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I had to pay back third party sick pay from 2 years ago of $15,325 and $26,745, respectively. When I calculate my adjusted gross income without the sick pay for that year, I would have qualified for the earned income credit. Can you also include that amount in the credit for this year under IRC 1341?


The BIDaWIZ Team's Answer:

You would need to amend your returns for those years to claim the earned income tax credit. The IRC section 1341 provision allows taxpayers that repaid more than $3,000 in taxable income to either claim a credit for the difference in taxes when excluding the previously taxable income or to report the difference as an miscellaneous itemized deduction on Schedule A of their form 1040. The taxpayer should chose the option that provides the greatest tax benefit. But, the IRC 1341 provision, doesn't in itself include the earned income tax credit.

The BIDaWIZ Team



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