View Full Version : Claiming earned income credit while in HWH?


ohsweetmaryjane
01-29-2012, 12:28 PM
Hi all,

Hoping someone understands the mumbo jumbo on the IRS's website. I'm trying to fill out my boyfriend's tax return...for him....obviously I have his permission....he worked while he was in a halfway house, but not FOR the halfway house (i.e., he had an outside job and has a W-2 from an actual employer).

It appears that he is eligible for the earned income credit.....but then on the IRS' website (see link below) it says the following...

"Earnings while an inmate. Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. This includes amounts for work performed while in a work release program or while in a halfway house."

It SOUNDS like it means that you can't claim EIC for work the prison or halfway house paid you.....what do you all think? And yes, I know we're not tax professionals, LOL, I just wanna get another set of eyes on this. The difference in the refund he will get is about $500, so I don't wanna not get that money if he's entitled to it!!!

http://www.irs.gov/publications/p17/ch35.html

fbopnomore
01-29-2012, 03:39 PM
That's what it means, you can not claim EITC for his real world earnings while he was a prisoner assigned to a HWH. Congress has figured out another way to smack ex felons. I'm sure the IRS has access to the date when he was released from prison/HWH too, so it would be taking a big chance for a probation/parole violation to chance it. It's up to you what you decide to do, but be aware of the possible ramifications. Social Security benefits are also forfeited during any month or partial month of incarceration.

Scott
01-30-2012, 12:40 AM
Hi all,

Hoping someone understands the mumbo jumbo on the IRS's website. I'm trying to fill out my boyfriend's tax return...for him....obviously I have his permission....he worked while he was in a halfway house, but not FOR the halfway house (i.e., he had an outside job and has a W-2 from an actual employer).

It appears that he is eligible for the earned income credit.....but then on the IRS' website (see link below) it says the following...

"Earnings while an inmate. Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. This includes amounts for work performed while in a work release program or while in a halfway house."

It SOUNDS like it means that you can't claim EIC for work the prison or halfway house paid you.....what do you all think? And yes, I know we're not tax professionals, LOL, I just wanna get another set of eyes on this. The difference in the refund he will get is about $500, so I don't wanna not get that money if he's entitled to it!!!

http://www.irs.gov/publications/p17/ch35.html

No - they are meaning work performed while a prison inmate, in a prison. if he has a W2 from an outside employer, while he was residing in a halfway house, he was not working for the halfway house, or the Prison System, he was working for the employer. His check was paid by an outside employer.

When I was in in prison I had a very good inmate job, and made enough that I got a 1099 each year. That was money paid by the Department of Corrections itself... that's what the website is talking about. I know what what you posted that it is VERY unclear...

The logic would be that if that money wasn't earned income - he wouldn't owe taxes on it either...

ohsweetmaryjane
01-30-2012, 05:51 AM
Now I am even more confused, haha. But I want Scott to be right, obviously. :)

nypurple
01-30-2012, 07:00 AM
Now I am even more confused, haha. But I want Scott to be right, obviously. :)

Scott is correct. The half way house was simply that....housing. It has nothing to do with the Department of Corrections.

His income was not paid by DOC.

Miss_A
01-30-2012, 08:26 AM
It means, he can get the EIC. Just file his taxes like normal. :)

fbopnomore
01-30-2012, 09:38 AM
I hope you guys are correct about EITC, but I would make absolutely sure before I claimed it. When you are in the HWH, you are still a bop prisoner for federal cases. States may be different though. Like a lot of other tax matters, the "This includes amounts for work performed while in a work release program or while in a halfway house." is open to interpretation, but it can also be a trap if you pick the wrong one. By the way, many work release programs involve free world employers too. EITC is a negative income tax and is subject to many additional restrictions that don't cover regular tax refunds.

The IRS has had so many problems with prisoner tax scams over the years that they pay close attention to who is, and who is not a prisoner. For Social Security benefits, HWH is definitely being in prison, so my only point is be certain you are able to claim EITC befored you do. You can ask the IRS, but they are not bound by the answers they give you, so I don't know how much help that would be either.

SimplyMe123
01-30-2012, 12:12 PM
I read this the same as fbopnomore.

"Earnings while an inmate. Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. This includes amounts for work performed while in a work release program or while in a halfway house."

I wouldn't claim it under the Earned Income Credit. EIC has a whole lot of restrictions in addition to the normal tax rules. I would file a normal tax return; he is eligible for his tax refund. But I would -not- claim EIC.

ohsweetmaryjane
01-30-2012, 08:15 PM
Thanks for all the feedback. I actually sat on the phone with the IRS for forty-five minutes today (90% of it on hold of course) and the guy was making it sound like we could claim the EIC and I asked if he could double check to make sure. He put me on hold......and hung up on me. Needless to say, I was beyond frustrated. And that was my only free time ALL day to call. I think I'm going to try to call tomorrow while I'm driving to work. If I get a definitive answer, I'll post it. My boyfriend pretty much told me to file it, and I would be doing it in good faith, but I'm going to give it a go with the IRS tomorrow one more time.