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Turbotax 2012 Return

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Turbotax 2012 Return

Turbotax 2012 return 4. Turbotax 2012 return   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. Turbotax 2012 return Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. Turbotax 2012 return Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. Turbotax 2012 return If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. Turbotax 2012 return You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. Turbotax 2012 return Special rules apply if you rent your condominium to others. Turbotax 2012 return You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. Turbotax 2012 return In addition, you can deduct any dues or assessments paid for maintenance of the common elements. Turbotax 2012 return You cannot deduct special assessments you pay to a condominium management corporation for improvements. Turbotax 2012 return However, you may be able to recover your share of the cost of any improvement by taking depreciation. Turbotax 2012 return Cooperatives If you live in a cooperative, you do not own your apartment. Turbotax 2012 return Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. Turbotax 2012 return If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. Turbotax 2012 return In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. Turbotax 2012 return Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. Turbotax 2012 return Figure your depreciation deduction as follows. Turbotax 2012 return Figure the depreciation for all the depreciable real property owned by the corporation. Turbotax 2012 return (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. Turbotax 2012 return ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. Turbotax 2012 return Multiply your cost per share by the total number of outstanding shares. Turbotax 2012 return Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. Turbotax 2012 return Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. Turbotax 2012 return Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. Turbotax 2012 return Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Turbotax 2012 return Multiply the result of (2) by the percentage you figured in (3). Turbotax 2012 return This is your depreciation on the stock. Turbotax 2012 return Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. Turbotax 2012 return Payments added to capital account. Turbotax 2012 return   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. Turbotax 2012 return For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. Turbotax 2012 return   Treat as a capital cost the amount you were assessed for capital items. Turbotax 2012 return This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. Turbotax 2012 return   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. Turbotax 2012 return Otherwise, figure your share in the following manner. Turbotax 2012 return Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. Turbotax 2012 return Multiply the corporation's deductible interest by the number you figured in (1). Turbotax 2012 return This is your share of the interest. Turbotax 2012 return Multiply the corporation's deductible taxes by the number you figured in (1). Turbotax 2012 return This is your share of the taxes. Turbotax 2012 return Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. Turbotax 2012 return You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. Turbotax 2012 return You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. Turbotax 2012 return However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). Turbotax 2012 return Example. Turbotax 2012 return Your tax year is the calendar year. Turbotax 2012 return You moved from your home in May and started renting it out on June 1. Turbotax 2012 return You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. Turbotax 2012 return Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. Turbotax 2012 return When figuring depreciation, treat the property as placed in service on June 1. Turbotax 2012 return Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. Turbotax 2012 return Fair market value. Turbotax 2012 return   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Turbotax 2012 return Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. Turbotax 2012 return Figuring the basis. Turbotax 2012 return   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. Turbotax 2012 return For other increases and decreases to basis, see Adjusted Basis in chapter 2. Turbotax 2012 return Example. Turbotax 2012 return Several years ago you built your home for $140,000 on a lot that cost you $14,000. Turbotax 2012 return Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. Turbotax 2012 return Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. Turbotax 2012 return Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. Turbotax 2012 return The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). Turbotax 2012 return On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. Turbotax 2012 return The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). Turbotax 2012 return Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. Turbotax 2012 return (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. Turbotax 2012 return ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. Turbotax 2012 return The fair market value of the property on the date you change your apartment to rental use. Turbotax 2012 return This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. Turbotax 2012 return The corporation's adjusted basis in the property on that date. Turbotax 2012 return Do not subtract depreciation when figuring the corporation's adjusted basis. Turbotax 2012 return If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). Turbotax 2012 return The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. Turbotax 2012 return Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. Turbotax 2012 return Generally, that will be MACRS for any conversion after 1986. Turbotax 2012 return Treat the property as placed in service on the conversion date. Turbotax 2012 return Example. Turbotax 2012 return Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. Turbotax 2012 return Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. Turbotax 2012 return 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . Turbotax 2012 return 01364). Turbotax 2012 return Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. Turbotax 2012 return You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). Turbotax 2012 return You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. Turbotax 2012 return There is no change in the types of expenses deductible for the personal-use part of your property. Turbotax 2012 return Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). Turbotax 2012 return You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. Turbotax 2012 return You do not have to divide the expenses that belong only to the rental part of your property. Turbotax 2012 return For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. Turbotax 2012 return If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. Turbotax 2012 return You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. Turbotax 2012 return How to divide expenses. Turbotax 2012 return   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. Turbotax 2012 return You can use any reasonable method for dividing the expense. Turbotax 2012 return It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. Turbotax 2012 return The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. Turbotax 2012 return Example. Turbotax 2012 return You rent a room in your house. Turbotax 2012 return The room is 12 × 15 feet, or 180 square feet. Turbotax 2012 return Your entire house has 1,800 square feet of floor space. Turbotax 2012 return You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. Turbotax 2012 return If your heating bill for the year for the entire house was $600, $60 ($600 × . Turbotax 2012 return 10) is a rental expense. Turbotax 2012 return The balance, $540, is a personal expense that you cannot deduct. Turbotax 2012 return Duplex. Turbotax 2012 return   A common situation is the duplex where you live in one unit and rent out the other. Turbotax 2012 return Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. Turbotax 2012 return Example. Turbotax 2012 return You own a duplex and live in one half, renting the other half. Turbotax 2012 return Both units are approximately the same size. Turbotax 2012 return Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. Turbotax 2012 return You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). Turbotax 2012 return Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. Turbotax 2012 return You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. Turbotax 2012 return Where to report. Turbotax 2012 return   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. Turbotax 2012 return For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. Turbotax 2012 return   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. Turbotax 2012 return You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. Turbotax 2012 return Presumption of profit. Turbotax 2012 return   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. Turbotax 2012 return Postponing decision. Turbotax 2012 return   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. Turbotax 2012 return You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. Turbotax 2012 return You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. Turbotax 2012 return More information. Turbotax 2012 return   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. Turbotax 2012 return Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. Turbotax 2012 return Instead of selling the house she had been living in, she decided to change it to rental property. Turbotax 2012 return Eileen selected a tenant and started renting the house on February 1. Turbotax 2012 return Eileen charges $750 a month for rent and collects it herself. Turbotax 2012 return Eileen also received a $750 security deposit from her tenant. Turbotax 2012 return Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. Turbotax 2012 return Her rental expenses for the year are as follows. Turbotax 2012 return   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. Turbotax 2012 return She can deduct eleven-twelfths of these expenses as rental expenses. Turbotax 2012 return She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. Turbotax 2012 return She cannot deduct the balance of the fire insurance because it is a personal expense. Turbotax 2012 return Eileen bought this house in 1984 for $35,000. Turbotax 2012 return Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. Turbotax 2012 return Before changing it to rental property, Eileen added several improvements to the house. Turbotax 2012 return She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. Turbotax 2012 return Of this amount, $35,000 was for the land and $117,000 was for the house. Turbotax 2012 return Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. Turbotax 2012 return As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. Turbotax 2012 return She chooses the GDS recovery period of 27. Turbotax 2012 return 5 years. Turbotax 2012 return She uses Table 2-2d to find her depreciation percentage. Turbotax 2012 return Since she placed the property in service in February, the percentage is 3. Turbotax 2012 return 182%. Turbotax 2012 return On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. Turbotax 2012 return The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. Turbotax 2012 return She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. Turbotax 2012 return On May 1, Eileen paid $4,000 to have a furnace installed in the house. Turbotax 2012 return The furnace is residential rental property. Turbotax 2012 return Because she placed the property in service in May, the percentage from Table 2-2d is 2. Turbotax 2012 return 273%. Turbotax 2012 return Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . Turbotax 2012 return 03182) $1,241   Dishwasher ($425 × . Turbotax 2012 return 20) 85   Furnace ($4,000 × . Turbotax 2012 return 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. Turbotax 2012 return She enters her income, expenses, and depreciation for the house in the column for Property A. Turbotax 2012 return Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. Turbotax 2012 return See the Instructions for Form 4562 for more information on preparing the form. Turbotax 2012 return Prev  Up  Next   Home   More Online Publications
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The Turbotax 2012 Return

Turbotax 2012 return 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. Turbotax 2012 return S. Turbotax 2012 return 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. Turbotax 2012 return You must meet all seven rules to qualify for the earned income credit. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return Adjusted gross income (AGI). Turbotax 2012 return   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Turbotax 2012 return   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Turbotax 2012 return You do not need to read the rest of this publication. Turbotax 2012 return Example—AGI is more than limit. Turbotax 2012 return Your AGI is $38,550, you are single, and you have one qualifying child. Turbotax 2012 return You cannot claim the EIC because your AGI is not less than $37,870. Turbotax 2012 return 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. Turbotax 2012 return Community property. Turbotax 2012 return   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. Turbotax 2012 return This is different from the community property rules that apply under Rule 7. Turbotax 2012 return 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). Turbotax 2012 return Any qualifying child listed on Schedule EIC also must have a valid SSN. Turbotax 2012 return (See Rule 8 if you have a qualifying child. Turbotax 2012 return ) 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. Turbotax 2012 return An example of a federally funded benefit is Medicaid. Turbotax 2012 return 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. Turbotax 2012 return S. Turbotax 2012 return citizen or permanent resident, ask the SSA for a new social security card without the legend. Turbotax 2012 return If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Turbotax 2012 return S. Turbotax 2012 return Individual Income Tax Return, to claim the EIC. Turbotax 2012 return U. Turbotax 2012 return S. Turbotax 2012 return citizen. Turbotax 2012 return   If you were a U. Turbotax 2012 return S. Turbotax 2012 return citizen when you received your SSN, you have a valid SSN. Turbotax 2012 return Valid for work only with INS authorization or DHS authorization. Turbotax 2012 return   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. Turbotax 2012 return SSN missing or incorrect. Turbotax 2012 return   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Turbotax 2012 return Other taxpayer identification number. Turbotax 2012 return   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). Turbotax 2012 return ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Turbotax 2012 return No SSN. Turbotax 2012 return   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). Turbotax 2012 return You cannot claim the EIC. Turbotax 2012 return Getting an SSN. Turbotax 2012 return   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. Turbotax 2012 return You can get Form SS-5 online at www. Turbotax 2012 return socialsecurity. Turbotax 2012 return gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Turbotax 2012 return Filing deadline approaching and still no SSN. Turbotax 2012 return   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Turbotax 2012 return Request an automatic 6-month extension of time to file your return. Turbotax 2012 return You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Turbotax 2012 return S. Turbotax 2012 return Individual Income Tax Return. Turbotax 2012 return For more information, see the instructions for Form 4868. Turbotax 2012 return File the return on time without claiming the EIC. Turbotax 2012 return After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Turbotax 2012 return Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return Your filing status cannot be “Married filing separately. Turbotax 2012 return ” Spouse did not live with you. Turbotax 2012 return   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. Turbotax 2012 return In that case, you may be able to claim the EIC. Turbotax 2012 return For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Turbotax 2012 return Rule 4—You Must Be a U. Turbotax 2012 return S. Turbotax 2012 return 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. Turbotax 2012 return You can use that filing status only if one spouse is a U. Turbotax 2012 return S. Turbotax 2012 return citizen or resident alien and you choose to treat the nonresident spouse as a U. Turbotax 2012 return S. Turbotax 2012 return resident. Turbotax 2012 return If you make this choice, you and your spouse are taxed on your worldwide income. Turbotax 2012 return If you need more information on making this choice, get Publication 519, U. Turbotax 2012 return S. Turbotax 2012 return Tax Guide for Aliens. Turbotax 2012 return 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). Turbotax 2012 return 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. Turbotax 2012 return You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Turbotax 2012 return U. Turbotax 2012 return S. Turbotax 2012 return possessions are not foreign countries. Turbotax 2012 return See Publication 54, Tax Guide for U. Turbotax 2012 return S. Turbotax 2012 return Citizens and Resident Aliens Abroad, for more detailed information. Turbotax 2012 return 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. Turbotax 2012 return If your investment income is more than $3,300, you cannot claim the credit. Turbotax 2012 return Form 1040EZ. Turbotax 2012 return   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. Turbotax 2012 return Form 1040A. Turbotax 2012 return   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. Turbotax 2012 return Form 1040. Turbotax 2012 return   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Turbotax 2012 return    Worksheet 1. Turbotax 2012 return 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. Turbotax 2012 return Interest and Dividends         1. Turbotax 2012 return Enter any amount from Form 1040, line 8a 1. Turbotax 2012 return   2. Turbotax 2012 return Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Turbotax 2012 return   3. Turbotax 2012 return Enter any amount from Form 1040, line 9a 3. Turbotax 2012 return   4. Turbotax 2012 return 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. Turbotax 2012 return (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Turbotax 2012 return ) 4. Turbotax 2012 return   Capital Gain Net Income         5. Turbotax 2012 return Enter the amount from Form 1040, line 13. Turbotax 2012 return If the amount on that line is a loss, enter -0- 5. Turbotax 2012 return       6. Turbotax 2012 return Enter any gain from Form 4797, Sales of Business Property, line 7. Turbotax 2012 return If the amount on that line is a loss, enter -0-. Turbotax 2012 return (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Turbotax 2012 return ) 6. Turbotax 2012 return       7. Turbotax 2012 return Substract line 6 of this worksheet from line 5 of this worksheet. Turbotax 2012 return (If the result is less than zero, enter -0-. Turbotax 2012 return ) 7. Turbotax 2012 return   Royalties and Rental Income From Personal Property         8. Turbotax 2012 return 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. Turbotax 2012 return       9. Turbotax 2012 return 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. Turbotax 2012 return       10. Turbotax 2012 return Subtract the amount on line 9 of this worksheet from the amount on line 8. Turbotax 2012 return (If the result is less than zero, enter -0-. Turbotax 2012 return ) 10. Turbotax 2012 return   Passive Activities         11. Turbotax 2012 return Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Turbotax 2012 return (g)), 34a (col. Turbotax 2012 return (d)), or 40). Turbotax 2012 return (See instructions below for lines 11 and 12. Turbotax 2012 return ) 11. Turbotax 2012 return       12. Turbotax 2012 return Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Turbotax 2012 return (f)), 34b (col. Turbotax 2012 return (c)), or 40). Turbotax 2012 return (See instructions below for lines 11 and 12. Turbotax 2012 return ) 12. Turbotax 2012 return       13. Turbotax 2012 return Combine the amounts on lines 11 and 12 of this worksheet. Turbotax 2012 return (If the result is less than zero, enter -0-. Turbotax 2012 return ) 13. Turbotax 2012 return   14. Turbotax 2012 return Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Turbotax 2012 return Enter the total. Turbotax 2012 return This is your investment income 14. Turbotax 2012 return   15. Turbotax 2012 return Is the amount on line 14 more than $3,300? ❑ Yes. Turbotax 2012 return You cannot take the credit. Turbotax 2012 return  ❑ No. Turbotax 2012 return 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). Turbotax 2012 return       Instructions for lines 11 and 12. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return Worksheet 2. Turbotax 2012 return Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Turbotax 2012 return Note. Turbotax 2012 return Fill out a separate Worksheet 2 for each Form 8814. Turbotax 2012 return     1. Turbotax 2012 return Enter the amount from Form 8814, line 2a 1. Turbotax 2012 return   2. Turbotax 2012 return Enter the amount from Form 8814, line 2b 2. Turbotax 2012 return   3. Turbotax 2012 return Subtract line 2 from line 1 3. Turbotax 2012 return   4. Turbotax 2012 return Enter the amount from Form 8814, line 1a 4. Turbotax 2012 return   5. Turbotax 2012 return Add lines 3 and 4 5. Turbotax 2012 return   6. Turbotax 2012 return Enter the amount of the child's Alaska Permanent Fund dividend 6. Turbotax 2012 return   7. Turbotax 2012 return Divide line 6 by line 5. Turbotax 2012 return Enter the result as a decimal (rounded to at least three places) 7. Turbotax 2012 return   8. Turbotax 2012 return Enter the amount from Form 8814, line 12 8. Turbotax 2012 return   9. Turbotax 2012 return Multiply line 7 by line 8 9. Turbotax 2012 return   10. Turbotax 2012 return Subtract line 9 from line 8. Turbotax 2012 return Enter the result on line 4 of Worksheet 1 10. Turbotax 2012 return     (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. Turbotax 2012 return )     Example—completing Worksheet 2. Turbotax 2012 return 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. Turbotax 2012 return You choose to report this income on your return. Turbotax 2012 return You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Turbotax 2012 return After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Turbotax 2012 return 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. Turbotax 2012 return 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Turbotax 2012 return You then enter $200 on line 4 of Worksheet 1. Turbotax 2012 return 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. Turbotax 2012 return If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Turbotax 2012 return If you are an employee, earned income includes all the taxable income you get from your employer. Turbotax 2012 return Rule 15 has information that will help you figure the amount of your earned income. Turbotax 2012 return If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Turbotax 2012 return Earned Income Earned income includes all of the following types of income. Turbotax 2012 return Wages, salaries, tips, and other taxable employee pay. Turbotax 2012 return Employee pay is earned income only if it is taxable. Turbotax 2012 return Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Turbotax 2012 return But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Turbotax 2012 return Net earnings from self-employment. Turbotax 2012 return Gross income received as a statutory employee. Turbotax 2012 return Wages, salaries, and tips. Turbotax 2012 return    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Turbotax 2012 return You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Turbotax 2012 return Nontaxable combat pay election. Turbotax 2012 return   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Turbotax 2012 return The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Turbotax 2012 return Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Turbotax 2012 return For details, see Nontaxable combat pay in chapter 4. Turbotax 2012 return Net earnings from self-employment. Turbotax 2012 return   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. Turbotax 2012 return Minister's housing. Turbotax 2012 return   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. Turbotax 2012 return 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). Turbotax 2012 return Statutory employee. Turbotax 2012 return   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Turbotax 2012 return You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Turbotax 2012 return Strike benefits. Turbotax 2012 return   Strike benefits paid by a union to its members are earned income. Turbotax 2012 return 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. Turbotax 2012 return Each approved form exempts certain income from social security taxes. Turbotax 2012 return Each form is discussed here in terms of what is or is not earned income for the EIC. Turbotax 2012 return Form 4361. Turbotax 2012 return   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Turbotax 2012 return This includes wages, salaries, tips, and other taxable employee compensation. Turbotax 2012 return A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Turbotax 2012 return Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Turbotax 2012 return Examples include fees for performing marriages and honoraria for delivering speeches. Turbotax 2012 return Form 4029. Turbotax 2012 return   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Turbotax 2012 return However, amounts you received as a self-employed individual do not count as earned income. Turbotax 2012 return Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Turbotax 2012 return 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. Turbotax 2012 return Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Turbotax 2012 return You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Turbotax 2012 return Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Turbotax 2012 return Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Turbotax 2012 return Disability insurance payments. Turbotax 2012 return   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Turbotax 2012 return It does not matter whether you have reached minimum retirement age. Turbotax 2012 return If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Turbotax 2012 return ” 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. Turbotax 2012 return Do not include any of these items in your earned income. Turbotax 2012 return Earnings while an inmate. Turbotax 2012 return   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Turbotax 2012 return This includes amounts for work performed while in a work release program or while in a halfway house. Turbotax 2012 return Workfare payments. Turbotax 2012 return   Nontaxable workfare payments are not earned income for the EIC. Turbotax 2012 return 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. Turbotax 2012 return Community property. Turbotax 2012 return   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. Turbotax 2012 return That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Turbotax 2012 return 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. Turbotax 2012 return Nevada, Washington, and California domestic partners. Turbotax 2012 return   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Turbotax 2012 return Your earned income for the EIC does not include any amount earned by your partner. Turbotax 2012 return Your earned income includes the entire amount you earned. Turbotax 2012 return For details, see Publication 555. Turbotax 2012 return Conservation Reserve Program (CRP) payments. Turbotax 2012 return   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. Turbotax 2012 return Nontaxable military pay. Turbotax 2012 return   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Turbotax 2012 return Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Turbotax 2012 return See Publication 3, Armed Forces' Tax Guide, for more information. Turbotax 2012 return    Combat pay. Turbotax 2012 return You can elect to include your nontaxable combat pay in earned income for the EIC. Turbotax 2012 return See Nontaxable combat pay in chapter 4. Turbotax 2012 return 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. Turbotax 2012 return This chapter discusses Rules 8 through 10. Turbotax 2012 return 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. Turbotax 2012 return You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Turbotax 2012 return (You cannot file Form 1040EZ. Turbotax 2012 return ) You also must complete Schedule EIC and attach it to your return. Turbotax 2012 return If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Turbotax 2012 return No qualifying child. Turbotax 2012 return   If you do not meet Rule 8, you do not have a qualifying child. Turbotax 2012 return Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return The fours tests are: Relationship, Age, Residency, and Joint return. Turbotax 2012 return The four tests are illustrated in Figure 1. Turbotax 2012 return The paragraphs that follow contain more information about each test. Turbotax 2012 return 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). Turbotax 2012 return The following definitions clarify the relationship test. Turbotax 2012 return Adopted child. Turbotax 2012 return   An adopted child is always treated as your own child. Turbotax 2012 return The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Turbotax 2012 return Foster child. Turbotax 2012 return   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. Turbotax 2012 return (An authorized placement agency includes a state or local government agency. Turbotax 2012 return It also includes a tax-exempt organization licensed by a state. Turbotax 2012 return In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Turbotax 2012 return ) Example. Turbotax 2012 return 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. Turbotax 2012 return Debbie is your foster child. Turbotax 2012 return Figure 1. Turbotax 2012 return Tests for Qualifying Child Please click here for the text description of the image. Turbotax 2012 return 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. Turbotax 2012 return The following examples and definitions clarify the age test. Turbotax 2012 return Example 1—child not under age 19. Turbotax 2012 return Your son turned 19 on December 10. Turbotax 2012 return 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. Turbotax 2012 return Example 2—child not younger than you or your spouse. Turbotax 2012 return Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Turbotax 2012 return He is not disabled. Turbotax 2012 return Both you and your spouse are 21 years old, and you file a joint return. Turbotax 2012 return Your brother is not your qualifying child because he is not younger than you or your spouse. Turbotax 2012 return Example 3—child younger than your spouse but not younger than you. Turbotax 2012 return The facts are the same as in Example 2 except that your spouse is 25 years old. Turbotax 2012 return Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Turbotax 2012 return Student defined. Turbotax 2012 return   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. Turbotax 2012 return   The 5 calendar months need not be consecutive. Turbotax 2012 return   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. Turbotax 2012 return School defined. Turbotax 2012 return   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Turbotax 2012 return However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Turbotax 2012 return Vocational high school students. Turbotax 2012 return   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. Turbotax 2012 return Permanently and totally disabled. Turbotax 2012 return   Your child is permanently and totally disabled if both of the following apply. Turbotax 2012 return He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Turbotax 2012 return A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Turbotax 2012 return Residency Test Your child must have lived with you in the United States for more than half of 2013. Turbotax 2012 return The following definitions clarify the residency test. Turbotax 2012 return United States. Turbotax 2012 return   This means the 50 states and the District of Columbia. Turbotax 2012 return It does not include Puerto Rico or U. Turbotax 2012 return S. Turbotax 2012 return possessions such as Guam. Turbotax 2012 return Homeless shelter. Turbotax 2012 return   Your home can be any location where you regularly live. Turbotax 2012 return You do not need a traditional home. Turbotax 2012 return 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. Turbotax 2012 return Military personnel stationed outside the United States. Turbotax 2012 return   U. Turbotax 2012 return S. Turbotax 2012 return 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. Turbotax 2012 return Extended active duty. Turbotax 2012 return   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Turbotax 2012 return 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. Turbotax 2012 return Birth or death of child. Turbotax 2012 return    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. Turbotax 2012 return Temporary absences. Turbotax 2012 return   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. Turbotax 2012 return Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Turbotax 2012 return Kidnapped child. Turbotax 2012 return   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. Turbotax 2012 return 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. Turbotax 2012 return This treatment applies for all years until the child is returned. Turbotax 2012 return 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. Turbotax 2012 return   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Turbotax 2012 return Joint Return Test To meet this test, the child cannot file a joint return for the year. Turbotax 2012 return Exception. Turbotax 2012 return   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. Turbotax 2012 return Example 1—child files joint return. Turbotax 2012 return You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Turbotax 2012 return He earned $25,000 for the year. Turbotax 2012 return The couple files a joint return. Turbotax 2012 return Because your daughter and her husband file a joint return, she is not your qualifying child. Turbotax 2012 return Example 2—child files joint return to get refund of tax withheld. Turbotax 2012 return Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Turbotax 2012 return They do not have a child. Turbotax 2012 return Neither is required to file a tax return. Turbotax 2012 return Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Turbotax 2012 return The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Turbotax 2012 return Example 3—child files joint return to claim American opportunity credit. Turbotax 2012 return The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return The exception to the joint return test does not apply, so your son is not your qualifying child. Turbotax 2012 return Married child. Turbotax 2012 return   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. Turbotax 2012 return    Social security number. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return   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. Turbotax 2012 return For more information about SSNs, see Rule 2. Turbotax 2012 return 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. Turbotax 2012 return However, only one of these persons can actually treat the child as a qualifying child. Turbotax 2012 return 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). Turbotax 2012 return The exemption for the child. Turbotax 2012 return The child tax credit. Turbotax 2012 return Head of household filing status. Turbotax 2012 return The credit for child and dependent care expenses. Turbotax 2012 return The exclusion for dependent care benefits. Turbotax 2012 return The EIC. Turbotax 2012 return The other person cannot take any of these benefits based on this qualifying child. Turbotax 2012 return In other words, you and the other person cannot agree to divide these tax benefits between you. Turbotax 2012 return The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Turbotax 2012 return The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Turbotax 2012 return However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Turbotax 2012 return Tiebreaker rules. Turbotax 2012 return   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. Turbotax 2012 return If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return See Example 8. Turbotax 2012 return   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. Turbotax 2012 return See Examples 1 through 13. Turbotax 2012 return   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. Turbotax 2012 return If the other person cannot claim the EIC. Turbotax 2012 return   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. Turbotax 2012 return See Examples 6 and 7. Turbotax 2012 return 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. Turbotax 2012 return Examples. Turbotax 2012 return    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Turbotax 2012 return Example 1—child lived with parent and grandparent. Turbotax 2012 return You and your 2-year-old son Jimmy lived with your mother all year. Turbotax 2012 return You are 25 years old, unmarried, and your AGI is $9,000. Turbotax 2012 return Your only income was $9,000 from a part-time job. Turbotax 2012 return Your mother's only income was $20,000 from her job, and her AGI is $20,000. Turbotax 2012 return Jimmy's father did not live with you or Jimmy. Turbotax 2012 return The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Turbotax 2012 return 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. Turbotax 2012 return 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). Turbotax 2012 return He is not a qualifying child of anyone else, including his father. Turbotax 2012 return 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). Turbotax 2012 return Example 2—parent has higher AGI than grandparent. Turbotax 2012 return The facts are the same as in Example 1 except your AGI is $25,000. Turbotax 2012 return Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Turbotax 2012 return Only you can claim him. Turbotax 2012 return Example 3—two persons claim same child. Turbotax 2012 return The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return Example 4—qualifying children split between two persons. Turbotax 2012 return 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. Turbotax 2012 return Only one of you can claim each child. Turbotax 2012 return However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Turbotax 2012 return For example, if you claim one child, your mother can claim the other two. Turbotax 2012 return Example 5—taxpayer who is a qualifying child. Turbotax 2012 return The facts are the same as in Example 1 except that you are only 18 years old. Turbotax 2012 return This means you are a qualifying child of your mother. Turbotax 2012 return Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Turbotax 2012 return Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Turbotax 2012 return 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. Turbotax 2012 return Example 6—grandparent with too much earned income to claim EIC. Turbotax 2012 return The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Turbotax 2012 return Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Turbotax 2012 return Example 7—parent with too much earned income to claim EIC. Turbotax 2012 return The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Turbotax 2012 return Your earned income is too high for you to claim the EIC. Turbotax 2012 return But your mother cannot claim the EIC either, because her AGI is not higher than yours. Turbotax 2012 return Example 8—child lived with both parents and grandparent. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return In other words, each parent's AGI can be treated as $15,000. Turbotax 2012 return Example 9—separated parents. Turbotax 2012 return You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Turbotax 2012 return In August and September, Joey lived with you. Turbotax 2012 return For the rest of the year, Joey lived with your husband, who is Joey's father. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return You and your husband will file separate returns. Turbotax 2012 return Your husband agrees to let you treat Joey as a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Turbotax 2012 return See Rule 3. Turbotax 2012 return Example 10—separated parents claim same child. Turbotax 2012 return The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Turbotax 2012 return In this case, only your husband will be allowed to treat Joey as a qualifying child. Turbotax 2012 return This is because, during 2013, the boy lived with him longer than with you. Turbotax 2012 return You cannot claim the EIC (either with or without a qualifying child). Turbotax 2012 return 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. Turbotax 2012 return See Rule 3. Turbotax 2012 return Example 11—unmarried parents. Turbotax 2012 return You, your 5-year-old son, and your son's father lived together all year. Turbotax 2012 return You and your son's father are not married. Turbotax 2012 return 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. Turbotax 2012 return Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Turbotax 2012 return Neither of you had any other income. Turbotax 2012 return Your son's father agrees to let you treat the child as a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return Example 12—unmarried parents claim same child. Turbotax 2012 return 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. Turbotax 2012 return In this case, only your son's father will be allowed to treat your son as a qualifying child. Turbotax 2012 return This is because his AGI, $14,000, is more than your AGI, $12,000. Turbotax 2012 return You cannot claim the EIC (either with or without a qualifying child). Turbotax 2012 return Example 13—child did not live with a parent. Turbotax 2012 return You and your 7-year-old niece, your sister's child, lived with your mother all year. Turbotax 2012 return You are 25 years old, and your AGI is $9,300. Turbotax 2012 return Your only income was from a part-time job. Turbotax 2012 return Your mother's AGI is $15,000. Turbotax 2012 return Her only income was from her job. Turbotax 2012 return Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Turbotax 2012 return 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. Turbotax 2012 return However, only your mother can treat her as a qualifying child. Turbotax 2012 return This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Turbotax 2012 return Special rule for divorced or separated parents (or parents who live apart). Turbotax 2012 return   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. Turbotax 2012 return 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. Turbotax 2012 return The child received over half of his or her support for the year from the parents. Turbotax 2012 return The child is in the custody of one or both parents for more than half of 2013. Turbotax 2012 return Either of the following statements is true. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return For details, see Publication 501. Turbotax 2012 return Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Turbotax 2012 return Applying Rule 9 to divorced or separated parents (or parents who live apart). Turbotax 2012 return   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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return Example 1. Turbotax 2012 return You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Turbotax 2012 return Your AGI is $10,000. Turbotax 2012 return Your mother’s AGI is $25,000. Turbotax 2012 return Your son's father did not live with you or your son. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return You and your mother did not have any child care expenses or dependent care benefits. Turbotax 2012 return 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. Turbotax 2012 return Example 2. Turbotax 2012 return The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Turbotax 2012 return Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Turbotax 2012 return Example 3. Turbotax 2012 return 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. Turbotax 2012 return Your mother also claims him as a qualifying child for head of household filing status. Turbotax 2012 return You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Turbotax 2012 return The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Turbotax 2012 return 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. Turbotax 2012 return ) if all of the following statements are true. Turbotax 2012 return You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Turbotax 2012 return Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Turbotax 2012 return 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. Turbotax 2012 return You lived with that person in the United States for more than half of the year. Turbotax 2012 return 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). Turbotax 2012 return For more details about the tests to be a qualifying child, see Rule 8. Turbotax 2012 return If you are a qualifying child of another taxpayer, you cannot claim the EIC. Turbotax 2012 return 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. Turbotax 2012 return Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Turbotax 2012 return Example. Turbotax 2012 return You and your daughter lived with your mother all year. Turbotax 2012 return You are 22 years old, unmarried, and attended a trade school full time. Turbotax 2012 return You had a part-time job and earned $5,700. Turbotax 2012 return You had no other income. Turbotax 2012 return Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Turbotax 2012 return She can claim the EIC if she meets all the other requirements. Turbotax 2012 return Because you are your mother's qualifying child, you cannot claim the EIC. Turbotax 2012 return This is so even if your mother cannot or does not claim the EIC. Turbotax 2012 return Child of person not required to file a return. Turbotax 2012 return   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. Turbotax 2012 return Example 1—return not required. Turbotax 2012 return 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. Turbotax 2012 return As a result, you are not your mother's qualifying child. Turbotax 2012 return You can claim the EIC if you meet all the other requirements to do so. Turbotax 2012 return Example 2—return filed to get refund of tax withheld. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return As a result, you are not your mother's qualifying child. Turbotax 2012 return You can claim the EIC if you meet all the other requirements to do so. Turbotax 2012 return Example 3—return filed to get EIC. Turbotax 2012 return The facts are the same as in Example 2 except your mother claimed the EIC on her return. Turbotax 2012 return Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Turbotax 2012 return As a result, you are your mother's qualifying child. Turbotax 2012 return You cannot claim the EIC. Turbotax 2012 return 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. Turbotax 2012 return This chapter discusses Rules 11 through 14. Turbotax 2012 return 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. Turbotax 2012 return You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Turbotax 2012 return If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Turbotax 2012 return If you have a qualifying child. Turbotax 2012 return   If you meet Rule 8, you have a qualifying child. Turbotax 2012 return If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return It does not matter which spouse meets the age test, as long as one of the spouses does. Turbotax 2012 return You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Turbotax 2012 return 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. Turbotax 2012 return If neither you nor your spouse meets the age test, you cannot claim the EIC. Turbotax 2012 return Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax 2012 return Death of spouse. Turbotax 2012 return   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. Turbotax 2012 return Example 1. Turbotax 2012 return You are age 28 and unmarried. Turbotax 2012 return You meet the age test. Turbotax 2012 return Example 2—spouse meets age test. Turbotax 2012 return You are married and filing a joint return. Turbotax 2012 return You are age 23 and your spouse is age 27. Turbotax 2012 return You meet the age test because your spouse is at least age 25 but under age 65. Turbotax 2012 return Example 3—spouse dies in 2013. Turbotax 2012 return You are married and filing a joint return with your spouse who died in August 2013. Turbotax 2012 return You are age 67. Turbotax 2012 return Your spouse would have become age 65 in November 2013. Turbotax 2012 return Because your spouse was under age 65 when she died, you meet the age test. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Turbotax 2012 return Example 1. Turbotax 2012 return In 2013, you were age 25, single, and living at home with your parents. Turbotax 2012 return You worked and were not a student. Turbotax 2012 return You earned $7,500. Turbotax 2012 return Your parents cannot claim you as a dependent. Turbotax 2012 return 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. Turbotax 2012 return You meet this rule. Turbotax 2012 return You can claim the EIC if you meet all the other requirements. Turbotax 2012 return Example 2. Turbotax 2012 return The facts are the same as in Example 1, except that you earned $2,000. Turbotax 2012 return Your parents can claim you as a dependent but decide not to. Turbotax 2012 return You do not meet this rule. Turbotax 2012 return You cannot claim the credit because your parents could have claimed you as a dependent. Turbotax 2012 return Joint returns. Turbotax 2012 return   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Turbotax 2012 return   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. Turbotax 2012 return But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Turbotax 2012 return Example 1—return filed to get refund of tax withheld. Turbotax 2012 return You are 26 years old. Turbotax 2012 return You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Turbotax 2012 return Neither you nor your wife is required to file a tax return. Turbotax 2012 return You do not have a child. Turbotax 2012 return Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Turbotax 2012 return Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Turbotax 2012 return They can claim exemptions for you and your wife if all the other tests to do so are met. Turbotax 2012 return Example 2—return filed to get EIC. Turbotax 2012 return The facts are the same as in Example 1except no taxes were taken out of your pay. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return Your parents cannot claim an exemption for either you or your wife. Turbotax 2012 return 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. Turbotax 2012 return ) if all of the following statements are true. Turbotax 2012 return You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Turbotax 2012 return Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Turbotax 2012 return 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. Turbotax 2012 return You lived with that person in the United States for more than half of the year. Turbotax 2012 return 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). Turbotax 2012 return For more details about the tests to be a qualifying child, see Rule 8. Turbotax 2012 return If you are a qualifying child of another taxpayer, you cannot claim the EIC. Turbotax 2012 return 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. Turbotax 2012 return Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax 2012 return Example. Turbotax 2012 return You lived with your mother all year. Turbotax 2012 return You are age 26, unmarried, and permanently and totally disabled. Turbotax 2012 return Your only income was from a community center where you went three days a week to answer telephones. Turbotax 2012 return You earned $5,000 for the year and provided more than half of your own support. Turbotax 2012 return Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Turbotax 2012 return She can claim the EIC if she meets all the other requirements. Turbotax 2012 return Because you are a qualifying child of your mother, you cannot claim the EIC. Turbotax 2012 return This is so even if your mother cannot or does not claim the EIC. Turbotax 2012 return Joint returns. Turbotax 2012 return   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Turbotax 2012 return   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. Turbotax 2012 return But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Turbotax 2012 return Child of person not required to file a return. Turbotax 2012 return   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. Turbotax 2012 return Example 1—return not required. Turbotax 2012 return You lived all year with your father. Turbotax 2012 return You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Turbotax 2012 return You have no other income, no children, and provided more than half of your own support. Turbotax 2012 return Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Turbotax 2012 return As a result, you are not your father's qualifying child. Turbotax 2012 return You can claim the EIC if you meet all the other requirements to do so. Turbotax 2012 return Example 2—return filed to get refund of tax withheld. Turbotax 2012 return 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. Turbotax 2012 return 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. Turbotax 2012 return As a result, you are not your father's qualifying child. Turbotax 2012 return You can claim the EIC if you meet all the other requirements to do so. Turbotax 2012 return Example 3—return filed to get EIC. Turbotax 2012 return The facts are the same as in Example 2 except your father claimed the EIC on his return. Turbotax 2012 return Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Turbotax 2012 return As a result, you are your father's qualifying child. Turbotax 2012 return You cannot claim the EIC. Turbotax 2012 return 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. Turbotax 2012 return If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Turbotax 2012 return United States. Turbotax 2012 return   This means the 50 states and the District of Columbia. Turbotax 2012 return It does not include Puerto Rico or U. Turbotax 2012 return S. Turbotax 2012 return possessions such as Guam. Turbotax 2012 return Homeless shelter. Turbotax 2012 return   Your home can be any location where you regularly live. Turbotax 2012 return You do not need a traditional home. Turbotax 2012 return If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Turbotax 2012 return Military personnel stationed outside the United States. Turbotax 2012 return   U. Turbotax 2012 return S. Turbotax 2012 return 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. Turbotax 2012 return Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Turbotax 2012 return You need to know the amount of your earned income to see if you meet the rule in this chapter. Turbotax 2012 return You also need to know that amount to figure your EIC. Turbotax 2012 return 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. Turbotax 2012 return Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Turbotax 2012 return Employee pay is earned income only if it is taxable. Turbotax 2012 return Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Turbotax 2012 return But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Turbotax 2012 return Earned income is explained in detail in Rule 7 in chapter 1. Turbotax 2012 return Figuring earned income. Turbotax 2012 return   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. Turbotax 2012 return   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. Turbotax 2012 return   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). Turbotax 2012 return You will then reduce that amount by any amount included on that line and described in the following list. Turbotax 2012 return Scholarship or fellowship grants not reported on a Form W-2. Turbotax 2012 return 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. Turbotax 2012 return Inmate's income. Turbotax 2012 return Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Turbotax 2012 return This includes amounts received for work performed while in a work release program or while in a halfway house. Turbotax 2012 return 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). Turbotax 2012 return Pension or annuity from deferred compensation plans. Turbotax 2012 return 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. Turbotax 2012 return 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). Turbotax 2012 return This amount may be reported in box 11 of your Form W-2. Turbotax 2012 return If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Turbotax 2012 return Clergy. Turbotax 2012 return   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