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Amended Tax Returns More:label_amended_20tax_20returns More:taxes

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Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes Publication 596 - Main Content Table of Contents Chapter 1—Rules for EveryoneRule 1—Adjusted Gross Income (AGI) Limits Rule 2—You Must Have a Valid Social Security Number (SSN) Rule 3—Your Filing Status Cannot Be Married Filing Separately Rule 4—You Must Be a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Citizen or Resident Alien All Year Rule 5—You Cannot File Form 2555 or Form 2555-EZ Rule 6—Your Investment Income Must Be $3,300 or Less Rule 7—You Must Have Earned Income Chapter 2—Rules If You Have a Qualifying ChildRule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer Chapter 3—Rules If You Do Not Have a Qualifying ChildRule 11—You Must Be at Least Age 25 but Under Age 65 Rule 12—You Cannot Be the Dependent of Another Person Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer Rule 14—You Must Have Lived in the United States More Than Half of the Year Chapter 4—Figuring and Claiming the EICRule 15—Earned Income Limits IRS Will Figure the EIC for You How To Figure the EIC Yourself Schedule EIC Chapter 5—Disallowance of the EICForm 8862 Are You Prohibited From Claiming the EIC for a Period of Years? Chapter 6—Detailed ExamplesExample 1—Sharon Rose Example 2—Cynthia and Jerry Grey Chapter 1—Rules for Everyone This chapter discusses Rules 1 through 7. Amended tax returns more:label_amended_20tax_20returns more:taxes You must meet all seven rules to qualify for the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the publication. Amended tax returns more:label_amended_20tax_20returns more:taxes If you meet all seven rules in this chapter, then read either chapter 2 or chapter 3 (whichever applies) for more rules you must meet. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 1—Adjusted Gross Income (AGI) Limits Your adjusted gross income (AGI) must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Adjusted gross income (AGI). Amended tax returns more:label_amended_20tax_20returns more:taxes   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not need to read the rest of this publication. Amended tax returns more:label_amended_20tax_20returns more:taxes Example—AGI is more than limit. Amended tax returns more:label_amended_20tax_20returns more:taxes Your AGI is $38,550, you are single, and you have one qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC because your AGI is not less than $37,870. Amended tax returns more:label_amended_20tax_20returns more:taxes However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. Amended tax returns more:label_amended_20tax_20returns more:taxes Community property. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. Amended tax returns more:label_amended_20tax_20returns more:taxes This is different from the community property rules that apply under Rule 7. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). Amended tax returns more:label_amended_20tax_20returns more:taxes Any qualifying child listed on Schedule EIC also must have a valid SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes (See Rule 8 if you have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes An example of a federally funded benefit is Medicaid. Amended tax returns more:label_amended_20tax_20returns more:taxes If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or permanent resident, ask the SSA for a new social security card without the legend. Amended tax returns more:label_amended_20tax_20returns more:taxes If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Individual Income Tax Return, to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you were a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen when you received your SSN, you have a valid SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes Valid for work only with INS authorization or DHS authorization. Amended tax returns more:label_amended_20tax_20returns more:taxes   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. Amended tax returns more:label_amended_20tax_20returns more:taxes SSN missing or incorrect. Amended tax returns more:label_amended_20tax_20returns more:taxes   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Other taxpayer identification number. Amended tax returns more:label_amended_20tax_20returns more:taxes   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). Amended tax returns more:label_amended_20tax_20returns more:taxes ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes No SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Getting an SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5 with the SSA. Amended tax returns more:label_amended_20tax_20returns more:taxes You can get Form SS-5 online at www. Amended tax returns more:label_amended_20tax_20returns more:taxes socialsecurity. Amended tax returns more:label_amended_20tax_20returns more:taxes gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Amended tax returns more:label_amended_20tax_20returns more:taxes Filing deadline approaching and still no SSN. Amended tax returns more:label_amended_20tax_20returns more:taxes   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Amended tax returns more:label_amended_20tax_20returns more:taxes Request an automatic 6-month extension of time to file your return. Amended tax returns more:label_amended_20tax_20returns more:taxes You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Individual Income Tax Return. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information, see the instructions for Form 4868. Amended tax returns more:label_amended_20tax_20returns more:taxes File the return on time without claiming the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 3—Your Filing Status Cannot Be “Married Filing Separately” If you are married, you usually must file a joint return to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Your filing status cannot be “Married filing separately. Amended tax returns more:label_amended_20tax_20returns more:taxes ” Spouse did not live with you. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. Amended tax returns more:label_amended_20tax_20returns more:taxes In that case, you may be able to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 4—You Must Be a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. Amended tax returns more:label_amended_20tax_20returns more:taxes You can use that filing status only if one spouse is a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or resident alien and you choose to treat the nonresident spouse as a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes resident. Amended tax returns more:label_amended_20tax_20returns more:taxes If you make this choice, you and your spouse are taxed on your worldwide income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you need more information on making this choice, get Publication 519, U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax Guide for Aliens. Amended tax returns more:label_amended_20tax_20returns more:taxes If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 5—You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Amended tax returns more:label_amended_20tax_20returns more:taxes U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes possessions are not foreign countries. Amended tax returns more:label_amended_20tax_20returns more:taxes See Publication 54, Tax Guide for U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Citizens and Resident Aliens Abroad, for more detailed information. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 6—Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. Amended tax returns more:label_amended_20tax_20returns more:taxes If your investment income is more than $3,300, you cannot claim the credit. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 1040EZ. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you file Form 1040EZ, your investment income is the total of the amount on line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 1040A. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you file Form 1040A, your investment income is the total of the amounts on lines 8a (taxable interest), 8b (tax-exempt interest), 9a (ordinary dividends), and 10 (capital gain distributions) on that form. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Amended tax returns more:label_amended_20tax_20returns more:taxes    Worksheet 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Investment Income If You Are Filing Form 1040 Use this worksheet to figure investment income for the earned income credit when you file Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes Interest and Dividends         1. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any amount from Form 1040, line 8a 1. Amended tax returns more:label_amended_20tax_20returns more:taxes   2. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Amended tax returns more:label_amended_20tax_20returns more:taxes   3. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any amount from Form 1040, line 9a 3. Amended tax returns more:label_amended_20tax_20returns more:taxes   4. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. Amended tax returns more:label_amended_20tax_20returns more:taxes (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 4. Amended tax returns more:label_amended_20tax_20returns more:taxes   Capital Gain Net Income         5. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 1040, line 13. Amended tax returns more:label_amended_20tax_20returns more:taxes If the amount on that line is a loss, enter -0- 5. Amended tax returns more:label_amended_20tax_20returns more:taxes       6. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any gain from Form 4797, Sales of Business Property, line 7. Amended tax returns more:label_amended_20tax_20returns more:taxes If the amount on that line is a loss, enter -0-. Amended tax returns more:label_amended_20tax_20returns more:taxes (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 6. Amended tax returns more:label_amended_20tax_20returns more:taxes       7. Amended tax returns more:label_amended_20tax_20returns more:taxes Substract line 6 of this worksheet from line 5 of this worksheet. Amended tax returns more:label_amended_20tax_20returns more:taxes (If the result is less than zero, enter -0-. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 7. Amended tax returns more:label_amended_20tax_20returns more:taxes   Royalties and Rental Income From Personal Property         8. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21 8. Amended tax returns more:label_amended_20tax_20returns more:taxes       9. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36 9. Amended tax returns more:label_amended_20tax_20returns more:taxes       10. Amended tax returns more:label_amended_20tax_20returns more:taxes Subtract the amount on line 9 of this worksheet from the amount on line 8. Amended tax returns more:label_amended_20tax_20returns more:taxes (If the result is less than zero, enter -0-. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 10. Amended tax returns more:label_amended_20tax_20returns more:taxes   Passive Activities         11. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Amended tax returns more:label_amended_20tax_20returns more:taxes (g)), 34a (col. Amended tax returns more:label_amended_20tax_20returns more:taxes (d)), or 40). Amended tax returns more:label_amended_20tax_20returns more:taxes (See instructions below for lines 11 and 12. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 11. Amended tax returns more:label_amended_20tax_20returns more:taxes       12. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Amended tax returns more:label_amended_20tax_20returns more:taxes (f)), 34b (col. Amended tax returns more:label_amended_20tax_20returns more:taxes (c)), or 40). Amended tax returns more:label_amended_20tax_20returns more:taxes (See instructions below for lines 11 and 12. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 12. Amended tax returns more:label_amended_20tax_20returns more:taxes       13. Amended tax returns more:label_amended_20tax_20returns more:taxes Combine the amounts on lines 11 and 12 of this worksheet. Amended tax returns more:label_amended_20tax_20returns more:taxes (If the result is less than zero, enter -0-. Amended tax returns more:label_amended_20tax_20returns more:taxes ) 13. Amended tax returns more:label_amended_20tax_20returns more:taxes   14. Amended tax returns more:label_amended_20tax_20returns more:taxes Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the total. Amended tax returns more:label_amended_20tax_20returns more:taxes This is your investment income 14. Amended tax returns more:label_amended_20tax_20returns more:taxes   15. Amended tax returns more:label_amended_20tax_20returns more:taxes Is the amount on line 14 more than $3,300? ❑ Yes. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot take the credit. Amended tax returns more:label_amended_20tax_20returns more:taxes  ❑ No. Amended tax returns more:label_amended_20tax_20returns more:taxes Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule 7, next). Amended tax returns more:label_amended_20tax_20returns more:taxes       Instructions for lines 11 and 12. Amended tax returns more:label_amended_20tax_20returns more:taxes In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss) included on line 26 of Schedule E or any amount included in your earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes To find out if the income on line 26 or line 40 of Schedule E is from a passive activity, see the Schedule E instructions. Amended tax returns more:label_amended_20tax_20returns more:taxes If any of the rental real estate income (or loss) included on Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26. Amended tax returns more:label_amended_20tax_20returns more:taxes Worksheet 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Amended tax returns more:label_amended_20tax_20returns more:taxes Note. Amended tax returns more:label_amended_20tax_20returns more:taxes Fill out a separate Worksheet 2 for each Form 8814. Amended tax returns more:label_amended_20tax_20returns more:taxes     1. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 8814, line 2a 1. Amended tax returns more:label_amended_20tax_20returns more:taxes   2. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 8814, line 2b 2. Amended tax returns more:label_amended_20tax_20returns more:taxes   3. Amended tax returns more:label_amended_20tax_20returns more:taxes Subtract line 2 from line 1 3. Amended tax returns more:label_amended_20tax_20returns more:taxes   4. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 8814, line 1a 4. Amended tax returns more:label_amended_20tax_20returns more:taxes   5. Amended tax returns more:label_amended_20tax_20returns more:taxes Add lines 3 and 4 5. Amended tax returns more:label_amended_20tax_20returns more:taxes   6. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount of the child's Alaska Permanent Fund dividend 6. Amended tax returns more:label_amended_20tax_20returns more:taxes   7. Amended tax returns more:label_amended_20tax_20returns more:taxes Divide line 6 by line 5. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the result as a decimal (rounded to at least three places) 7. Amended tax returns more:label_amended_20tax_20returns more:taxes   8. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the amount from Form 8814, line 12 8. Amended tax returns more:label_amended_20tax_20returns more:taxes   9. Amended tax returns more:label_amended_20tax_20returns more:taxes Multiply line 7 by line 8 9. Amended tax returns more:label_amended_20tax_20returns more:taxes   10. Amended tax returns more:label_amended_20tax_20returns more:taxes Subtract line 9 from line 8. Amended tax returns more:label_amended_20tax_20returns more:taxes Enter the result on line 4 of Worksheet 1 10. Amended tax returns more:label_amended_20tax_20returns more:taxes     (If filing more than one Form 8814, enter on line 4 of Worksheet 1 the total of the amounts on line 10 of all Worksheets 2. Amended tax returns more:label_amended_20tax_20returns more:taxes )     Example—completing Worksheet 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Your 10-year-old child has taxable interest income of $400, an Alaska Permanent Fund dividend of $1,000, and ordinary dividends of $1,100, of which $500 are qualified dividends. Amended tax returns more:label_amended_20tax_20returns more:taxes You choose to report this income on your return. Amended tax returns more:label_amended_20tax_20returns more:taxes You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Amended tax returns more:label_amended_20tax_20returns more:taxes After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes On Worksheet 2, you enter $2,100 on line 1, $500 on line 2, $1,600 on line 3, $400 on line 4, $2,000 on line 5, $1,000 on line 6, 0. Amended tax returns more:label_amended_20tax_20returns more:taxes 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Amended tax returns more:label_amended_20tax_20returns more:taxes You then enter $200 on line 4 of Worksheet 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 7—You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are an employee, earned income includes all the taxable income you get from your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 15 has information that will help you figure the amount of your earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned Income Earned income includes all of the following types of income. Amended tax returns more:label_amended_20tax_20returns more:taxes Wages, salaries, tips, and other taxable employee pay. Amended tax returns more:label_amended_20tax_20returns more:taxes Employee pay is earned income only if it is taxable. Amended tax returns more:label_amended_20tax_20returns more:taxes Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes Net earnings from self-employment. Amended tax returns more:label_amended_20tax_20returns more:taxes Gross income received as a statutory employee. Amended tax returns more:label_amended_20tax_20returns more:taxes Wages, salaries, and tips. Amended tax returns more:label_amended_20tax_20returns more:taxes    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Amended tax returns more:label_amended_20tax_20returns more:taxes Nontaxable combat pay election. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Amended tax returns more:label_amended_20tax_20returns more:taxes Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes For details, see Nontaxable combat pay in chapter 4. Amended tax returns more:label_amended_20tax_20returns more:taxes Net earnings from self-employment. Amended tax returns more:label_amended_20tax_20returns more:taxes   You may have net earnings from self-employment if: You own your own business, or You are a minister or member of a religious order. Amended tax returns more:label_amended_20tax_20returns more:taxes Minister's housing. Amended tax returns more:label_amended_20tax_20returns more:taxes   The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. Amended tax returns more:label_amended_20tax_20returns more:taxes For that reason, it is included in earned income for the EIC (except in the cases described in Approved Form 4361 or Form 4029 , below). Amended tax returns more:label_amended_20tax_20returns more:taxes Statutory employee. Amended tax returns more:label_amended_20tax_20returns more:taxes   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Amended tax returns more:label_amended_20tax_20returns more:taxes You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Amended tax returns more:label_amended_20tax_20returns more:taxes Strike benefits. Amended tax returns more:label_amended_20tax_20returns more:taxes   Strike benefits paid by a union to its members are earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Amended tax returns more:label_amended_20tax_20returns more:taxes Each approved form exempts certain income from social security taxes. Amended tax returns more:label_amended_20tax_20returns more:taxes Each form is discussed here in terms of what is or is not earned income for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 4361. Amended tax returns more:label_amended_20tax_20returns more:taxes   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes This includes wages, salaries, tips, and other taxable employee compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Examples include fees for performing marriages and honoraria for delivering speeches. Amended tax returns more:label_amended_20tax_20returns more:taxes Form 4029. Amended tax returns more:label_amended_20tax_20returns more:taxes   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes However, amounts you received as a self-employed individual do not count as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Amended tax returns more:label_amended_20tax_20returns more:taxes Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Amended tax returns more:label_amended_20tax_20returns more:taxes Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Amended tax returns more:label_amended_20tax_20returns more:taxes You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Amended tax returns more:label_amended_20tax_20returns more:taxes Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Amended tax returns more:label_amended_20tax_20returns more:taxes Disability insurance payments. Amended tax returns more:label_amended_20tax_20returns more:taxes   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes It does not matter whether you have reached minimum retirement age. Amended tax returns more:label_amended_20tax_20returns more:taxes If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Amended tax returns more:label_amended_20tax_20returns more:taxes ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Amended tax returns more:label_amended_20tax_20returns more:taxes Do not include any of these items in your earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Earnings while an inmate. Amended tax returns more:label_amended_20tax_20returns more:taxes   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes This includes amounts for work performed while in a work release program or while in a halfway house. Amended tax returns more:label_amended_20tax_20returns more:taxes Workfare payments. Amended tax returns more:label_amended_20tax_20returns more:taxes   Nontaxable workfare payments are not earned income for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. Amended tax returns more:label_amended_20tax_20returns more:taxes Community property. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. Amended tax returns more:label_amended_20tax_20returns more:taxes That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Amended tax returns more:label_amended_20tax_20returns more:taxes Nevada, Washington, and California domestic partners. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Amended tax returns more:label_amended_20tax_20returns more:taxes Your earned income for the EIC does not include any amount earned by your partner. Amended tax returns more:label_amended_20tax_20returns more:taxes Your earned income includes the entire amount you earned. Amended tax returns more:label_amended_20tax_20returns more:taxes For details, see Publication 555. Amended tax returns more:label_amended_20tax_20returns more:taxes Conservation Reserve Program (CRP) payments. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Nontaxable military pay. Amended tax returns more:label_amended_20tax_20returns more:taxes   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Amended tax returns more:label_amended_20tax_20returns more:taxes See Publication 3, Armed Forces' Tax Guide, for more information. Amended tax returns more:label_amended_20tax_20returns more:taxes    Combat pay. Amended tax returns more:label_amended_20tax_20returns more:taxes You can elect to include your nontaxable combat pay in earned income for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes See Nontaxable combat pay in chapter 4. Amended tax returns more:label_amended_20tax_20returns more:taxes Chapter 2—Rules If You Have a Qualifying Child If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This chapter discusses Rules 8 through 10. Amended tax returns more:label_amended_20tax_20returns more:taxes You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit with a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes (You cannot file Form 1040EZ. Amended tax returns more:label_amended_20tax_20returns more:taxes ) You also must complete Schedule EIC and attach it to your return. Amended tax returns more:label_amended_20tax_20returns more:taxes If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Amended tax returns more:label_amended_20tax_20returns more:taxes No qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you do not meet Rule 8, you do not have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Amended tax returns more:label_amended_20tax_20returns more:taxes The fours tests are: Relationship, Age, Residency, and Joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes The four tests are illustrated in Figure 1. Amended tax returns more:label_amended_20tax_20returns more:taxes The paragraphs that follow contain more information about each test. Amended tax returns more:label_amended_20tax_20returns more:taxes Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). Amended tax returns more:label_amended_20tax_20returns more:taxes The following definitions clarify the relationship test. Amended tax returns more:label_amended_20tax_20returns more:taxes Adopted child. Amended tax returns more:label_amended_20tax_20returns more:taxes   An adopted child is always treated as your own child. Amended tax returns more:label_amended_20tax_20returns more:taxes The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Amended tax returns more:label_amended_20tax_20returns more:taxes Foster child. Amended tax returns more:label_amended_20tax_20returns more:taxes   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Amended tax returns more:label_amended_20tax_20returns more:taxes (An authorized placement agency includes a state or local government agency. Amended tax returns more:label_amended_20tax_20returns more:taxes It also includes a tax-exempt organization licensed by a state. Amended tax returns more:label_amended_20tax_20returns more:taxes In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Amended tax returns more:label_amended_20tax_20returns more:taxes ) Example. Amended tax returns more:label_amended_20tax_20returns more:taxes Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. Amended tax returns more:label_amended_20tax_20returns more:taxes Debbie is your foster child. Amended tax returns more:label_amended_20tax_20returns more:taxes Figure 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Tests for Qualifying Child Please click here for the text description of the image. Amended tax returns more:label_amended_20tax_20returns more:taxes Conditions for Qualifying Child Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly, or Permanently and totally disabled at any time during 2013, regardless of age. Amended tax returns more:label_amended_20tax_20returns more:taxes The following examples and definitions clarify the age test. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—child not under age 19. Amended tax returns more:label_amended_20tax_20returns more:taxes Your son turned 19 on December 10. Amended tax returns more:label_amended_20tax_20returns more:taxes Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—child not younger than you or your spouse. Amended tax returns more:label_amended_20tax_20returns more:taxes Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Amended tax returns more:label_amended_20tax_20returns more:taxes He is not disabled. Amended tax returns more:label_amended_20tax_20returns more:taxes Both you and your spouse are 21 years old, and you file a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes Your brother is not your qualifying child because he is not younger than you or your spouse. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—child younger than your spouse but not younger than you. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 2 except that your spouse is 25 years old. Amended tax returns more:label_amended_20tax_20returns more:taxes Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Amended tax returns more:label_amended_20tax_20returns more:taxes Student defined. Amended tax returns more:label_amended_20tax_20returns more:taxes   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. Amended tax returns more:label_amended_20tax_20returns more:taxes   The 5 calendar months need not be consecutive. Amended tax returns more:label_amended_20tax_20returns more:taxes   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. Amended tax returns more:label_amended_20tax_20returns more:taxes School defined. Amended tax returns more:label_amended_20tax_20returns more:taxes   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Amended tax returns more:label_amended_20tax_20returns more:taxes However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Vocational high school students. Amended tax returns more:label_amended_20tax_20returns more:taxes   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. Amended tax returns more:label_amended_20tax_20returns more:taxes Permanently and totally disabled. Amended tax returns more:label_amended_20tax_20returns more:taxes   Your child is permanently and totally disabled if both of the following apply. Amended tax returns more:label_amended_20tax_20returns more:taxes He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Amended tax returns more:label_amended_20tax_20returns more:taxes A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Amended tax returns more:label_amended_20tax_20returns more:taxes Residency Test Your child must have lived with you in the United States for more than half of 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes The following definitions clarify the residency test. Amended tax returns more:label_amended_20tax_20returns more:taxes United States. Amended tax returns more:label_amended_20tax_20returns more:taxes   This means the 50 states and the District of Columbia. Amended tax returns more:label_amended_20tax_20returns more:taxes It does not include Puerto Rico or U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes possessions such as Guam. Amended tax returns more:label_amended_20tax_20returns more:taxes Homeless shelter. Amended tax returns more:label_amended_20tax_20returns more:taxes   Your home can be any location where you regularly live. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not need a traditional home. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. Amended tax returns more:label_amended_20tax_20returns more:taxes Military personnel stationed outside the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes   U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Extended active duty. Amended tax returns more:label_amended_20tax_20returns more:taxes   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Amended tax returns more:label_amended_20tax_20returns more:taxes Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Amended tax returns more:label_amended_20tax_20returns more:taxes Birth or death of child. Amended tax returns more:label_amended_20tax_20returns more:taxes    child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Temporary absences. Amended tax returns more:label_amended_20tax_20returns more:taxes   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Amended tax returns more:label_amended_20tax_20returns more:taxes Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Amended tax returns more:label_amended_20tax_20returns more:taxes Kidnapped child. Amended tax returns more:label_amended_20tax_20returns more:taxes   A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. Amended tax returns more:label_amended_20tax_20returns more:taxes The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Amended tax returns more:label_amended_20tax_20returns more:taxes This treatment applies for all years until the child is returned. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. Amended tax returns more:label_amended_20tax_20returns more:taxes   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Joint Return Test To meet this test, the child cannot file a joint return for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes Exception. Amended tax returns more:label_amended_20tax_20returns more:taxes   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—child files joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Amended tax returns more:label_amended_20tax_20returns more:taxes He earned $25,000 for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes The couple files a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes Because your daughter and her husband file a joint return, she is not your qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—child files joint return to get refund of tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Amended tax returns more:label_amended_20tax_20returns more:taxes They do not have a child. Amended tax returns more:label_amended_20tax_20returns more:taxes Neither is required to file a tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Amended tax returns more:label_amended_20tax_20returns more:taxes The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—child files joint return to claim American opportunity credit. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Amended tax returns more:label_amended_20tax_20returns more:taxes He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Amended tax returns more:label_amended_20tax_20returns more:taxes Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to claim a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes The exception to the joint return test does not apply, so your son is not your qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Married child. Amended tax returns more:label_amended_20tax_20returns more:taxes   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) described later. Amended tax returns more:label_amended_20tax_20returns more:taxes    Social security number. Amended tax returns more:label_amended_20tax_20returns more:taxes Your qualifying child must have a valid social security number (SSN), unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information about SSNs, see Rule 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. Amended tax returns more:label_amended_20tax_20returns more:taxes However, only one of these persons can actually treat the child as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Amended tax returns more:label_amended_20tax_20returns more:taxes The exemption for the child. Amended tax returns more:label_amended_20tax_20returns more:taxes The child tax credit. Amended tax returns more:label_amended_20tax_20returns more:taxes Head of household filing status. Amended tax returns more:label_amended_20tax_20returns more:taxes The credit for child and dependent care expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes The exclusion for dependent care benefits. Amended tax returns more:label_amended_20tax_20returns more:taxes The EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The other person cannot take any of these benefits based on this qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes In other words, you and the other person cannot agree to divide these tax benefits between you. Amended tax returns more:label_amended_20tax_20returns more:taxes The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes Tiebreaker rules. Amended tax returns more:label_amended_20tax_20returns more:taxes   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. Amended tax returns more:label_amended_20tax_20returns more:taxes If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Amended tax returns more:label_amended_20tax_20returns more:taxes If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. Amended tax returns more:label_amended_20tax_20returns more:taxes If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Amended tax returns more:label_amended_20tax_20returns more:taxes If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Amended tax returns more:label_amended_20tax_20returns more:taxes If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Amended tax returns more:label_amended_20tax_20returns more:taxes If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. Amended tax returns more:label_amended_20tax_20returns more:taxes See Example 8. Amended tax returns more:label_amended_20tax_20returns more:taxes   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes See Examples 1 through 13. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in chapter 3 for people who do not have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes If the other person cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes See Examples 6 and 7. Amended tax returns more:label_amended_20tax_20returns more:taxes But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes Examples. Amended tax returns more:label_amended_20tax_20returns more:taxes    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—child lived with parent and grandparent. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your 2-year-old son Jimmy lived with your mother all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are 25 years old, unmarried, and your AGI is $9,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Your only income was $9,000 from a part-time job. Amended tax returns more:label_amended_20tax_20returns more:taxes Your mother's only income was $20,000 from her job, and her AGI is $20,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Jimmy's father did not live with you or Jimmy. Amended tax returns more:label_amended_20tax_20returns more:taxes The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Amended tax returns more:label_amended_20tax_20returns more:taxes Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. Amended tax returns more:label_amended_20tax_20returns more:taxes However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier in this chapter for which that person qualifies). Amended tax returns more:label_amended_20tax_20returns more:taxes He is not a qualifying child of anyone else, including his father. Amended tax returns more:label_amended_20tax_20returns more:taxes If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—parent has higher AGI than grandparent. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except your AGI is $25,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Only you can claim him. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—two persons claim same child. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. Amended tax returns more:label_amended_20tax_20returns more:taxes The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 4—qualifying children split between two persons. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Amended tax returns more:label_amended_20tax_20returns more:taxes Only one of you can claim each child. Amended tax returns more:label_amended_20tax_20returns more:taxes However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, if you claim one child, your mother can claim the other two. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 5—taxpayer who is a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you are only 18 years old. Amended tax returns more:label_amended_20tax_20returns more:taxes This means you are a qualifying child of your mother. Amended tax returns more:label_amended_20tax_20returns more:taxes Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 6—grandparent with too much earned income to claim EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Amended tax returns more:label_amended_20tax_20returns more:taxes Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 7—parent with too much earned income to claim EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Amended tax returns more:label_amended_20tax_20returns more:taxes Your earned income is too high for you to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes But your mother cannot claim the EIC either, because her AGI is not higher than yours. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 8—child lived with both parents and grandparent. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have AGI of $30,000 on a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. Amended tax returns more:label_amended_20tax_20returns more:taxes Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. Amended tax returns more:label_amended_20tax_20returns more:taxes In other words, each parent's AGI can be treated as $15,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 9—separated parents. Amended tax returns more:label_amended_20tax_20returns more:taxes You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Amended tax returns more:label_amended_20tax_20returns more:taxes In August and September, Joey lived with you. Amended tax returns more:label_amended_20tax_20returns more:taxes For the rest of the year, Joey lived with your husband, who is Joey's father. Amended tax returns more:label_amended_20tax_20returns more:taxes Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. Amended tax returns more:label_amended_20tax_20returns more:taxes At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the Special rule for divorced or separated parents (or parents who live apart) does not apply. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your husband will file separate returns. Amended tax returns more:label_amended_20tax_20returns more:taxes Your husband agrees to let you treat Joey as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. Amended tax returns more:label_amended_20tax_20returns more:taxes However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes See Rule 3. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 10—separated parents claim same child. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes In this case, only your husband will be allowed to treat Joey as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This is because, during 2013, the boy lived with him longer than with you. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC (either with or without a qualifying child). Amended tax returns more:label_amended_20tax_20returns more:taxes However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes See Rule 3. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 11—unmarried parents. Amended tax returns more:label_amended_20tax_20returns more:taxes You, your 5-year-old son, and your son's father lived together all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your son's father are not married. Amended tax returns more:label_amended_20tax_20returns more:taxes Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Amended tax returns more:label_amended_20tax_20returns more:taxes Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Neither of you had any other income. Amended tax returns more:label_amended_20tax_20returns more:taxes Your son's father agrees to let you treat the child as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 12—unmarried parents claim same child. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes In this case, only your son's father will be allowed to treat your son as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This is because his AGI, $14,000, is more than your AGI, $12,000. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC (either with or without a qualifying child). Amended tax returns more:label_amended_20tax_20returns more:taxes Example 13—child did not live with a parent. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your 7-year-old niece, your sister's child, lived with your mother all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are 25 years old, and your AGI is $9,300. Amended tax returns more:label_amended_20tax_20returns more:taxes Your only income was from a part-time job. Amended tax returns more:label_amended_20tax_20returns more:taxes Your mother's AGI is $15,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Her only income was from her job. Amended tax returns more:label_amended_20tax_20returns more:taxes Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Amended tax returns more:label_amended_20tax_20returns more:taxes Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. Amended tax returns more:label_amended_20tax_20returns more:taxes However, only your mother can treat her as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Amended tax returns more:label_amended_20tax_20returns more:taxes Special rule for divorced or separated parents (or parents who live apart). Amended tax returns more:label_amended_20tax_20returns more:taxes   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. Amended tax returns more:label_amended_20tax_20returns more:taxes The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all time during the last 6 months of 2013, whether or not they are or were married. Amended tax returns more:label_amended_20tax_20returns more:taxes The child received over half of his or her support for the year from the parents. Amended tax returns more:label_amended_20tax_20returns more:taxes The child is in the custody of one or both parents for more than half of 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Either of the following statements is true. Amended tax returns more:label_amended_20tax_20returns more:taxes The custodial parent signs Form 8332 or a substantially similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her return. Amended tax returns more:label_amended_20tax_20returns more:taxes If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Amended tax returns more:label_amended_20tax_20returns more:taxes A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes For details, see Publication 501. Amended tax returns more:label_amended_20tax_20returns more:taxes Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Amended tax returns more:label_amended_20tax_20returns more:taxes Applying Rule 9 to divorced or separated parents (or parents who live apart). Amended tax returns more:label_amended_20tax_20returns more:taxes   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. Amended tax returns more:label_amended_20tax_20returns more:taxes However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Amended tax returns more:label_amended_20tax_20returns more:taxes Your AGI is $10,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Your mother’s AGI is $25,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Your son's father did not live with you or your son. Amended tax returns more:label_amended_20tax_20returns more:taxes Under the Special rule for divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. Amended tax returns more:label_amended_20tax_20returns more:taxes However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your mother did not have any child care expenses or dependent care benefits. Amended tax returns more:label_amended_20tax_20returns more:taxes If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Your mother also claims him as a qualifying child for head of household filing status. Amended tax returns more:label_amended_20tax_20returns more:taxes You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Amended tax returns more:label_amended_20tax_20returns more:taxes ) if all of the following statements are true. Amended tax returns more:label_amended_20tax_20returns more:taxes You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Amended tax returns more:label_amended_20tax_20returns more:taxes Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Amended tax returns more:label_amended_20tax_20returns more:taxes You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Amended tax returns more:label_amended_20tax_20returns more:taxes You lived with that person in the United States for more than half of the year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Amended tax returns more:label_amended_20tax_20returns more:taxes For more details about the tests to be a qualifying child, see Rule 8. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a qualifying child of another taxpayer, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your daughter lived with your mother all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are 22 years old, unmarried, and attended a trade school full time. Amended tax returns more:label_amended_20tax_20returns more:taxes You had a part-time job and earned $5,700. Amended tax returns more:label_amended_20tax_20returns more:taxes You had no other income. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Amended tax returns more:label_amended_20tax_20returns more:taxes She can claim the EIC if she meets all the other requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you are your mother's qualifying child, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes This is so even if your mother cannot or does not claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Child of person not required to file a return. Amended tax returns more:label_amended_20tax_20returns more:taxes   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you met the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—return not required. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are not your mother's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You can claim the EIC if you meet all the other requirements to do so. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—return filed to get refund of tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except your mother had wages of $1,500 and had income tax withheld from her wages. Amended tax returns more:label_amended_20tax_20returns more:taxes She files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are not your mother's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You can claim the EIC if you meet all the other requirements to do so. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—return filed to get EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 2 except your mother claimed the EIC on her return. Amended tax returns more:label_amended_20tax_20returns more:taxes Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are your mother's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Chapter 3—Rules If You Do Not Have a Qualifying Child Use this chapter if you do not have a qualifying child and have met all the rules in chapter 1. Amended tax returns more:label_amended_20tax_20returns more:taxes This chapter discusses Rules 11 through 14. Amended tax returns more:label_amended_20tax_20returns more:taxes You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Amended tax returns more:label_amended_20tax_20returns more:taxes If you have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you meet Rule 8, you have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 11—You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes It does not matter which spouse meets the age test, as long as one of the spouses does. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. Amended tax returns more:label_amended_20tax_20returns more:taxes If neither you nor your spouse meets the age test, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes Death of spouse. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are age 28 and unmarried. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet the age test. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—spouse meets age test. Amended tax returns more:label_amended_20tax_20returns more:taxes You are married and filing a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes You are age 23 and your spouse is age 27. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet the age test because your spouse is at least age 25 but under age 65. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—spouse dies in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You are married and filing a joint return with your spouse who died in August 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You are age 67. Amended tax returns more:label_amended_20tax_20returns more:taxes Your spouse would have become age 65 in November 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Because your spouse was under age 65 when she died, you meet the age test. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 12—You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are not sure whether someone else can claim you as a dependent, get Publication 501 and read the rules for claiming a dependent. Amended tax returns more:label_amended_20tax_20returns more:taxes If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, you were age 25, single, and living at home with your parents. Amended tax returns more:label_amended_20tax_20returns more:taxes You worked and were not a student. Amended tax returns more:label_amended_20tax_20returns more:taxes You earned $7,500. Amended tax returns more:label_amended_20tax_20returns more:taxes Your parents cannot claim you as a dependent. Amended tax returns more:label_amended_20tax_20returns more:taxes When you file your return, you claim an exemption for yourself by not checking the You box on line 5 of your Form 1040EZ and by entering $10,000 on that line. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet this rule. Amended tax returns more:label_amended_20tax_20returns more:taxes You can claim the EIC if you meet all the other requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1, except that you earned $2,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Your parents can claim you as a dependent but decide not to. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not meet this rule. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the credit because your parents could have claimed you as a dependent. Amended tax returns more:label_amended_20tax_20returns more:taxes Joint returns. Amended tax returns more:label_amended_20tax_20returns more:taxes   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes   However, another person may be able to claim you as a dependent if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—return filed to get refund of tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes You are 26 years old. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Amended tax returns more:label_amended_20tax_20returns more:taxes Neither you nor your wife is required to file a tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not have a child. Amended tax returns more:label_amended_20tax_20returns more:taxes Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Amended tax returns more:label_amended_20tax_20returns more:taxes Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes They can claim exemptions for you and your wife if all the other tests to do so are met. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—return filed to get EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1except no taxes were taken out of your pay. Amended tax returns more:label_amended_20tax_20returns more:taxes Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. Amended tax returns more:label_amended_20tax_20returns more:taxes Because claiming the EIC is your reason for filing the return, you are not filing it only to claim a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes Your parents cannot claim an exemption for either you or your wife. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Amended tax returns more:label_amended_20tax_20returns more:taxes ) if all of the following statements are true. Amended tax returns more:label_amended_20tax_20returns more:taxes You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Amended tax returns more:label_amended_20tax_20returns more:taxes Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Amended tax returns more:label_amended_20tax_20returns more:taxes You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Amended tax returns more:label_amended_20tax_20returns more:taxes You lived with that person in the United States for more than half of the year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Amended tax returns more:label_amended_20tax_20returns more:taxes For more details about the tests to be a qualifying child, see Rule 8. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a qualifying child of another taxpayer, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You lived with your mother all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are age 26, unmarried, and permanently and totally disabled. Amended tax returns more:label_amended_20tax_20returns more:taxes Your only income was from a community center where you went three days a week to answer telephones. Amended tax returns more:label_amended_20tax_20returns more:taxes You earned $5,000 for the year and provided more than half of your own support. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes She can claim the EIC if she meets all the other requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you are a qualifying child of your mother, you cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes This is so even if your mother cannot or does not claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Joint returns. Amended tax returns more:label_amended_20tax_20returns more:taxes   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Amended tax returns more:label_amended_20tax_20returns more:taxes Child of person not required to file a return. Amended tax returns more:label_amended_20tax_20returns more:taxes   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1—return not required. Amended tax returns more:label_amended_20tax_20returns more:taxes You lived all year with your father. Amended tax returns more:label_amended_20tax_20returns more:taxes You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Amended tax returns more:label_amended_20tax_20returns more:taxes You have no other income, no children, and provided more than half of your own support. Amended tax returns more:label_amended_20tax_20returns more:taxes Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are not your father's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You can claim the EIC if you meet all the other requirements to do so. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2—return filed to get refund of tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 1 except your father had wages of $1,500 and had income tax withheld from his wages. Amended tax returns more:label_amended_20tax_20returns more:taxes He files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are not your father's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You can claim the EIC if you meet all the other requirements to do so. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3—return filed to get EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes The facts are the same as in Example 2 except your father claimed the EIC on his return. Amended tax returns more:label_amended_20tax_20returns more:taxes Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Amended tax returns more:label_amended_20tax_20returns more:taxes As a result, you are your father's qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 14—You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. Amended tax returns more:label_amended_20tax_20returns more:taxes If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes United States. Amended tax returns more:label_amended_20tax_20returns more:taxes   This means the 50 states and the District of Columbia. Amended tax returns more:label_amended_20tax_20returns more:taxes It does not include Puerto Rico or U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes possessions such as Guam. Amended tax returns more:label_amended_20tax_20returns more:taxes Homeless shelter. Amended tax returns more:label_amended_20tax_20returns more:taxes   Your home can be any location where you regularly live. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not need a traditional home. Amended tax returns more:label_amended_20tax_20returns more:taxes If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Amended tax returns more:label_amended_20tax_20returns more:taxes Military personnel stationed outside the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes   U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes military personnel stationed outside the United States on extended active duty (defined in chapter 2) are considered to live in the United States during that duty period for purposes of the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes You need to know the amount of your earned income to see if you meet the rule in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes You also need to know that amount to figure your EIC. Amended tax returns more:label_amended_20tax_20returns more:taxes Rule 15—Earned Income Limits Your earned income must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Amended tax returns more:label_amended_20tax_20returns more:taxes Employee pay is earned income only if it is taxable. Amended tax returns more:label_amended_20tax_20returns more:taxes Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned income is explained in detail in Rule 7 in chapter 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Figuring earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. Amended tax returns more:label_amended_20tax_20returns more:taxes   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. Amended tax returns more:label_amended_20tax_20returns more:taxes   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes You will then reduce that amount by any amount included on that line and described in the following list. Amended tax returns more:label_amended_20tax_20returns more:taxes Scholarship or fellowship grants not reported on a Form W-2. Amended tax returns more:label_amended_20tax_20returns more:taxes A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes Inmate's income. Amended tax returns more:label_amended_20tax_20returns more:taxes Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes This includes amounts received for work performed while in a work release program or while in a halfway house. Amended tax returns more:label_amended_20tax_20returns more:taxes If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes Pension or annuity from deferred compensation plans. Amended tax returns more:label_amended_20tax_20returns more:taxes A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. Amended tax returns more:label_amended_20tax_20returns more:taxes If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Amended tax returns more:label_amended_20tax_20returns more:taxes This amount may be reported in box 11 of your Form W-2. Amended tax returns more:label_amended_20tax_20returns more:taxes If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Amended tax returns more:label_amended_20tax_20returns more:taxes Clergy. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also re
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Identity Protection Tips

Top tips every taxpayer should know about identity theft

Identity theft often starts outside of the tax administration system when someone's personal information is stolen or lost. Identity thieves may then use a taxpayer's identity to fraudulently file a tax return and claim a refund. In other cases, the identity thief uses the taxpayer's personal information in order to get a job. The legitimate taxpayer may be unaware that anything has happened until they file their return later in the filing season and discover two returns have been filed using the same Social Security number.

These are the IRS' top tips to help you avoid becoming the victim of an identity thief.

  1. The IRS does not initiate contact with taxpayers by email or social media tools to request personal or financial information. The IRS does not send emails stating you are being electronically audited or that you are getting a refund. This includes any type of electronic communication, such as text messages and social media channels.

  2. If you receive a scam email claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.

  3. Identity thieves access your personal information by many different means, including:
    • Stealing your wallet or purse
    • Posing as someone who needs information about you through a phone call or email
    • Looking through your trash for personal information
    • Accessing information you provide to an unsecured Internet site.

  4. If you discover a website that claims to be the IRS but does not begin with 'www.irs.gov', forward that link to the IRS at phishing@irs.gov.

  5. To learn how to identify a secure website, visit the Federal Trade Commission's website.

  6. If your SSN is stolen, another individual may use it to get a job. That person's employer may report income earned by them to the IRS using your SSN, thus making it appear you did not report all of your income on your tax return.

    When this occurs, you should contact the IRS to show the income is not yours. After the IRS authenticates who you are, your tax record will be updated to reflect only your information. The IRS will use this information to minimize future occurrences.

  7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don't know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice. If you believe the notice is not from the IRS, contact the IRS to determine if the letter is a legitimate IRS notice.

  8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification, such as a Social Security card, driver's license or passport, along with a copy of a police report and/or a completed IRS Form 14039, Identity Theft Affidavit, which should be faxed to the IRS at 1-855-807-5720. Please be sure to write clearly.

    As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490. IPSU hours of Operation: Monday - Friday, 7:00 a.m. - 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

    You should also follow FTC's guidance for reporting identity theft

  9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your SSN.

  10. For more information about identity theft, including information about how to report identity theft, phishing and related fraudulent activity, visit the IRS Identity Theft Protection page, which you can find by searching identity theft on the IRS.gov home page.

  11. IRS impersonation schemes flourish during tax season and can take the form of email, websites, even tweets. Scammers may also use a phone or fax to reach their victims. If you receive a paper letter or notice via mail claiming to be the IRS but you suspect it is a scam, check the IRS phishing page at IRS.gov/phishing to determine if it is a legitimate IRS notice or letter. If it is a legitimate IRS notice or letter, reply if needed. If the caller or party that sent the paper letter is not legitimate, contact the Treasury Inspector General for Tax Administration at 1-800-366-4484. You may also fax the notice/letter you received plus any related or supporting information to TIGTA. Note: This is not a toll-free FAX number 1-202-927-7018.

  12. While preparing your tax return for electronic filing, make sure to use a strong password to protect the data file. Once your return has been e-filed, save the file to a CD or flash drive and then delete the personal return information from your hard drive. Store the CD or flash drive in a safe place, such as a lock box or safe. If working with an accountant, you should query them on what measures they take to protect your information.

  13. If you have information about the identity thief that impacted your personal information negatively, file an online complaint with the Internet Crime Complaint Center. The IC3 gives victims of cyber crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. IC3 sends every complaint to one or more law enforcement or regulatory agencies that have jurisdiction over the matter.

 


Identity protection home page

Page Last Reviewed or Updated: 06-Dec-2013

The Amended Tax Returns More:label_amended_20tax_20returns More:taxes

Amended tax returns more:label_amended_20tax_20returns more:taxes 4. Amended tax returns more:label_amended_20tax_20returns more:taxes   Foreign Earned Income and Housing: Exclusion – Deduction Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Who Qualifies for the Exclusions and the Deduction? RequirementsTax Home in Foreign Country Bona Fide Residence Test Physical Presence Test Waiver of Time Requirements U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Travel Restrictions Foreign Earned Income Foreign Earned Income ExclusionLimit on Excludable Amount Choosing the Exclusion Foreign Housing Exclusion and DeductionHousing Amount Foreign Housing Exclusion Foreign Housing Deduction Married Couples Form 2555 and Form 2555-EZForm 2555-EZ Form 2555 Topics - This chapter discusses: Who qualifies for the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, The requirements that must be met to claim either exclusion or the deduction, How to figure the foreign earned income exclusion, and How to figure the foreign housing exclusion and the foreign housing deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes Useful Items - You may want to see: Publication 519 U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax Guide for Aliens 570 Tax Guide for Individuals With Income from U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Possessions 596 Earned Income Credit (EIC) Form (and Instructions) 1040X Amended U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Individual Income Tax Return 2555 Foreign Earned Income 2555-EZ Foreign Earned Income Exclusion See chapter 7 for information about getting these publications and forms. Amended tax returns more:label_amended_20tax_20returns more:taxes Who Qualifies for the Exclusions and the Deduction? If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. Amended tax returns more:label_amended_20tax_20returns more:taxes However, you may qualify to exclude from income up to $97,600 of your foreign earnings. Amended tax returns more:label_amended_20tax_20returns more:taxes In addition, you can exclude or deduct certain foreign housing amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later. Amended tax returns more:label_amended_20tax_20returns more:taxes You also may be entitled to exclude from income the value of meals and lodging provided to you by your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes See Exclusion of Meals and Lodging, later. Amended tax returns more:label_amended_20tax_20returns more:taxes Requirements To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must meet all three of the following requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes Your tax home must be in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes You must have foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes You must be one of the following. Amended tax returns more:label_amended_20tax_20returns more:taxes A U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes A U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes A U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months. Amended tax returns more:label_amended_20tax_20returns more:taxes See Publication 519 to find out if you are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes resident alien for tax purposes and whether you keep that alien status when you temporarily work abroad. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a nonresident alien married to a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or resident alien, and both you and your spouse choose to treat you as a resident alien, you are a resident alien for tax purposes. Amended tax returns more:label_amended_20tax_20returns more:taxes For information on making the choice, see the discussion in chapter 1 under Nonresident Alien Spouse Treated as a Resident . Amended tax returns more:label_amended_20tax_20returns more:taxes Waiver of minimum time requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes   The minimum time requirements for bona fide residence and physical presence can be waived if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Amended tax returns more:label_amended_20tax_20returns more:taxes This is fully explained under Waiver of Time Requirements , later. Amended tax returns more:label_amended_20tax_20returns more:taxes   See Figure 4-A and information in this chapter to determine if you are eligible to claim either exclusion or the deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax Home in Foreign Country To qualify for the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, your tax home must be in a foreign country throughout your period of bona fide residence or physical presence abroad. Amended tax returns more:label_amended_20tax_20returns more:taxes Bona fide residence and physical presence are explained later. Amended tax returns more:label_amended_20tax_20returns more:taxes Tax Home Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. Amended tax returns more:label_amended_20tax_20returns more:taxes Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Amended tax returns more:label_amended_20tax_20returns more:taxes Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes. Amended tax returns more:label_amended_20tax_20returns more:taxes If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. Amended tax returns more:label_amended_20tax_20returns more:taxes If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work. Amended tax returns more:label_amended_20tax_20returns more:taxes You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes However, your abode is not necessarily in the United States while you are temporarily in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United States, whether or not your spouse or dependents use the dwelling. Amended tax returns more:label_amended_20tax_20returns more:taxes “Abode” has been variously defined as one's home, habitation, residence, domicile, or place of dwelling. Amended tax returns more:label_amended_20tax_20returns more:taxes It does not mean your principal place of business. Amended tax returns more:label_amended_20tax_20returns more:taxes “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home. Amended tax returns more:label_amended_20tax_20returns more:taxes ” The location of your abode often will depend on where you maintain your economic, family, and personal ties. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. Amended tax returns more:label_amended_20tax_20returns more:taxes You return to your family residence in the United States during your off periods. Amended tax returns more:label_amended_20tax_20returns more:taxes You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot claim either of the exclusions or the housing deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes For several years, you were a marketing executive with a producer of machine tools in Toledo, Ohio. Amended tax returns more:label_amended_20tax_20returns more:taxes In November of last year, your employer transferred you to London, England, for a minimum of 18 months to set up a sales operation for Europe. Amended tax returns more:label_amended_20tax_20returns more:taxes Before you left, you distributed business cards showing your business and home addresses in London. Amended tax returns more:label_amended_20tax_20returns more:taxes You kept ownership of your home in Toledo but rented it to another family. Amended tax returns more:label_amended_20tax_20returns more:taxes You placed your car in storage. Amended tax returns more:label_amended_20tax_20returns more:taxes In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London. Amended tax returns more:label_amended_20tax_20returns more:taxes Shortly after moving, you leased a car and you and your spouse got British driving licenses. Amended tax returns more:label_amended_20tax_20returns more:taxes Your entire family got library cards for the local public library. Amended tax returns more:label_amended_20tax_20returns more:taxes You and your spouse opened bank accounts with a London bank and secured consumer credit. Amended tax returns more:label_amended_20tax_20returns more:taxes You joined a local business league and both you and your spouse became active in the neighborhood civic association and worked with a local charity. Amended tax returns more:label_amended_20tax_20returns more:taxes Your abode is in London for the time you live there. Amended tax returns more:label_amended_20tax_20returns more:taxes You satisfy the tax home test in the foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes Please click here for the text description of the image. Amended tax returns more:label_amended_20tax_20returns more:taxes Figure 4–A Can I Claim the Exclusion or Deduction? Temporary or Indefinite Assignment The location of your tax home often depends on whether your assignment is temporary or indefinite. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are temporarily absent from your tax home in the United States on business, you may be able to deduct your away-from-home expenses (for travel, meals, and lodging), but you would not qualify for the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes If your new work assignment is for an indefinite period, your new place of employment becomes your tax home and you would not be able to deduct any of the related expenses that you have in the general area of this new work assignment. Amended tax returns more:label_amended_20tax_20returns more:taxes If your new tax home is in a foreign country and you meet the other requirements, your earnings may qualify for the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes If you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. Amended tax returns more:label_amended_20tax_20returns more:taxes If you expect it to last for more than 1 year, it is indefinite. Amended tax returns more:label_amended_20tax_20returns more:taxes If you expect it to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Amended tax returns more:label_amended_20tax_20returns more:taxes Once your expectation changes, it is indefinite. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign Country To meet the bona fide residence test or the physical presence test, you must live in or be present in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes A foreign country includes any territory under the sovereignty of a government other than that of the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes The term “foreign country” includes the country's airspace and territorial waters, but not international waters and the airspace above them. Amended tax returns more:label_amended_20tax_20returns more:taxes It also includes the seabed and subsoil of those submarine areas adjacent to the country's territorial waters over which it has exclusive rights under international law to explore and exploit the natural resources. Amended tax returns more:label_amended_20tax_20returns more:taxes The term “foreign country” does not include Antarctica or U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes possessions such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Virgin Islands, and Johnston Island. Amended tax returns more:label_amended_20tax_20returns more:taxes For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, the terms “foreign,” “abroad,” and “overseas” refer to areas outside the United States and those areas listed or described in the previous sentence. Amended tax returns more:label_amended_20tax_20returns more:taxes American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands Residence or presence in a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes possession does not qualify you for the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes You may, however, qualify for an exclusion of your possession income on your U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes return. Amended tax returns more:label_amended_20tax_20returns more:taxes American Samoa. Amended tax returns more:label_amended_20tax_20returns more:taxes   There is a possession exclusion available to individuals who are bona fide residents of American Samoa for the entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes Gross income from sources within American Samoa may be eligible for this exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Income that is effectively connected with the conduct of a trade or business within American Samoa also may be eligible for this exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Use Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, to figure the exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Guam and the Commonwealth of the Northern Mariana Islands. Amended tax returns more:label_amended_20tax_20returns more:taxes   An exclusion will be available to residents of Guam and the Commonwealth of the Northern Mariana Islands if, and when, new implementation agreements take effect between the United States and those possessions. Amended tax returns more:label_amended_20tax_20returns more:taxes   For more information, see Publication 570. Amended tax returns more:label_amended_20tax_20returns more:taxes Puerto Rico and U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Virgin Islands Residents of Puerto Rico and the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Virgin Islands cannot claim the foreign earned income exclusion or the foreign housing exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Puerto Rico. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, if you are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen who is a bona fide resident of Puerto Rico for the entire tax year, you are not subject to U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes tax on income from Puerto Rican sources. Amended tax returns more:label_amended_20tax_20returns more:taxes This does not include amounts paid for services performed as an employee of the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes However, you are subject to U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes tax on your income from sources outside Puerto Rico. Amended tax returns more:label_amended_20tax_20returns more:taxes In figuring your U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes tax, you cannot deduct expenses allocable to income not subject to tax. Amended tax returns more:label_amended_20tax_20returns more:taxes Bona Fide Residence Test You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes You can use the bona fide residence test to qualify for the exclusions and the deduction only if you are either: A U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen, or A U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not automatically acquire bona fide resident status merely by living in a foreign country or countries for 1 year. Amended tax returns more:label_amended_20tax_20returns more:taxes If you go to a foreign country to work on a particular job for a specified period of time, you ordinarily will not be regarded as a bona fide resident of that country even though you work there for 1 tax year or longer. Amended tax returns more:label_amended_20tax_20returns more:taxes The length of your stay and the nature of your job are only two of the factors to be considered in determining whether you meet the bona fide residence test. Amended tax returns more:label_amended_20tax_20returns more:taxes Bona fide residence. Amended tax returns more:label_amended_20tax_20returns more:taxes   To meet the bona fide residence test, you must have established a bona fide residence in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes   Your bona fide residence is not necessarily the same as your domicile. Amended tax returns more:label_amended_20tax_20returns more:taxes Your domicile is your permanent home, the place to which you always return or intend to return. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You could have your domicile in Cleveland, Ohio, and a bona fide residence in Edinburgh, Scotland, if you intend to return eventually to Cleveland. Amended tax returns more:label_amended_20tax_20returns more:taxes The fact that you go to Scotland does not automatically make Scotland your bona fide residence. Amended tax returns more:label_amended_20tax_20returns more:taxes If you go there as a tourist, or on a short business trip, and return to the United States, you have not established bona fide residence in Scotland. Amended tax returns more:label_amended_20tax_20returns more:taxes But if you go to Scotland to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes You are clearly not a resident of Scotland in the first instance. Amended tax returns more:label_amended_20tax_20returns more:taxes However, in the second, you are a resident because your stay in Scotland appears to be permanent. Amended tax returns more:label_amended_20tax_20returns more:taxes If your residency is not as clearly defined as either of these illustrations, it may be more difficult to decide whether you have established a bona fide residence. Amended tax returns more:label_amended_20tax_20returns more:taxes Determination. Amended tax returns more:label_amended_20tax_20returns more:taxes   Questions of bona fide residence are determined according to each individual case, taking into account factors such as your intention, the purpose of your trip, and the nature and length of your stay abroad. Amended tax returns more:label_amended_20tax_20returns more:taxes   To meet the bona fide residence test, you must show the Internal Revenue Service (IRS) that you have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes The IRS decides whether you are a bona fide resident of a foreign country largely on the basis of facts you report on Form 2555. Amended tax returns more:label_amended_20tax_20returns more:taxes IRS cannot make this determination until you file Form 2555. Amended tax returns more:label_amended_20tax_20returns more:taxes Statement to foreign authorities. Amended tax returns more:label_amended_20tax_20returns more:taxes   You are not considered a bona fide resident of a foreign country if you make a statement to the authorities of that country that you are not a resident of that country, and the authorities: Hold that you are not subject to their income tax laws as a resident, or Have not made a final decision on your status. Amended tax returns more:label_amended_20tax_20returns more:taxes Special agreements and treaties. Amended tax returns more:label_amended_20tax_20returns more:taxes   An income tax exemption provided in a treaty or other international agreement will not in itself prevent you from being a bona fide resident of a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes Whether a treaty prevents you from becoming a bona fide resident of a foreign country is determined under all provisions of the treaty, including specific provisions relating to residence or privileges and immunities. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen employed in the United Kingdom by a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes employer under contract with the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Armed Forces. Amended tax returns more:label_amended_20tax_20returns more:taxes You are not subject to the North Atlantic Treaty Status of Forces Agreement. Amended tax returns more:label_amended_20tax_20returns more:taxes You may be a bona fide resident of the United Kingdom. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen in the United Kingdom who qualifies as an “employee” of an armed service or as a member of a “civilian component” under the North Atlantic Treaty Status of Forces Agreement. Amended tax returns more:label_amended_20tax_20returns more:taxes You are not a bona fide resident of the United Kingdom. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 3. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen employed in Japan by a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes employer under contract with the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Armed Forces. Amended tax returns more:label_amended_20tax_20returns more:taxes You are subject to the agreement of the Treaty of Mutual Cooperation and Security between the United States and Japan. Amended tax returns more:label_amended_20tax_20returns more:taxes Being subject to the agreement does not make you a bona fide resident of Japan. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 4. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen employed as an “official” by the United Nations in Switzerland. Amended tax returns more:label_amended_20tax_20returns more:taxes You are exempt from Swiss taxation on the salary or wages paid to you by the United Nations. Amended tax returns more:label_amended_20tax_20returns more:taxes This does not prevent you from being a bona fide resident of Switzerland. Amended tax returns more:label_amended_20tax_20returns more:taxes Effect of voting by absentee ballot. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen living abroad, you can vote by absentee ballot in any election held in the United States without risking your status as a bona fide resident of a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes   However, if you give information to the local election officials about the nature and length of your stay abroad that does not match the information you give for the bona fide residence test, the information given in connection with absentee voting will be considered in determining your status, but will not necessarily be conclusive. Amended tax returns more:label_amended_20tax_20returns more:taxes Uninterrupted period including entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes   To meet the bona fide residence test, you must reside in a foreign country or countries for an uninterrupted period that includes an entire tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes An entire tax year is from January 1 through December 31 for taxpayers who file their income tax returns on a calendar year basis. Amended tax returns more:label_amended_20tax_20returns more:taxes   During the period of bona fide residence in a foreign country, you can leave the country for brief or temporary trips back to the United States or elsewhere for vacation or business. Amended tax returns more:label_amended_20tax_20returns more:taxes To keep your status as a bona fide resident of a foreign country, you must have a clear intention of returning from such trips, without unreasonable delay, to your foreign residence or to a new bona fide residence in another foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You arrived with your family in Lisbon, Portugal, on November 1, 2011. Amended tax returns more:label_amended_20tax_20returns more:taxes Your assignment is indefinite, and you intend to live there with your family until your company sends you to a new post. Amended tax returns more:label_amended_20tax_20returns more:taxes You immediately established residence there. Amended tax returns more:label_amended_20tax_20returns more:taxes You spent April of 2012 at a business conference in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Your family stayed in Lisbon. Amended tax returns more:label_amended_20tax_20returns more:taxes Immediately following the conference, you returned to Lisbon and continued living there. Amended tax returns more:label_amended_20tax_20returns more:taxes On January 1, 2013, you completed an uninterrupted period of residence for a full tax year (2012), and you meet the bona fide residence test. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Assume the same facts as in Example 1, except that you transferred back to the United States on December 13, 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes You would not meet the bona fide residence test because your bona fide residence in the foreign country, although it lasted more than a year, did not include a full tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test (discussed later). Amended tax returns more:label_amended_20tax_20returns more:taxes Bona fide resident for part of a year. Amended tax returns more:label_amended_20tax_20returns more:taxes   Once you have established bona fide residence in a foreign country for an uninterrupted period that includes an entire tax year, you are a bona fide resident of that country for the period starting with the date you actually began the residence and ending with the date you abandon the foreign residence. Amended tax returns more:label_amended_20tax_20returns more:taxes Your period of bona fide residence can include an entire tax year plus parts of 2 other tax years. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You were a bona fide resident of Singapore from March 1, 2011, through September 14, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes On September 15, 2013, you returned to the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Since you were a bona fide resident of a foreign country for all of 2012, you were also a bona fide resident of a foreign country from March 1, 2011, through the end of 2011 and from January 1, 2013, through September 14, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Reassignment. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are assigned from one foreign post to another, you may or may not have a break in foreign residence between your assignments, depending on the circumstances. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You were a resident of Pakistan from October 1, 2012, through November 30, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes On December 1, 2013, you and your family returned to the United States to wait for an assignment to another foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes Your household goods also were returned to the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Your foreign residence ended on November 30, 2013, and did not begin again until after you were assigned to another foreign country and physically entered that country. Amended tax returns more:label_amended_20tax_20returns more:taxes Since you were not a bona fide resident of a foreign country for the entire tax year of 2012 or 2013 you do not meet the bona fide residence test in either year. Amended tax returns more:label_amended_20tax_20returns more:taxes You may, however, qualify for the foreign earned income exclusion or the housing exclusion or deduction under the physical presence test, discussed later. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Assume the same facts as in Example 1, except that upon completion of your assignment in Pakistan you were given a new assignment to Turkey. Amended tax returns more:label_amended_20tax_20returns more:taxes On December 1, 2013, you and your family returned to the United States for a month's vacation. Amended tax returns more:label_amended_20tax_20returns more:taxes On January 2, 2014, you arrived in Turkey for your new assignment. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you did not interrupt your bona fide residence abroad, you meet the bona fide residence test. Amended tax returns more:label_amended_20tax_20returns more:taxes Physical Presence Test You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months. Amended tax returns more:label_amended_20tax_20returns more:taxes The 330 days do not have to be consecutive. Amended tax returns more:label_amended_20tax_20returns more:taxes Any U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen or resident alien can use the physical presence test to qualify for the exclusions and the deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes The physical presence test is based only on how long you stay in a foreign country or countries. Amended tax returns more:label_amended_20tax_20returns more:taxes This test does not depend on the kind of residence you establish, your intentions about returning, or the nature and purpose of your stay abroad. Amended tax returns more:label_amended_20tax_20returns more:taxes 330 full days. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, to meet the physical presence test, you must be physically present in a foreign country or countries for at least 330 full days during a 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes You can count days you spent abroad for any reason. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not have to be in a foreign country only for employment purposes. Amended tax returns more:label_amended_20tax_20returns more:taxes You can be on vacation. Amended tax returns more:label_amended_20tax_20returns more:taxes   You do not meet the physical presence test if illness, family problems, a vacation, or your employer's orders cause you to be present for less than the required amount of time. Amended tax returns more:label_amended_20tax_20returns more:taxes Exception. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can be physically present in a foreign country or countries for less than 330 full days and still meet the physical presence test if you are required to leave a country because of war or civil unrest. Amended tax returns more:label_amended_20tax_20returns more:taxes See Waiver of Time Requirements, later. Amended tax returns more:label_amended_20tax_20returns more:taxes Full day. Amended tax returns more:label_amended_20tax_20returns more:taxes   A full day is a period of 24 consecutive hours, beginning at midnight. Amended tax returns more:label_amended_20tax_20returns more:taxes Travel. Amended tax returns more:label_amended_20tax_20returns more:taxes    When you leave the United States to go directly to a foreign country or when you return directly to the United States from a foreign country, the time you spend on or over international waters does not count toward the 330-day total. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You leave the United States for France by air on June 10. Amended tax returns more:label_amended_20tax_20returns more:taxes You arrive in France at 9:00 a. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on June 11. Amended tax returns more:label_amended_20tax_20returns more:taxes Your first full day of physical presence in France is June 12. Amended tax returns more:label_amended_20tax_20returns more:taxes Passing over foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes   If, in traveling from the United States to a foreign country, you pass over a foreign country before midnight of the day you leave, the first day you can count toward the 330-day total is the day following the day you leave the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You leave the United States by air at 9:30 a. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on June 10 to travel to Kenya. Amended tax returns more:label_amended_20tax_20returns more:taxes You pass over western Africa at 11:00 p. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on June 10 and arrive in Kenya at 12:30 a. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on June 11. Amended tax returns more:label_amended_20tax_20returns more:taxes Your first full day in a foreign country is June 11. Amended tax returns more:label_amended_20tax_20returns more:taxes Change of location. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can move about from one place to another in a foreign country or to another foreign country without losing full days. Amended tax returns more:label_amended_20tax_20returns more:taxes If any part of your travel is not within any foreign country and takes less than 24 hours, you are considered to be in a foreign country during that part of travel. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You leave Ireland by air at 11:00 p. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on July 6 and arrive in Sweden at 5:00 a. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on July 7. Amended tax returns more:label_amended_20tax_20returns more:taxes Your trip takes less than 24 hours and you lose no full days. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes You leave Norway by ship at 10:00 p. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on July 6 and arrive in Portugal at 6:00 a. Amended tax returns more:label_amended_20tax_20returns more:taxes m. Amended tax returns more:label_amended_20tax_20returns more:taxes on July 8. Amended tax returns more:label_amended_20tax_20returns more:taxes Since your travel is not within a foreign country or countries and the trip takes more than 24 hours, you lose as full days July 6, 7, and 8. Amended tax returns more:label_amended_20tax_20returns more:taxes If you remain in Portugal, your next full day in a foreign country is July 9. Amended tax returns more:label_amended_20tax_20returns more:taxes In United States while in transit. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are in transit between two points outside the United States and are physically present in the United States for less than 24 hours, you are not treated as present in the United States during the transit. Amended tax returns more:label_amended_20tax_20returns more:taxes You are treated as traveling over areas not within any foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes    Please click here for the text description of the image. Amended tax returns more:label_amended_20tax_20returns more:taxes Figure 4-B How to figure the 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes   There are four rules you should know when figuring the 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes Your 12-month period can begin with any day of the month. Amended tax returns more:label_amended_20tax_20returns more:taxes It ends the day before the same calendar day, 12 months later. Amended tax returns more:label_amended_20tax_20returns more:taxes Your 12-month period must be made up of consecutive months. Amended tax returns more:label_amended_20tax_20returns more:taxes Any 12-month period can be used if the 330 days in a foreign country fall within that period. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not have to begin your 12-month period with your first full day in a foreign country or end it with the day you leave. Amended tax returns more:label_amended_20tax_20returns more:taxes You can choose the 12-month period that gives you the greatest exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes In determining whether the 12-month period falls within a longer stay in the foreign country, 12-month periods can overlap one another. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a construction worker who works on and off in a foreign country over a 20-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes You might pick up the 330 full days in a 12-month period only during the middle months of the time you work in the foreign country because the first few and last few months of the 20-month period are broken up by long visits to the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes You work in New Zealand for a 20-month period from January 1, 2012, through August 31, 2013, except that you spend 28 days in February 2012 and 28 days in February 2013 on vacation in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes You are present in New Zealand for at least 330 full days during each of the following two 12-month periods: January 1, 2012 – December 31, 2012 and September 1, 2012 – August 31, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes By overlapping the 12-month periods in this way, you meet the physical presence test for the whole 20-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes See Figure 4-B, on the previous page. Amended tax returns more:label_amended_20tax_20returns more:taxes Waiver of Time Requirements Both the bona fide residence test and the physical presence test contain minimum time requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes The minimum time requirements can be waived, however, if you must leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Amended tax returns more:label_amended_20tax_20returns more:taxes You must be able to show that you reasonably could have expected to meet the minimum time requirements if not for the adverse conditions. Amended tax returns more:label_amended_20tax_20returns more:taxes To qualify for the waiver, you must actually have your tax home in the foreign country and be a bona fide resident of, or be physically present in, the foreign country on or before the beginning date of the waiver. Amended tax returns more:label_amended_20tax_20returns more:taxes Early in 2014, the IRS will publish in the Internal Revenue Bulletin a list of the only countries that qualify for the waiver for 2013 and the effective dates. Amended tax returns more:label_amended_20tax_20returns more:taxes If you left one of the countries on or after the date listed for each country, you can meet the bona fide residence test or physical presence test for 2013 without meeting the minimum time requirement. Amended tax returns more:label_amended_20tax_20returns more:taxes However, in figuring your exclusion, the number of your qualifying days of bona fide residence or physical presence includes only days of actual residence or presence within the country. Amended tax returns more:label_amended_20tax_20returns more:taxes U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Travel Restrictions If you are present in a foreign country in violation of U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes law, you will not be treated as a bona fide resident of a foreign country or as physically present in a foreign country while you are in violation of the law. Amended tax returns more:label_amended_20tax_20returns more:taxes Income that you earn from sources within such a country for services performed during a period of violation does not qualify as foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Your housing expenses within that country (or outside that country for housing your spouse or dependents) while you are in violation of the law cannot be included in figuring your foreign housing amount. Amended tax returns more:label_amended_20tax_20returns more:taxes For 2013, the only country to which travel restrictions applied was Cuba. Amended tax returns more:label_amended_20tax_20returns more:taxes The restrictions applied for the entire year. Amended tax returns more:label_amended_20tax_20returns more:taxes However, individuals working at the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Naval Base at Guantanamo Bay in Cuba are not in violation of U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes law. Amended tax returns more:label_amended_20tax_20returns more:taxes Personal service income earned by individuals at the base is eligible for the foreign earned income exclusion provided the other requirements are met. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign Earned Income To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign earned income generally is income you receive for services you perform during a period in which you meet both of the following requirements. Amended tax returns more:label_amended_20tax_20returns more:taxes Your tax home is in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes You meet either the bona fide residence test or the physical presence test. Amended tax returns more:label_amended_20tax_20returns more:taxes To determine whether your tax home is in a foreign country, see Tax Home in Foreign Country, earlier. Amended tax returns more:label_amended_20tax_20returns more:taxes To determine whether you meet either the bona fide residence test or the physical presence test, see Bona Fide Residence Test and Physical Presence Test, earlier. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign earned income does not include the following amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes The value of meals and lodging that you exclude from your income because the meals and lodging were furnished for the convenience of your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes Pension or annuity payments you receive, including social security benefits (see Pensions and annuities, later). Amended tax returns more:label_amended_20tax_20returns more:taxes Pay you receive as an employee of the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government. Amended tax returns more:label_amended_20tax_20returns more:taxes (See U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government Employees, later. Amended tax returns more:label_amended_20tax_20returns more:taxes ) Amounts you include in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualified annuity contract. Amended tax returns more:label_amended_20tax_20returns more:taxes Any unallowable moving expense deduction that you choose to recapture as explained under Moving Expense Attributable to Foreign Earnings in 2 Years in chapter 5. Amended tax returns more:label_amended_20tax_20returns more:taxes Payments you receive after the end of the tax year following the tax year in which you performed the services that earned the income. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   This is pay for personal services performed, such as wages, salaries, or professional fees. Amended tax returns more:label_amended_20tax_20returns more:taxes The list that follows classifies many types of income into three categories. Amended tax returns more:label_amended_20tax_20returns more:taxes The column headed Variable Income lists income that may fall into either the earned income category, the unearned income category, or partly into both. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information on earned and unearned income, see Earned and Unearned Income, later. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned Income Unearned Income Variable Income Salaries and wages Dividends Business profits Commissions Interest Royalties Bonuses Capital gains Rents Professional fees Gambling winnings Scholarships and fellowships Tips Alimony     Social security benefits     Pensions     Annuities     In addition to the types of earned income listed, certain noncash income and allowances or reimbursements are considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Noncash income. Amended tax returns more:label_amended_20tax_20returns more:taxes   The fair market value of property or facilities provided to you by your employer in the form of lodging, meals, or use of a car is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Allowances or reimbursements. Amended tax returns more:label_amended_20tax_20returns more:taxes   Earned income includes allowances or reimbursements you receive, such as the following amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes    Cost-of-living allowances. Amended tax returns more:label_amended_20tax_20returns more:taxes Overseas differential. Amended tax returns more:label_amended_20tax_20returns more:taxes Family allowance. Amended tax returns more:label_amended_20tax_20returns more:taxes Reimbursement for education or education allowance. Amended tax returns more:label_amended_20tax_20returns more:taxes Home leave allowance. Amended tax returns more:label_amended_20tax_20returns more:taxes Quarters allowance. Amended tax returns more:label_amended_20tax_20returns more:taxes Reimbursement for moving or moving allowance (unless excluded from income as discussed later in Reimbursement of employee expenses under Earned and Unearned Income). Amended tax returns more:label_amended_20tax_20returns more:taxes Source of Earned Income The source of your earned income is the place where you perform the services for which you received the income. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign earned income is income you receive for working in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes Where or how you are paid has no effect on the source of the income. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, income you receive for work done in Austria is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen, a bona fide resident of Canada, and working as a mining engineer. Amended tax returns more:label_amended_20tax_20returns more:taxes Your salary is $76,800 per year. Amended tax returns more:label_amended_20tax_20returns more:taxes You also receive a $6,000 cost-of-living allowance, and a $6,000 education allowance. Amended tax returns more:label_amended_20tax_20returns more:taxes Your employment contract did not indicate that you were entitled to these allowances only while outside the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Your total income is $88,800. Amended tax returns more:label_amended_20tax_20returns more:taxes You work a 5-day week, Monday through Friday. Amended tax returns more:label_amended_20tax_20returns more:taxes After subtracting your vacation, you have a total of 240 workdays in the year. Amended tax returns more:label_amended_20tax_20returns more:taxes You worked in the United States during the year for 6 weeks (30 workdays). Amended tax returns more:label_amended_20tax_20returns more:taxes The following shows how to figure the part of your income that is for work done in Canada during the year. Amended tax returns more:label_amended_20tax_20returns more:taxes   Number of days worked in Canada during the year (210) × Total income ($88,800) = $77,700     Number of days of work during the year for which payment was made (240)   Your foreign source earned income is $77,700. Amended tax returns more:label_amended_20tax_20returns more:taxes Earned and Unearned Income Earned income was defined earlier as pay for personal services performed. Amended tax returns more:label_amended_20tax_20returns more:taxes Some types of income are not easily identified as earned or unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Some of these types of income are further explained here. Amended tax returns more:label_amended_20tax_20returns more:taxes Income from a sole proprietorship or partnership. Amended tax returns more:label_amended_20tax_20returns more:taxes   Income from a business in which capital investment is an important part of producing the income may be unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a sole proprietor or partner and your personal services are also an important part of producing the income, the part of the income that represents the value of your personal services will be treated as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Capital a factor. Amended tax returns more:label_amended_20tax_20returns more:taxes   If capital investment is an important part of producing income, no more than 30% of your share of the net profits of the business is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you have no net profits, the part of your gross profit that represents a reasonable allowance for personal services actually performed is considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you do not have a net profit, the 30% limit does not apply. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen and meet the bona fide residence test. Amended tax returns more:label_amended_20tax_20returns more:taxes You invest in a partnership based in Cameroon that is engaged solely in selling merchandise outside the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes You perform no services for the partnership. Amended tax returns more:label_amended_20tax_20returns more:taxes At the end of the tax year, your share of the net profits is $80,000. Amended tax returns more:label_amended_20tax_20returns more:taxes The entire $80,000 is unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes Assume that in Example 1 you spend time operating the business. Amended tax returns more:label_amended_20tax_20returns more:taxes Your share of the net profits is $80,000; 30% of your share of the profits is $24,000. Amended tax returns more:label_amended_20tax_20returns more:taxes If the value of your services for the year is $15,000, your earned income is limited to the value of your services, $15,000. Amended tax returns more:label_amended_20tax_20returns more:taxes Capital not a factor. Amended tax returns more:label_amended_20tax_20returns more:taxes   If capital is not an income-producing factor and personal services produce the business income, the 30% rule does not apply. Amended tax returns more:label_amended_20tax_20returns more:taxes The entire amount of business income is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You and Lou Green are management consultants and operate as equal partners in performing services outside the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes Because capital is not an income- producing factor, all the income from the partnership is considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Income from a corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes   The salary you receive from a corporation is earned income only if it represents a reasonable allowance as compensation for work you do for the corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes Any amount over what is considered a reasonable salary is unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 1. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen and an officer and stockholder of a corporation in Honduras. Amended tax returns more:label_amended_20tax_20returns more:taxes You perform no work or service of any kind for the corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes During the tax year you receive a $10,000 “salary” from the corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes The $10,000 clearly is not for personal services and is unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example 2. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen and work full time as secretary-treasurer of your corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes During the tax year you receive $100,000 as salary from the corporation. Amended tax returns more:label_amended_20tax_20returns more:taxes If $80,000 is a reasonable allowance as pay for the work you did, then $80,000 is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Stock options. Amended tax returns more:label_amended_20tax_20returns more:taxes   You may have earned income if you disposed of stock that you got by exercising a stock option granted to you under an employee stock purchase plan. Amended tax returns more:label_amended_20tax_20returns more:taxes   If your gain on the disposition of stock you got by exercising an option is treated as capital gain, your gain is unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   However, if you disposed of the stock less than 2 years after you were granted the option or less than 1 year after you got the stock, part of the gain on the disposition may be earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes It is considered received in the year you disposed of the stock and earned in the year you performed the services for which you were granted the option. Amended tax returns more:label_amended_20tax_20returns more:taxes Any part of the earned income that is due to work you did outside the United States is foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   See Publication 525, Taxable and Nontaxable Income, for a discussion of the treatment of stock options. Amended tax returns more:label_amended_20tax_20returns more:taxes Pensions and annuities. Amended tax returns more:label_amended_20tax_20returns more:taxes    For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, amounts received as pensions or annuities are unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Royalties. Amended tax returns more:label_amended_20tax_20returns more:taxes   Royalties from the leasing of oil and mineral lands and patents generally are a form of rent or dividends and are unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   Royalties received by a writer are earned income if they are received: For the transfer of property rights of the writer in the writer's product, or Under a contract to write a book or series of articles. Amended tax returns more:label_amended_20tax_20returns more:taxes Rental income. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, rental income is unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you perform personal services in connection with the production of rent, up to 30% of your net rental income can be considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes Larry Smith, a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen living in Australia, owns and operates a rooming house in Sydney. Amended tax returns more:label_amended_20tax_20returns more:taxes If he is operating the rooming house as a business that requires capital and personal services, he can consider up to 30% of net rental income as earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes On the other hand, if he just owns the rooming house and performs no personal services connected with its operation, except perhaps making minor repairs and collecting rents, none of his net income from the house is considered earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes It is all unearned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Professional fees. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are engaged in a professional occupation (such as a doctor or lawyer), all fees received in the performance of these services are earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Income of an artist. Amended tax returns more:label_amended_20tax_20returns more:taxes   Income you receive from the sale of paintings you created is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Scholarships and fellowships. Amended tax returns more:label_amended_20tax_20returns more:taxes   Any portion of a scholarship or fellowship grant that is paid to you for teaching, research or other services is considered earned income if you must include it in your gross income. Amended tax returns more:label_amended_20tax_20returns more:taxes If the payer of the grant is required to provide you with a Form W-2, Wage and Tax Statement, these amounts will be listed as wages. Amended tax returns more:label_amended_20tax_20returns more:taxes    Certain scholarship and fellowship income may be exempt under other provisions. Amended tax returns more:label_amended_20tax_20returns more:taxes See Publication 970, Tax Benefits for Education, chapter 1. Amended tax returns more:label_amended_20tax_20returns more:taxes Use of employer's property or facilities. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you receive fringe benefits in the form of the right to use your employer's property or facilities, the fair market value of that right is earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being required to buy or sell, and both having reasonable knowledge of all the necessary facts. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are privately employed and live in Japan all year. Amended tax returns more:label_amended_20tax_20returns more:taxes You are paid a salary of $6,000 a month. Amended tax returns more:label_amended_20tax_20returns more:taxes You live rent-free in a house provided by your employer that has a fair rental value of $3,000 a month. Amended tax returns more:label_amended_20tax_20returns more:taxes The house is not provided for your employer's convenience. Amended tax returns more:label_amended_20tax_20returns more:taxes You report on the calendar-year, cash basis. Amended tax returns more:label_amended_20tax_20returns more:taxes You received $72,000 salary from foreign sources plus $36,000 fair rental value of the house, or a total of $108,000 of earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Reimbursement of employee expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are reimbursed under an accountable plan (defined below) for expenses you incur on your employer's behalf and you have adequately accounted to your employer for the expenses, do not include the reimbursement for those expenses in your earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   The expenses for which you are reimbursed are not considered allocable (related) to your earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If expenses and reimbursement are equal, there is nothing to allocate to excluded income. Amended tax returns more:label_amended_20tax_20returns more:taxes If expenses are more than the reimbursement, the unreimbursed expenses are considered to have been incurred in producing earned income and must be divided between your excluded and included income in determining the amount of unreimbursed expenses you can deduct. Amended tax returns more:label_amended_20tax_20returns more:taxes (See chapter 5. Amended tax returns more:label_amended_20tax_20returns more:taxes ) If the reimbursement is more than the expenses, no expenses remain to be divided between excluded and included income and the excess reimbursement must be included in earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes   These rules do not apply to the following individuals. Amended tax returns more:label_amended_20tax_20returns more:taxes Straight-commission salespersons. Amended tax returns more:label_amended_20tax_20returns more:taxes Employees who have arrangements with their employers under which taxes are not withheld on a percentage of the commissions because the employers consider that percentage to be attributable to the employees' expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes Accountable plan. Amended tax returns more:label_amended_20tax_20returns more:taxes   An accountable plan is a reimbursement or allowance arrangement that includes all three of the following rules. Amended tax returns more:label_amended_20tax_20returns more:taxes The expenses covered under the plan must have a business connection. Amended tax returns more:label_amended_20tax_20returns more:taxes The employee must adequately account to the employer for these expenses within a reasonable period of time. Amended tax returns more:label_amended_20tax_20returns more:taxes The employee must return any excess reimbursement or allowance within a reasonable period of time. Amended tax returns more:label_amended_20tax_20returns more:taxes Reimbursement of moving expenses. Amended tax returns more:label_amended_20tax_20returns more:taxes   Reimbursement of moving expenses may be earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes You must include as earned income: Any reimbursements of, or payments for, nondeductible moving expenses, Reimbursements that are more than your deductible expenses and that you do not return to your employer, Any reimbursements made (or treated as made) under a nonaccountable plan (any plan that does not meet the rules listed above for an accountable plan), even if they are for deductible expenses, and Any reimbursement of moving expenses you deducted in an earlier year. Amended tax returns more:label_amended_20tax_20returns more:taxes This section discusses reimbursements that must be included in earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Publication 521, Moving Expenses, discusses additional rules that apply to moving expense deductions and reimbursements. Amended tax returns more:label_amended_20tax_20returns more:taxes   The rules for determining when the reimbursement is considered earned or where the reimbursement is considered earned may differ somewhat from the general rules previously discussed. Amended tax returns more:label_amended_20tax_20returns more:taxes   Although you receive the reimbursement in one tax year, it may be considered earned for services performed, or to be performed, in another tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes You must report the reimbursement as income on your return in the year you receive it, even if it is considered earned during a different year. Amended tax returns more:label_amended_20tax_20returns more:taxes Move from U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes to foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you move from the United States to a foreign country, your moving expense reimbursement is generally considered pay for future services to be performed at the new location. Amended tax returns more:label_amended_20tax_20returns more:taxes The reimbursement is considered earned solely in the year of the move if you qualify for the exclusion for a period that includes at least 120 days during that tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are neither a bona fide resident of nor physically present in a foreign country or countries for a period that includes 120 days during the year of the move, a portion of the reimbursement is considered earned in the year of the move and a portion is considered earned in the year following the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes To figure the amount earned in the year of the move, multiply the reimbursement by a fraction. Amended tax returns more:label_amended_20tax_20returns more:taxes The numerator (top number) is the number of days in your qualifying period that fall within the year of the move, and the denominator (bottom number) is the total number of days in the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes   The difference between the total reimbursement and the amount considered earned in the year of the move is the amount considered earned in the year following the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes The part earned in each year is figured as shown in the following example. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen working in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes You were told in October 2012 that you were being transferred to a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes You arrived in the foreign country on December 15, 2012, and you are a bona fide resident for the remainder of 2012 and all of 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Your employer reimbursed you $2,000 in January 2013 for the part of the moving expense that you were not allowed to deduct. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you did not qualify for the exclusion under the bona fide residence test for at least 120 days in 2012 (the year of the move), the reimbursement is considered pay for services performed in the foreign country for both 2012 and 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You figure the part of the reimbursement for services performed in the foreign country in 2012 by multiplying the total reimbursement by a fraction. Amended tax returns more:label_amended_20tax_20returns more:taxes The fraction is the number of days during which you were a bona fide resident in 2012 (the year of the move) divided by 366. Amended tax returns more:label_amended_20tax_20returns more:taxes The remaining part of the reimbursement is for services performed in the foreign country in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes This computation is used only to determine when the reimbursement is considered earned. Amended tax returns more:label_amended_20tax_20returns more:taxes You would include the amount of the reimbursement in income in 2013, the year you received it. Amended tax returns more:label_amended_20tax_20returns more:taxes Move between foreign countries. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you move between foreign countries, any moving expense reimbursement that you must include in income will be considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days in the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes Move to U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you move to the United States, the moving expense reimbursement that you must include in income is generally considered to be U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes source income. Amended tax returns more:label_amended_20tax_20returns more:taxes   However, if under either an agreement between you and your employer or a statement of company policy that is reduced to writing before your move to the foreign country, your employer will reimburse you for your move back to the United States regardless of whether you continue to work for the employer, the includible reimbursement is considered compensation for past services performed in the foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes The includible reimbursement is considered earned in the year of the move if you qualify for the foreign earned income exclusion for a period that includes at least 120 days during that year. Amended tax returns more:label_amended_20tax_20returns more:taxes Otherwise, you treat the includible reimbursement as received for services performed in the foreign country in the year of the move and the year immediately before the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes   See the discussion under Move from U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes to foreign country , earlier, to figure the amount of the includible reimbursement considered earned in the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes The amount earned in the year before the year of the move is the difference between the total includible reimbursement and the amount earned in the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes citizen employed in a foreign country. Amended tax returns more:label_amended_20tax_20returns more:taxes You retired from employment with your employer on March 31, 2013, and returned to the United States after having been a bona fide resident of the foreign country for several years. Amended tax returns more:label_amended_20tax_20returns more:taxes A written agreement with your employer entered into before you went abroad provided that you would be reimbursed for your move back to the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes In April 2013, your former employer reimbursed you $4,000 for the part of the cost of your move back to the United States that you were not allowed to deduct. Amended tax returns more:label_amended_20tax_20returns more:taxes Because you were not a bona fide resident of a foreign country or countries for a period that included at least 120 days in 2013 (the year of the move), the includible reimbursement is considered pay for services performed in the foreign country for both 2013 and 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes You figure the part of the moving expense reimbursement for services performed in the foreign country for 2013 by multiplying the total includible reimbursement by a fraction. Amended tax returns more:label_amended_20tax_20returns more:taxes The fraction is the number of days of foreign residence during the year (90) divided by the number of days in the year (365). Amended tax returns more:label_amended_20tax_20returns more:taxes The remaining part of the includible reimbursement is for services performed in the foreign country in 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes You report the amount of the includible reimbursement in 2013, the year you received it. Amended tax returns more:label_amended_20tax_20returns more:taxes    In this example, if you met the physical presence test for a period that included at least 120 days in 2013, the moving expense reimbursement would be considered earned entirely in the year of the move. Amended tax returns more:label_amended_20tax_20returns more:taxes Storage expense reimbursements. Amended tax returns more:label_amended_20tax_20returns more:taxes   If you are reimbursed for storage expenses, the reimbursement is for services you perform during the period of time for which the storage expenses are incurred. Amended tax returns more:label_amended_20tax_20returns more:taxes U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government Employees For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. Amended tax returns more:label_amended_20tax_20returns more:taxes This includes amounts paid from both appropriated and nonappropriated funds. Amended tax returns more:label_amended_20tax_20returns more:taxes The following organizations (and other organizations similarly organized and operated under United States Army, Navy, or Air Force regulations) are integral parts of the Armed Forces, agencies, or instrumentalities of the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes United States Armed Forces exchanges. Amended tax returns more:label_amended_20tax_20returns more:taxes Commissioned and noncommissioned officers' messes. Amended tax returns more:label_amended_20tax_20returns more:taxes Armed Forces motion picture services. Amended tax returns more:label_amended_20tax_20returns more:taxes Kindergartens on foreign Armed Forces installations. Amended tax returns more:label_amended_20tax_20returns more:taxes Amounts paid by the United States or its agencies to persons who are not their employees may qualify for exclusion or deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government employee paid by a U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes agency that assigned you to a foreign government to perform specific services for which the agency is reimbursed by the foreign government, your pay is from the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government and does not qualify for exclusion or deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes If you have questions about whether you are an employee or an independent contractor, get Publication 15-A, Employer's Supplemental Tax Guide. Amended tax returns more:label_amended_20tax_20returns more:taxes American Institute in Taiwan. Amended tax returns more:label_amended_20tax_20returns more:taxes   Amounts paid by the American Institute in Taiwan are not foreign earned income for purposes of the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are an employee of the American Institute in Taiwan, allowances you receive are exempt from U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes tax up to the amount that equals tax-exempt allowances received by civilian employees of the U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government. Amended tax returns more:label_amended_20tax_20returns more:taxes Allowances. Amended tax returns more:label_amended_20tax_20returns more:taxes   Cost-of-living and foreign-area allowances paid under certain acts of Congress to U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes civilian officers and employees stationed in Alaska and Hawaii or elsewhere outside the 48 contiguous states and the District of Columbia can be excluded from gross income. Amended tax returns more:label_amended_20tax_20returns more:taxes Post differentials are wages that must be included in gross income, regardless of the act of Congress under which they are paid. Amended tax returns more:label_amended_20tax_20returns more:taxes More information. Amended tax returns more:label_amended_20tax_20returns more:taxes   Publication 516, U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government Civilian Employees Stationed Abroad, has more information for U. Amended tax returns more:label_amended_20tax_20returns more:taxes S. Amended tax returns more:label_amended_20tax_20returns more:taxes Government employees abroad. Amended tax returns more:label_amended_20tax_20returns more:taxes Exclusion of Meals and Lodging You do not include in your income the value of meals and lodging provided to you and your family by your employer at no charge if the following conditions are met. Amended tax returns more:label_amended_20tax_20returns more:taxes The meals are furnished: On the business premises of your employer, and For the convenience of your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes The lodging is furnished: On the business premises of your employer, For the convenience of your employer, and As a condition of your employment. Amended tax returns more:label_amended_20tax_20returns more:taxes If these conditions are met, do not include the value of the meals or lodging in your income, even if a law or your employment contract says that they are provided as compensation. Amended tax returns more:label_amended_20tax_20returns more:taxes Amounts you do not include in income because of these rules are not foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you receive a Form W-2, excludable amounts should not be included in the total reported in box 1 as wages. Amended tax returns more:label_amended_20tax_20returns more:taxes Family. Amended tax returns more:label_amended_20tax_20returns more:taxes   Your family, for this purpose, includes only your spouse and your dependents. Amended tax returns more:label_amended_20tax_20returns more:taxes Lodging. Amended tax returns more:label_amended_20tax_20returns more:taxes   The value of lodging includes the cost of heat, electricity, gas, water, sewer service, and similar items needed to make the lodging fit to live in. Amended tax returns more:label_amended_20tax_20returns more:taxes Business premises of employer. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, the business premises of your employer is wherever you work. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, if you work as a housekeeper, meals and lodging provided in your employer's home are provided on the business premises of your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes Similarly, meals provided to cowhands while herding cattle on land leased or owned by their employer are considered provided on the premises of their employer. Amended tax returns more:label_amended_20tax_20returns more:taxes Convenience of employer. Amended tax returns more:label_amended_20tax_20returns more:taxes   Whether meals or lodging are provided for your employer's convenience must be determined from all the facts and circumstances. Amended tax returns more:label_amended_20tax_20returns more:taxes Meals furnished at no charge are considered provided for your employer's convenience if there is a good business reason for providing them, other than to give you more pay. Amended tax returns more:label_amended_20tax_20returns more:taxes   On the other hand, if your employer provides meals to you or your family as a means of giving you more pay, and there is no other business reason for providing them, their value is extra income to you because they are not furnished for the convenience of your employer. Amended tax returns more:label_amended_20tax_20returns more:taxes Condition of employment. Amended tax returns more:label_amended_20tax_20returns more:taxes   Lodging is provided as a condition of employment if you must accept the lodging to properly carry out the duties of your job. Amended tax returns more:label_amended_20tax_20returns more:taxes You must accept lodging to properly carry out your duties if, for example, you must be available for duty at all times or you could not perform your duties if the lodging was not furnished. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign camps. Amended tax returns more:label_amended_20tax_20returns more:taxes   If the lodging is in a camp located in a foreign country, the camp is considered part of your employer's business premises. Amended tax returns more:label_amended_20tax_20returns more:taxes The camp must be: Provided for your employer's convenience because the place where you work is in a remote area where satisfactory housing is not available to you on the open market within a reasonable commuting distance, Located as close as reasonably possible in the area where you work, and Provided in a common area or enclave that is not available to the general public for lodging or accommodations and that normally houses at least ten employees. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign Earned Income Exclusion If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you can choose to exclude from your income a limited amount of your foreign earned income. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign earned income was defined earlier in this chapter. Amended tax returns more:label_amended_20tax_20returns more:taxes You also can choose to exclude from your income a foreign housing amount. Amended tax returns more:label_amended_20tax_20returns more:taxes This is explained later under Foreign Housing Exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes If you choose to exclude a foreign housing amount, you must figure the foreign housing exclusion before you figure the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Your foreign earned income exclusion is limited to your foreign earned income minus your foreign housing exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes If you choose to exclude foreign earned income, you cannot deduct, exclude, or claim a credit for any item that can be allocated to or charged against the excluded amounts. Amended tax returns more:label_amended_20tax_20returns more:taxes This includes any expenses, losses, and other normally deductible items allocable to the excluded income. Amended tax returns more:label_amended_20tax_20returns more:taxes For more information about deductions and credits, see chapter 5 . Amended tax returns more:label_amended_20tax_20returns more:taxes Limit on Excludable Amount You may be able to exclude up to $97,600 of your foreign earned income in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot exclude more than the smaller of: $97,600, or Your foreign earned income (discussed earlier) for the tax year minus your foreign housing exclusion (discussed later). Amended tax returns more:label_amended_20tax_20returns more:taxes If both you and your spouse work abroad and each of you meets either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes You do not both need to meet the same test. Amended tax returns more:label_amended_20tax_20returns more:taxes Together, you and your spouse can exclude as much as $195,200. Amended tax returns more:label_amended_20tax_20returns more:taxes Paid in year following work. Amended tax returns more:label_amended_20tax_20returns more:taxes   Generally, you are considered to have earned income in the year in which you do the work for which you receive the income, even if you work in one year but are not paid until the following year. Amended tax returns more:label_amended_20tax_20returns more:taxes If you report your income on a cash basis, you report the income on your return for the year you receive it. Amended tax returns more:label_amended_20tax_20returns more:taxes If you work one year, but are not paid for that work until the next year, the amount you can exclude in the year you are paid is the amount you could have excluded in the year you did the work if you had been paid in that year. Amended tax returns more:label_amended_20tax_20returns more:taxes For an exception to this general rule, see Year-end payroll period, later. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You were a bona fide resident of Brazil for all of 2012 and 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You report your income on the cash basis. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2012, you were paid $84,200 for work you did in Brazil during that year. Amended tax returns more:label_amended_20tax_20returns more:taxes You excluded all of the $84,200 from your income in 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2013, you were paid $117,300 for your work in Brazil. Amended tax returns more:label_amended_20tax_20returns more:taxes $18,800 was for work you did in 2012 and $98,500 was for work you did in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You can exclude $10,900 of the $18,800 from your income in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes This is the $95,100 maximum exclusion in 2012 minus the $84,200 actually excluded that year. Amended tax returns more:label_amended_20tax_20returns more:taxes You must include the remaining $7,900 in income in 2013 because you could not have excluded that income in 2012 if you had received it that year. Amended tax returns more:label_amended_20tax_20returns more:taxes You can exclude $97,600 of the $98,500 you were paid for work you did in 2013 from your 2013 income. Amended tax returns more:label_amended_20tax_20returns more:taxes Your total foreign earned income exclusion for 2013 is $108,500 ($10,900 for work you did in 2012 and $97,600 for work you did in 2013). Amended tax returns more:label_amended_20tax_20returns more:taxes You would include in your 2013 income $8,800 ($7,900 for the work you did in 2012 and $900 for the work you did in 2013). Amended tax returns more:label_amended_20tax_20returns more:taxes Year-end payroll period. Amended tax returns more:label_amended_20tax_20returns more:taxes   There is an exception to the general rule that income is considered earned in the year you do the work for which you receive the income. Amended tax returns more:label_amended_20tax_20returns more:taxes If you are a cash-basis taxpayer, any salary or wage payment you receive after the end of the year in which you do the work for which you receive the pay is considered earned entirely in the year you receive it if all four of the following apply. Amended tax returns more:label_amended_20tax_20returns more:taxes The period for which the payment is made is a normal payroll period of your employer that regularly applies to you. Amended tax returns more:label_amended_20tax_20returns more:taxes The payroll period includes the last day of your tax year (December 31 if you figure your taxes on a calendar-year basis). Amended tax returns more:label_amended_20tax_20returns more:taxes The payroll period is not longer than 16 days. Amended tax returns more:label_amended_20tax_20returns more:taxes The payday comes at the same time in relation to the payroll period that it would normally come and it comes before the end of the next payroll period. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are paid twice a month. Amended tax returns more:label_amended_20tax_20returns more:taxes For the normal payroll period that begins on the first of the month and ends on the fifteenth of the month, you are paid on the sixteenth day of the month. Amended tax returns more:label_amended_20tax_20returns more:taxes For the normal payroll period that begins on the sixteenth of the month and ends on the last day of the month, you are paid on the first day of the following month. Amended tax returns more:label_amended_20tax_20returns more:taxes Because all of the above conditions are met, the pay you received on January 1, 2013, is considered earned in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Income earned over more than 1 year. Amended tax returns more:label_amended_20tax_20returns more:taxes   Regardless of when you actually receive income, you must apply it to the year in which you earned it in figuring your excludable amount for that year. Amended tax returns more:label_amended_20tax_20returns more:taxes For example, a bonus may be based on work you did over several years. Amended tax returns more:label_amended_20tax_20returns more:taxes You determine the amount of the bonus that is considered earned in a particular year in two steps. Amended tax returns more:label_amended_20tax_20returns more:taxes Divide the bonus by the number of calendar months in the period when you did the work that resulted in the bonus. Amended tax returns more:label_amended_20tax_20returns more:taxes Multiply the result of (1) by the number of months you did the work during the year. Amended tax returns more:label_amended_20tax_20returns more:taxes This is the amount that is subject to the exclusion limit for that tax year. Amended tax returns more:label_amended_20tax_20returns more:taxes Income received more than 1 year after it was earned. Amended tax returns more:label_amended_20tax_20returns more:taxes   You cannot exclude income you receive after the end of the year following the year you do the work to earn it. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes   You were a bona fide resident of Sweden for 2011, 2012, and 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You report your income on the cash basis. Amended tax returns more:label_amended_20tax_20returns more:taxes In 2011, you were paid $69,000 for work you did in Sweden that year and in 2012 you were paid $74,000 for that year's work in Sweden. Amended tax returns more:label_amended_20tax_20returns more:taxes You excluded all the income on your 2011 and 2012 returns. Amended tax returns more:label_amended_20tax_20returns more:taxes   In 2013, you were paid $92,000; $82,000 for your work in Sweden during 2013, and $10,000 for work you did in Sweden in 2011. Amended tax returns more:label_amended_20tax_20returns more:taxes You cannot exclude any of the $10,000 for work done in 2011 because you received it after the end of the year following the year in which you earned it. Amended tax returns more:label_amended_20tax_20returns more:taxes You must include the $10,000 in income. Amended tax returns more:label_amended_20tax_20returns more:taxes You can exclude all of the $82,000 received for work you did in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Community income. Amended tax returns more:label_amended_20tax_20returns more:taxes   The maximum exclusion applies separately to the earnings of spouses. Amended tax returns more:label_amended_20tax_20returns more:taxes Ignore any community property laws when you figure your limit on the foreign earned income exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Part-year exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes   If the period for which you qualify for the foreign earned income exclusion includes only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. Amended tax returns more:label_amended_20tax_20returns more:taxes The number of qualifying days is the number of days in the year within the period on which you both: Have your tax home in a foreign country, and Meet either the bona fide residence test or the physical presence test. Amended tax returns more:label_amended_20tax_20returns more:taxes   For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. Amended tax returns more:label_amended_20tax_20returns more:taxes To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You report your income on the calendar-year basis and you qualified for the foreign earned income exclusion under the bona fide residence test for 75 days in 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes You can exclude a maximum of 75/365 of $97,600, or $20,055, of your foreign earned income for 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes If you qualify under the bona fide residence test for all of 2014, you can exclude your foreign earned income up to the 2014 limit. Amended tax returns more:label_amended_20tax_20returns more:taxes Physical presence test. Amended tax returns more:label_amended_20tax_20returns more:taxes   Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. Amended tax returns more:label_amended_20tax_20returns more:taxes If you qualify for the foreign earned income exclusion under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year. Amended tax returns more:label_amended_20tax_20returns more:taxes Example. Amended tax returns more:label_amended_20tax_20returns more:taxes You are physically present and have your tax home in a foreign country for a 16-month period from June 1, 2012, through September 30, 2013, except for 16 days in December 2012 when you were on vacation in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes You figure the maximum exclusion for 2012 as follows. Amended tax returns more:label_amended_20tax_20returns more:taxes Beginning with June 1, 2012, count forward 330 full days. Amended tax returns more:label_amended_20tax_20returns more:taxes Do not count the 16 days you spent in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes The 330th day, May 12, 2013, is the last day of a 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes Count backward 12 months from May 11, 2013, to find the first day of this 12-month period, May 12, 2012. Amended tax returns more:label_amended_20tax_20returns more:taxes This 12-month period runs from May 12, 2012, through May 11, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Count the total days during 2012 that fall within this 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes This is 234 days (May 12, 2012 – December 31, 2012). Amended tax returns more:label_amended_20tax_20returns more:taxes Multiply $95,100 (the maximum exclusion for 2012) by the fraction 234/366 to find your maximum exclusion for 2012 ($60,802). Amended tax returns more:label_amended_20tax_20returns more:taxes You figure the maximum exclusion for 2013 in the opposite manner. Amended tax returns more:label_amended_20tax_20returns more:taxes Beginning with your last full day, September 30, 2013, count backward 330 full days. Amended tax returns more:label_amended_20tax_20returns more:taxes Do not count the 16 days you spent in the United States. Amended tax returns more:label_amended_20tax_20returns more:taxes That day, October 20, 2012, is the first day of a 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes Count forward 12 months from October 20, 2012, to find the last day of this 12-month period, October 19, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes This 12-month period runs from October 20, 2012, through October 19, 2013. Amended tax returns more:label_amended_20tax_20returns more:taxes Count the total days during 2013 that fall within this 12-month period. Amended tax returns more:label_amended_20tax_20returns more:taxes This is 292 days (January 1, 2013 – October 19, 2013). Amended tax returns more:label_amended_20tax_20returns more:taxes Multiply $97,600, the maximum limit, by the fraction 292/365 to find your maximum exclusion for 2013 ($78,080). Amended tax returns more:label_amended_20tax_20returns more:taxes Choosing the Exclusion The foreign earned income exclusion is voluntary. Amended tax returns more:label_amended_20tax_20returns more:taxes You can choose the exclusion by completing the appropriate parts of Form 2555. Amended tax returns more:label_amended_20tax_20returns more:taxes When You Can Choose the Exclusion Your initial choice of the exclusion on Form 2555 or Form 2555-EZ generally must be made with one of the following returns. Amended tax returns more:label_amended_20tax_20returns more:taxes A return filed by the due date (including any extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes A return amending a timely-filed return. Amended tax returns more:label_amended_20tax_20returns more:taxes Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid. Amended tax returns more:label_amended_20tax_20returns more:taxes A return filed within 1 year from the original due date of the return (determined without regard to any extensions). Amended tax returns more:label_amended_20tax_20returns more:taxes Filing after the above periods. Amended tax returns more:label_amended_20tax_20returns more:taxes   You can choose the exclusion on a return filed after the periods described above if you owe no federal income tax after taking into account the exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described earlier if you file before the IRS discovers that you failed to choose the exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes Whether or not you owe federal income tax after taking the exclusion into account, if you file your return after the periods described earlier, you must type or legibly print at the top of the first page of the Form 1040 “Filed pursuant to section 1. Amended tax returns more:label_amended_20tax_20returns more:taxes 911-7(a)(2)(i)(D). Amended tax returns more:label_amended_20tax_20returns more:taxes ” If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you may still be able to choose the exclusion. Amended tax returns more:label_amended_20tax_20returns more:taxes You must request a private letter ruling under Income Tax Regulation 301. Amended tax returns more:label_amended_20tax_20returns more:taxes 9100-3 and Revenue Procedure 2013-1, 2013-1 I. Amended tax returns more:label_amended_20tax_20returns more:taxes R. Amended tax returns more:label_amended_20tax_20returns more:taxes B. Amended tax returns more:label_amended_20tax_20returns more:taxes 1, available at www. Amended tax returns more:label_amended_20tax_20returns more:taxes irs. Amended tax returns more:label_amended_20tax_20returns more:taxes gov/irb/2013-01_IRB/ar06. Amended tax returns more:label_amended_20tax_20returns more:taxes html. Amended tax returns more:label_amended_20tax_20returns more:taxes Effect of Choosing the Exclusion Once you choose to exclude your foreign earned income, that choice remains in effect for that year and all later years unless you revoke it. Amended tax returns more:label_amended_20tax_20returns more:taxes Foreign tax credit or deduction. Amended tax returns more:label_amended_20tax_20returns more:taxes