now has the 8867 and due diligence questions and documentation with it and will require some hopefully brief explanation to this client. We will be seeing some strange returns again this year with the double dipping on some of the credits with no payback and other occurrences from law changes having some unintended consequences like this EIC. 5 Quote Link to comment Share on other sites More sharing options...
jasdlm Posted February 13, 2022 Report Share Posted February 13, 2022 I just want to add that all this EIC for retired people not of RMD age who are working simply for a little structure/something to do (3 of them work in my office!) ... receiving SS but living on savings to take advantage of these years of little/no tax on SS, is making me super anxious. Some of these clients have well over a million dollars in retirement plus some after tax assets. Just doesn't seem right. I keep waiting for the other shoe to fall. The return I just did resulted in an EIC of over $1,000 for a retired professor who is not yet RMD age. I triple check them every time thinking I'm doing something wrong. 2 Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 13, 2022 Report Share Posted February 13, 2022 I haven't done any returns with EIC for at least 3 years. Do they still have a cap limitation on total investment income? Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 13, 2022 Report Share Posted February 13, 2022 Yes, but the cap was raised. ($10,000?) 1 Quote Link to comment Share on other sites More sharing options...
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