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@ShoeBox Taxes wrote:

but I haven't been able to get it to count as Earned Income for the EITC

I had booked it as "rental expense" on the partnership return, in the exact amount of their % of those things, and then rental income to the couple, so they would pay tax on it. Is there a different way to deal with that? If so, what? 

The couple also doesn't have business-related depreciation to recapture

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Did you figure out the EIC?  You never commented about Box 14 of the K-1.

It could be rearranged as an Accountable Plan, where the taxpayer pays for the expenses then submits for a monthly reimbursement of the the office expense.

Another option is for the Partners to pay for the expenses, then take the expense as Unreimbursed Partnership Expense (UPE) (make sure there is a Partnership Agreement that dictates that).  However, if the parents are no longer working for the business, that is potentially more problematic.

The current rental situation they are depreciating the property, so they will probably have Unrecaptured Section 1250 when when they sell the house.  There could be options for the future to avoid adding to that, but they don't seem ideal.