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Www free1040taxreturn com Publication 534 - Introductory Material Table of Contents Important Change for 1995 Introduction How To Use This Publication Important Change for 1995 Major changes to Publications 534 and 946. Www free1040taxreturn com  This publication, as well as Publication 946,How To Depreciate Property, has been changed. Www free1040taxreturn com Publication 534 has been shortened. Www free1040taxreturn com It no longer contains general information on MACRS and the section 179 deduction. Www free1040taxreturn com It contains a discussion of the accelerated cost recovery system (ACRS), the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property. Www free1040taxreturn com We expanded Publication 946 by adding material taken from Publication 534. Www free1040taxreturn com We added more detail to the discussions of the section 179 deduction, the modified accelerated cost recovery system (MACRS), and listed property. Www free1040taxreturn com We replaced the partialMACRS Percentage Tables with the complete ones from Publication 534. Www free1040taxreturn com We also added the Table of Class Lives and Recovery Periods from Publication 534. Www free1040taxreturn com We made these changes to eliminate most of the duplication that existed in the two publications. Www free1040taxreturn com This will save money and make it easier for you to decide which publication you need. Www free1040taxreturn com Use this publication to figure depreciation on property you placed in service before 1987; use Publication 946 to figure depreciation on property you placed in service after 1986. Www free1040taxreturn com Introduction The law allows you to recover your cost in business or income-producing property through yearly tax deductions. Www free1040taxreturn com You do this by depreciating your property, that is, by deducting some of your cost on your tax return each year. Www free1040taxreturn com You can depreciate both tangible property, such as a car, building, or machinery, and certain intangible property, such as a copyright or a patent. Www free1040taxreturn com The amount you can deduct depends on: How much the property cost, When you began using it, How long it will take to recover your cost, and Which of several depreciation methods you use. Www free1040taxreturn com Depreciation defined. Www free1040taxreturn com   Depreciation is a loss in the value of property over the time the property is being used. Www free1040taxreturn com Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. Www free1040taxreturn com You can get back your cost of certain property, such as equipment you use in your business or property used for the production of income by taking deductions for depreciation. Www free1040taxreturn com Black's Law Dictionary Amortization. Www free1040taxreturn com   Amortization is similar to depreciation. Www free1040taxreturn com Using amortization, you can recover your cost or basis in certain property proportionately over a specific number of years or months. Www free1040taxreturn com Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution control facilities. Www free1040taxreturn com You can find information on amortization inchapter 12 of Publication 535, Business Expenses. Www free1040taxreturn com Alternative minimum tax. Www free1040taxreturn com   If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable for the alternative minimum tax. Www free1040taxreturn com Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight line method. Www free1040taxreturn com For more information, you may wish to see the following: Form 6251, Alternative Minimum Tax-Individuals, and Publication 542, Tax Information on Corporations. Www free1040taxreturn com Ordering publications and forms. Www free1040taxreturn com   To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). Www free1040taxreturn com You can also write to the IRS Forms Distribution Center nearest you. Www free1040taxreturn com Check your income tax package for the address. Www free1040taxreturn com   If you have access to a personal computer and a modem, you can also get many forms and publications electronically. Www free1040taxreturn com See How To Get Forms and Publications in your income tax package for details. Www free1040taxreturn com Telephone help. Www free1040taxreturn com   You can call the IRS with your tax question Monday through Friday during regular business hours. Www free1040taxreturn com Check your telephone book for the local number or you can call1-800-829-1040. Www free1040taxreturn com Telephone help for hearing-impaired persons. Www free1040taxreturn com   If you have access to TDD equipment, you can call 1-800-829-4059 with your tax question or to order forms and publications. Www free1040taxreturn com See your tax package for the hours of operation. Www free1040taxreturn com How To Use This Publication This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property placed in service before 1987. Www free1040taxreturn com It is divided into three chapters and contains an appendix. Www free1040taxreturn com Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS). Www free1040taxreturn com Chapter 2 explains the rules for depreciating property first used before 1981. Www free1040taxreturn com Chapter 3 explains the rules for listed property. Www free1040taxreturn com Also this chapter defines listed property. Www free1040taxreturn com The appendix contains the ACRS Percentage Tables. Www free1040taxreturn com Prev  Up  Next   Home   More Online Publications
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IRS Continues Smooth Start to Filing Season

 

IR-2014-20, Feb. 27, 2014

WASHINGTON — The IRS announced today that, three weeks into the filing season, it has received about one-third of the individual income tax returns that it expects to receive during 2014. The IRS has processed almost 98 percent of the 49.6 million returns received so far. Each week this filing season, the IRS has processed a greater percentage of the returns received than during comparable weeks last year.

More taxpayers are filing their returns electronically this year. Overall, 46.6 million returns have been e-filed this year, up one percent from the same time last year. As in prior years, the greatest increase is among individuals filing from their home computers. Almost 22 million returns have been e-filed from home computers this year, an increase of almost 7 percent compared to the same time last year.

The IRS has issued more than 40 million tax refunds this year, an increase of more than six percent compared to the same time last year. Almost 90 percent of these refunds were directly deposited into taxpayers’ accounts.

 

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2014 FILING SEASON STATISTICS

Cumulative statistics comparing 2/22/13 and 2/21/14

Individual Income Tax Returns:

2013

2014

% Change

Total Receipts

49,448,000

49,558,000

0.2

Total Processed

42,837,000

48,335,000

12.8

 

 

 

 

E-filing Receipts:

 

 

 

TOTAL           

46,149,000

46,641,000

1.1

Tax Professionals

25,618,000

24,687,000

-3.6

Self-prepared

20,531,000

21,954,000

6.9

 

 

 

 

Web Usage:

 

 

 

Visits to IRS.gov

155,167,572

145,881,766

-6.0

 

 

 

 

Total Refunds:

 

 

 

Number

38,042,000

40,389,000

6.2

Amount

$113.738

Billion

$125.831

Billion

10.6

Average refund

$2,990

$3,116

4.2

 

 

 

 

Direct Deposit Refunds:

 

 

 

Number

34,618,000

35,694,000

3.1

Amount

$107.228

Billion

$112.628

Billion

5.0

Average refund

$3,097

$3,155

1.9

 

Page Last Reviewed or Updated: 27-Feb-2014

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Www free1040taxreturn com 36. Www free1040taxreturn com   Earned Income Credit (EIC) Table of Contents What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. Www free1040taxreturn com Rules for EveryoneRule 1. Www free1040taxreturn com Your AGI Must Be Less Than: Rule 2. Www free1040taxreturn com You Must Have a Valid Social Security Number (SSN) Rule 3. Www free1040taxreturn com Your Filing Status Cannot Be Married Filing Separately Rule 4. Www free1040taxreturn com You Must Be a U. Www free1040taxreturn com S. Www free1040taxreturn com Citizen or Resident Alien All Year Rule 5. Www free1040taxreturn com You Cannot File Form 2555 or Form 2555-EZ Rule 6. Www free1040taxreturn com Your Investment Income Must Be $3,300 or Less Rule 7. Www free1040taxreturn com You Must Have Earned Income Part B. Www free1040taxreturn com Rules If You Have a Qualifying ChildRule 8. Www free1040taxreturn com Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. Www free1040taxreturn com Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. Www free1040taxreturn com You Cannot Be a Qualifying Child of Another Taxpayer Part C. Www free1040taxreturn com Rules If You Do Not Have a Qualifying ChildRule 11. Www free1040taxreturn com You Must Be at Least Age 25 but Under Age 65 Rule 12. Www free1040taxreturn com You Cannot Be the Dependent of Another Person Rule 13. Www free1040taxreturn com You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. Www free1040taxreturn com You Must Have Lived in the United States More Than Half of the Year Part D. Www free1040taxreturn com Figuring and Claiming the EICRule 15. Www free1040taxreturn com Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. Www free1040taxreturn com John and Janet Smith (Form 1040A) Example 2. Www free1040taxreturn com Kelly Green (Form 1040EZ) What's New Earned income amount is more. Www free1040taxreturn com  The maximum amount of income you can earn and still get the credit has increased. Www free1040taxreturn com You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Www free1040taxreturn com Your adjusted gross income also must be less than the amount in the above list that applies to you. Www free1040taxreturn com For details, see Rules 1 and 15. Www free1040taxreturn com Investment income amount is more. Www free1040taxreturn com  The maximum amount of investment income you can have and still get the credit has increased to $3,300. Www free1040taxreturn com See Rule 6. Www free1040taxreturn com Reminders Increased EIC on certain joint returns. Www free1040taxreturn com  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Www free1040taxreturn com As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Www free1040taxreturn com When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Www free1040taxreturn com Online help. Www free1040taxreturn com  You can use the EITC Assistant at www. Www free1040taxreturn com irs. Www free1040taxreturn com gov/eitc to find out if you are eligible for the credit. Www free1040taxreturn com The EITC Assistant is available in English and Spanish. Www free1040taxreturn com EIC questioned by IRS. Www free1040taxreturn com  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Www free1040taxreturn com We will tell you what documents to send us. Www free1040taxreturn com These may include: birth certificates, school records, medical records, etc. Www free1040taxreturn com The process of establishing your eligibility will delay your refund. Www free1040taxreturn com Introduction The earned income credit (EIC) is a tax credit for certain people who work and have less than $51,567 of earned income. Www free1040taxreturn com A tax credit usually means more money in your pocket. Www free1040taxreturn com It reduces the amount of tax you owe. Www free1040taxreturn com The EIC may also give you a refund. Www free1040taxreturn com How do you get the earned income credit?   To claim the EIC, you must: Qualify by meeting certain rules, and File a tax return, even if you: Do not owe any tax, Did not earn enough money to file a return, or Did not have income taxes withheld from your pay. Www free1040taxreturn com When you complete your return, you can figure your EIC by using a worksheet in the instructions for Form 1040, Form 1040A, or Form 1040EZ. Www free1040taxreturn com Or, if you prefer, you can let the IRS figure the credit for you. Www free1040taxreturn com How will this chapter help you?   This chapter will explain the following. Www free1040taxreturn com The rules you must meet to qualify for the EIC. Www free1040taxreturn com How to figure the EIC. Www free1040taxreturn com Useful Items - You may want to see: Publication 596 Earned Income Credit (EIC) Form (and Instructions) Schedule EIC Earned Income Credit (Qualifying Child Information) 8862 Information To Claim Earned Income Credit After Disallowance Do You Qualify for the Credit? To qualify to claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone . Www free1040taxreturn com Then you must meet the rules in Part B, Rules If You Have a Qualifying Child , or Part C, Rules If You Do Not Have a Qualifying Child . Www free1040taxreturn com There is one final rule you must meet in Part D, Figuring and Claiming the EIC . Www free1040taxreturn com You qualify for the credit if you meet all the rules in each part that applies to you. Www free1040taxreturn com If you have a qualifying child, the rules in Parts A, B, and D apply to you. Www free1040taxreturn com If you do not have a qualifying child, the rules in Parts A, C, and D apply to you. Www free1040taxreturn com Table 36-1, Earned Income Credit in a Nutshell. Www free1040taxreturn com   Use Table 36–1 as a guide to Parts A, B, C, and D. Www free1040taxreturn com The table is a summary of all the rules in each part. Www free1040taxreturn com Do you have a qualifying child?   You have a qualifying child only if you have a child who meets the four tests described in Rule 8 and illustrated in Figure 36–1. Www free1040taxreturn com If Improper Claim Made in Prior Year If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. Www free1040taxreturn com You must also qualify to claim the EIC by meeting all the rules described in this chapter. Www free1040taxreturn com However, if your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. Www free1040taxreturn com For example, if your arithmetic is incorrect, the IRS can correct it. Www free1040taxreturn com If you do not provide a correct social security number, the IRS can deny the EIC. Www free1040taxreturn com These kinds of errors are called math or clerical errors. Www free1040taxreturn com If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. Www free1040taxreturn com If your error was due to fraud, then you cannot claim the EIC for the next 10 years. Www free1040taxreturn com More information. Www free1040taxreturn com   See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862. Www free1040taxreturn com Part A. Www free1040taxreturn com Rules for Everyone This part of the chapter discusses Rules 1 through 7. Www free1040taxreturn com You must meet all seven rules to qualify for the earned income credit. Www free1040taxreturn com If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the chapter. Www free1040taxreturn com If you meet all seven rules in this part, then read either Part B or Part C (whichever applies) for more rules you must meet. Www free1040taxreturn com Rule 1. Www free1040taxreturn com Your 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. Www free1040taxreturn com Adjusted gross income (AGI). Www free1040taxreturn com   AGI is the amount on line 38 (Form 1040), line 22 (Form 1040A), or line 4 (Form 1040EZ). Www free1040taxreturn com If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Www free1040taxreturn com Example. Www free1040taxreturn com Your AGI is $38,550, you are single, and you have one qualifying child. Www free1040taxreturn com You cannot claim the EIC because your AGI is not less than $37,870. Www free1040taxreturn com 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. Www free1040taxreturn com Community property. Www free1040taxreturn com   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. Www free1040taxreturn com This is different from the community property rules that apply under Rule 7 . Www free1040taxreturn com Rule 2. Www free1040taxreturn com 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). Www free1040taxreturn com Any qualifying child listed on Schedule EIC also must have a valid SSN. Www free1040taxreturn com (See Rule 8 if you have a qualifying child. Www free1040taxreturn com ) 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. Www free1040taxreturn com An example of a federally funded benefit is Medicaid. Www free1040taxreturn com 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. Www free1040taxreturn com S. Www free1040taxreturn com citizen or permanent resident, ask the SSA for a new social security card without the legend. Www free1040taxreturn com U. Www free1040taxreturn com S. Www free1040taxreturn com citizen. Www free1040taxreturn com   If you were a U. Www free1040taxreturn com S. Www free1040taxreturn com citizen when you received your SSN, you have a valid SSN. Www free1040taxreturn com Valid for work only with INS or DHS authorization. Www free1040taxreturn com   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. Www free1040taxreturn com SSN missing or incorrect. Www free1040taxreturn com   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Www free1040taxreturn com Other taxpayer identification number. Www free1040taxreturn com   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). Www free1040taxreturn com ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Www free1040taxreturn com No SSN. Www free1040taxreturn com   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). Www free1040taxreturn com You cannot claim the EIC. Www free1040taxreturn com Getting an SSN. Www free1040taxreturn com   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, Application for a Social Security Card, with the SSA. Www free1040taxreturn com You can get Form SS-5 online at www. Www free1040taxreturn com socialsecurity. Www free1040taxreturn com gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Www free1040taxreturn com Filing deadline approaching and still no SSN. Www free1040taxreturn com   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Www free1040taxreturn com Request an automatic 6-month extension of time to file your return. Www free1040taxreturn com You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Www free1040taxreturn com S. Www free1040taxreturn com Individual Income Tax Return. Www free1040taxreturn com For more information, see chapter 1 . Www free1040taxreturn com File the return on time without claiming the EIC. Www free1040taxreturn com After receiving the SSN, file an amended return (Form 1040X, Amended U. Www free1040taxreturn com S. Www free1040taxreturn com Individual Income Tax Return) claiming the EIC. Www free1040taxreturn com Attach a filled-in Schedule EIC if you have a qualifying child. Www free1040taxreturn com Table 36-1. Www free1040taxreturn com Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Www free1040taxreturn com Second, you must meet all the rules in one of these columns, whichever applies. Www free1040taxreturn com Third, you must meet the rule in this column. Www free1040taxreturn com Part A. Www free1040taxreturn com  Rules for Everyone Part B. Www free1040taxreturn com  Rules If You Have a Qualifying Child Part C. Www free1040taxreturn com  Rules If You Do Not Have a Qualifying Child Part D. Www free1040taxreturn com  Figuring and Claiming the EIC 1. Www free1040taxreturn com 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. Www free1040taxreturn com 2. Www free1040taxreturn com You must have a valid social security number. Www free1040taxreturn com  3. Www free1040taxreturn com Your filing status cannot be “Married filing separately. Www free1040taxreturn com ” 4. Www free1040taxreturn com You must be a U. Www free1040taxreturn com S. Www free1040taxreturn com citizen or resident alien all year. Www free1040taxreturn com  5. Www free1040taxreturn com You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Www free1040taxreturn com  6. Www free1040taxreturn com Your investment income must be $3,300 or less. Www free1040taxreturn com  7. Www free1040taxreturn com You must have earned income. Www free1040taxreturn com 8. Www free1040taxreturn com Your child must meet the relationship, age, residency, and joint return tests. Www free1040taxreturn com  9. Www free1040taxreturn com Your qualifying child cannot be used by more than one person to claim the EIC. Www free1040taxreturn com  10. Www free1040taxreturn com You cannot be a qualifying child of another person. Www free1040taxreturn com 11. Www free1040taxreturn com You must be at least age 25 but under age 65. Www free1040taxreturn com  12. Www free1040taxreturn com You cannot be the dependent of another person. Www free1040taxreturn com  13. Www free1040taxreturn com You cannot be a qualifying child of another person. Www free1040taxreturn com  14. Www free1040taxreturn com You must have lived in the United States more than half of the year. Www free1040taxreturn com 15. Www free1040taxreturn com 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. Www free1040taxreturn com Rule 3. Www free1040taxreturn com Your Filing Status Cannot Be Married Filing Separately If you are married, you usually must file a joint return to claim the EIC. Www free1040taxreturn com Your filing status cannot be “Married filing separately. Www free1040taxreturn com ” Spouse did not live with you. Www free1040taxreturn com   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. Www free1040taxreturn com In that case, you may be able to claim the EIC. Www free1040taxreturn com For detailed information about filing as head of household, see chapter 2 . Www free1040taxreturn com Rule 4. Www free1040taxreturn com You Must Be a U. Www free1040taxreturn com S. Www free1040taxreturn com 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. Www free1040taxreturn com You can use that filing status only if one spouse is a U. Www free1040taxreturn com S. Www free1040taxreturn com citizen or resident alien and you choose to treat the nonresident spouse as a U. Www free1040taxreturn com S. Www free1040taxreturn com resident. Www free1040taxreturn com If you make this choice, you and your spouse are taxed on your worldwide income. Www free1040taxreturn com 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). Www free1040taxreturn com If you need more information on making this choice, get Publication 519, U. Www free1040taxreturn com S. Www free1040taxreturn com Tax Guide for Aliens. Www free1040taxreturn com Rule 5. Www free1040taxreturn com 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. Www free1040taxreturn com You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Www free1040taxreturn com U. Www free1040taxreturn com S. Www free1040taxreturn com possessions are not foreign countries. Www free1040taxreturn com See Publication 54, Tax Guide for U. Www free1040taxreturn com S. Www free1040taxreturn com Citizens and Resident Aliens Abroad, for more detailed information. Www free1040taxreturn com Rule 6. Www free1040taxreturn com 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. Www free1040taxreturn com If your investment income is more than $3,300, you cannot claim the credit. Www free1040taxreturn com For most people, investment income is the total of the following amounts. Www free1040taxreturn com Taxable interest (line 8a of Form 1040 or 1040A). Www free1040taxreturn com Tax-exempt interest (line 8b of Form 1040 or 1040A). Www free1040taxreturn com Dividend income (line 9a of Form 1040 or 1040A). Www free1040taxreturn com Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A). Www free1040taxreturn com If you file Form 1040EZ, your investment income is the total of the amount of line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Www free1040taxreturn com However, see Rule 6 in chapter 1 of Publication 596 if: You are filing Schedule E (Form 1040), Form 4797, or Form 8814, or You are reporting income from the rental of personal property on Form 1040, line 21. Www free1040taxreturn com Rule 7. Www free1040taxreturn com You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Www free1040taxreturn com If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Www free1040taxreturn com If you are an employee, earned income includes all the taxable income you get from your employer. Www free1040taxreturn com If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the instructions for Form 1040. Www free1040taxreturn com Earned Income Earned income includes all of the following types of income. Www free1040taxreturn com Wages, salaries, tips, and other taxable employee pay. Www free1040taxreturn com Employee pay is earned income only if it is taxable. Www free1040taxreturn com Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Www free1040taxreturn com But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained below. Www free1040taxreturn com Net earnings from self-employment. Www free1040taxreturn com Gross income received as a statutory employee. Www free1040taxreturn com Wages, salaries, and tips. Www free1040taxreturn com   Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Www free1040taxreturn com You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Www free1040taxreturn com Nontaxable combat pay election. Www free1040taxreturn com   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Www free1040taxreturn com Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Www free1040taxreturn com Figure the credit with and without your nontaxable combat pay before making the election. Www free1040taxreturn com   If you make the election, you must include in earned income all nontaxable combat pay you received. Www free1040taxreturn com If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. Www free1040taxreturn com In other words, if one of you makes the election, the other one can also make it but does not have to. Www free1040taxreturn com   The amount of your nontaxable combat pay should be shown in box 12 of your Form W-2 with code “Q. Www free1040taxreturn com ” Self-employed persons and statutory employees. Www free1040taxreturn com   If you are self-employed or received income as a statutory employee, you must use the Form 1040 instructions to see if you qualify to get the EIC. Www free1040taxreturn com 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. Www free1040taxreturn com Each approved form exempts certain income from social security taxes. Www free1040taxreturn com Each form is discussed here in terms of what is or is not earned income for the EIC. Www free1040taxreturn com Form 4361. Www free1040taxreturn com   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Www free1040taxreturn com This includes wages, salaries, tips, and other taxable employee compensation. Www free1040taxreturn com A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Www free1040taxreturn com Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Www free1040taxreturn com Examples include fees for performing marriages and honoraria for delivering speeches. Www free1040taxreturn com Form 4029. Www free1040taxreturn com   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Www free1040taxreturn com However, amounts you received as a self-employed individual do not count as earned income. Www free1040taxreturn com Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Www free1040taxreturn com 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. Www free1040taxreturn com Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Www free1040taxreturn com You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Www free1040taxreturn com Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Www free1040taxreturn com Report taxable pension payments on Form 1040, lines 16a and 16b (or Form 1040A, lines 12a and 12b). Www free1040taxreturn com Disability insurance payments. Www free1040taxreturn com   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Www free1040taxreturn com It does not matter whether you have reached minimum retirement age. Www free1040taxreturn com If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Www free1040taxreturn com ” 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. Www free1040taxreturn com Do not include any of these items in your earned income. Www free1040taxreturn com Earnings while an inmate. Www free1040taxreturn com   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Www free1040taxreturn com This includes amounts for work performed while in a work release program or while in a halfway house. Www free1040taxreturn com Workfare payments. Www free1040taxreturn com   Nontaxable workfare payments are not earned income for the EIC. Www free1040taxreturn com 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 private sector employment is not available, or (2) community service program activities. Www free1040taxreturn com Community property. Www free1040taxreturn com   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. Www free1040taxreturn com That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Www free1040taxreturn com 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. Www free1040taxreturn com Nevada, Washington, and California domestic partners. Www free1040taxreturn com   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Www free1040taxreturn com Your earned income for the EIC does not include any amount earned by your partner. Www free1040taxreturn com Your earned income includes the entire amount you earned. Www free1040taxreturn com For details, see Publication 555. Www free1040taxreturn com Conservation Reserve Program (CRP) payments. Www free1040taxreturn com   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. Www free1040taxreturn com Nontaxable military pay. Www free1040taxreturn com   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Www free1040taxreturn com Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Www free1040taxreturn com See Publication 3, Armed Forces' Tax Guide, for more information. Www free1040taxreturn com    Combat pay. Www free1040taxreturn com You can elect to include your nontaxable combat pay in earned income for the EIC. Www free1040taxreturn com See Nontaxable combat pay election, earlier. Www free1040taxreturn com Part B. Www free1040taxreturn com Rules If You Have a Qualifying Child If you have met all of the rules in Part A , read Part B to see if you have a qualifying child. Www free1040taxreturn com Part B discusses Rules 8 through 10. Www free1040taxreturn com You must meet all three of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit with a qualifying child. Www free1040taxreturn com You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Www free1040taxreturn com (You cannot file Form 1040EZ. Www free1040taxreturn com ) You also must complete Schedule EIC and attach it to your return. Www free1040taxreturn com If you meet all the rules in Part A and this part, read Part D to find out what to do next. Www free1040taxreturn com If you do not meet Rule 8, you do not have a qualifying child. Www free1040taxreturn com Read Part C to find out if you can get the earned income credit without a qualifying child. Www free1040taxreturn com Rule 8. Www free1040taxreturn com Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Www free1040taxreturn com The four tests are: Relationship, Age, Residency, and Joint return. Www free1040taxreturn com The four tests are illustrated in Figure 36–1. Www free1040taxreturn com The paragraphs that follow contain more information about each test. Www free1040taxreturn com 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). Www free1040taxreturn com The following definitions clarify the relationship test. Www free1040taxreturn com Adopted child. Www free1040taxreturn com   An adopted child is always treated as your own child. Www free1040taxreturn com The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Www free1040taxreturn com Foster child. Www free1040taxreturn com   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction. Www free1040taxreturn com An authorized placement agency includes a state or local government agency. Www free1040taxreturn com It also includes a tax-exempt organization licensed by a state. Www free1040taxreturn com In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Www free1040taxreturn com Example. Www free1040taxreturn com 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. Www free1040taxreturn com Debbie is your foster child. Www free1040taxreturn com 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. Www free1040taxreturn com    The following examples and definitions clarify the age test. Www free1040taxreturn com Example 1—child not under age 19. Www free1040taxreturn com Your son turned 19 on December 10. Www free1040taxreturn com 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. Www free1040taxreturn com Example 2—child not younger than you or your spouse. Www free1040taxreturn com Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Www free1040taxreturn com He is not disabled. Www free1040taxreturn com Both you and your spouse are 21 years old and you file a joint return. Www free1040taxreturn com Your brother is not your qualifying child because he is not younger than you or your spouse. Www free1040taxreturn com Example 3—child younger than your spouse but not younger than you. Www free1040taxreturn com The facts are the same as in Example 2 except that your spouse is 25 years old. Www free1040taxreturn com Because your brother is younger than your spouse, he is your qualifying child even though he is not younger than you. Www free1040taxreturn com Student defined. Www free1040taxreturn com   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. Www free1040taxreturn com The 5 calendar months need not be consecutive. Www free1040taxreturn com   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. Www free1040taxreturn com School defined. Www free1040taxreturn com   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Www free1040taxreturn com However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Www free1040taxreturn com Vocational high school students. Www free1040taxreturn com   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. Www free1040taxreturn com Permanently and totally disabled. Www free1040taxreturn com   Your child is permanently and totally disabled if both of the following apply. Www free1040taxreturn com He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Www free1040taxreturn com A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Www free1040taxreturn com Residency Test Your child must have lived with you in the United States for more than half of 2013. Www free1040taxreturn com The following definitions clarify the residency test. Www free1040taxreturn com United States. Www free1040taxreturn com   This means the 50 states and the District of Columbia. Www free1040taxreturn com It does not include Puerto Rico or U. Www free1040taxreturn com S. Www free1040taxreturn com possessions such as Guam. Www free1040taxreturn com Homeless shelter. Www free1040taxreturn com   Your home can be any location where you regularly live. Www free1040taxreturn com You do not need a traditional home. Www free1040taxreturn com 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. Www free1040taxreturn com Military personnel stationed outside the United States. Www free1040taxreturn com    U. Www free1040taxreturn com S. Www free1040taxreturn com 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. Www free1040taxreturn com Figure 36-1. Www free1040taxreturn com Tests for Qualifying Child Please click here for the text description of the image. Www free1040taxreturn com Qualifying child Extended active duty. Www free1040taxreturn com   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Www free1040taxreturn com 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. Www free1040taxreturn com Birth or death of a child. Www free1040taxreturn com   A 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. Www free1040taxreturn com Temporary absences. Www free1040taxreturn com   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. Www free1040taxreturn com Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Www free1040taxreturn com Kidnapped child. Www free1040taxreturn com    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. Www free1040taxreturn com The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or your child's family. Www free1040taxreturn com This treatment applies for all years until the child is returned. Www free1040taxreturn com 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. Www free1040taxreturn com   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Www free1040taxreturn com Joint Return Test To meet this test, the child cannot file a joint return for the year. Www free1040taxreturn com Exception. Www free1040taxreturn com   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. Www free1040taxreturn com Example 1—child files joint return. Www free1040taxreturn com You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Www free1040taxreturn com He earned $25,000 for the year. Www free1040taxreturn com The couple files a joint return. Www free1040taxreturn com Because your daughter and her husband filed a joint return, she is not your qualifying child. Www free1040taxreturn com Example 2—child files joint return only to claim a refund of withheld tax. Www free1040taxreturn com Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Www free1040taxreturn com They do not have a child. Www free1040taxreturn com Neither is required to file a tax return. Www free1040taxreturn com Taxes were taken out of their pay, so they filed a joint return only to get a refund of the withheld taxes. Www free1040taxreturn com The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Www free1040taxreturn com Example 3—child files joint return to claim American opportunity credit. Www free1040taxreturn com The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Www free1040taxreturn com 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. Www free1040taxreturn com Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. Www free1040taxreturn com The exception to the joint return test does not apply, so your son is not your qualifying child. Www free1040taxreturn com Married child. Www free1040taxreturn com   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. Www free1040taxreturn com Social security number. Www free1040taxreturn com   The 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. Www free1040taxreturn com 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), which is issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Www free1040taxreturn com   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. Www free1040taxreturn com For more information about SSNs, see Rule 2 . Www free1040taxreturn com Rule 9. Www free1040taxreturn com 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. Www free1040taxreturn com However, only one of these persons can actually treat the child as a qualifying child. Www free1040taxreturn com 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). Www free1040taxreturn com The exemption for the child. Www free1040taxreturn com The child tax credit. Www free1040taxreturn com Head of household filing status. Www free1040taxreturn com The credit for child and dependent care expenses. Www free1040taxreturn com The exclusion for dependent care benefits. Www free1040taxreturn com The EIC. Www free1040taxreturn com The other person cannot take any of these benefits based on this qualifying child. Www free1040taxreturn com In other words, you and the other person cannot agree to divide these tax benefits between you. Www free1040taxreturn com The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Www free1040taxreturn com The tiebreaker rules explained next explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Www free1040taxreturn com However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Www free1040taxreturn com Tiebreaker rules. Www free1040taxreturn com   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. Www free1040taxreturn com If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com See Example 8 . Www free1040taxreturn com   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. Www free1040taxreturn com See Examples 1 through 13 . Www free1040taxreturn com   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 Part C for people who do not have a qualifying child. Www free1040taxreturn com If the other person cannot claim the EIC. Www free1040taxreturn com   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. Www free1040taxreturn com See Examples 6 and 7 . Www free1040taxreturn com 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. Www free1040taxreturn com Examples. Www free1040taxreturn com The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Www free1040taxreturn com Example 1. Www free1040taxreturn com You and your 2-year-old son Jimmy lived with your mother all year. Www free1040taxreturn com You are 25 years old, unmarried, and your AGI is $9,000. Www free1040taxreturn com Your only income was $9,000 from a part-time job. Www free1040taxreturn com Your mother's only income was $20,000 from her job, and her AGI is $20,000. Www free1040taxreturn com Jimmy's father did not live with you or Jimmy. Www free1040taxreturn com The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Www free1040taxreturn com 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. Www free1040taxreturn com However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier for which that person qualifies). Www free1040taxreturn com He is not a qualifying child of anyone else, including his father. Www free1040taxreturn com 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). Www free1040taxreturn com Example 2. Www free1040taxreturn com The facts are the same as in Example 1 except your AGI is $25,000. Www free1040taxreturn com Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Www free1040taxreturn com Only you can claim him. Www free1040taxreturn com Example 3. Www free1040taxreturn com The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com Example 4. Www free1040taxreturn com 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. Www free1040taxreturn com Only one of you can claim each child. Www free1040taxreturn com However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Www free1040taxreturn com For example, if you claim one child, your mother can claim the other two. Www free1040taxreturn com Example 5. Www free1040taxreturn com The facts are the same as in Example 1 except that you are only 18 years old. Www free1040taxreturn com This means you are a qualifying child of your mother. Www free1040taxreturn com Because of Rule 10 , discussed next, you cannot claim the EIC and cannot claim Jimmy as a qualifying child. Www free1040taxreturn com Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Www free1040taxreturn com 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. Www free1040taxreturn com Example 6. Www free1040taxreturn com The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Www free1040taxreturn com Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Www free1040taxreturn com Example 7. Www free1040taxreturn com The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Www free1040taxreturn com Your earned income is too high for you to claim the EIC. Www free1040taxreturn com But your mother cannot claim the EIC either, because her AGI is not higher than yours. Www free1040taxreturn com Example 8. Www free1040taxreturn com 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 an AGI of $30,000 on a joint return. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com In other words, each parent's AGI can be treated as $15,000. Www free1040taxreturn com Example 9. Www free1040taxreturn com You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Www free1040taxreturn com In August and September, Joey lived with you. Www free1040taxreturn com For the rest of the year, Joey lived with your husband, who is Joey's father. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com You and your husband will file separate returns. Www free1040taxreturn com Your husband agrees to let you treat Joey as a qualifying child. Www free1040taxreturn com 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. Www free1040taxreturn com However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Www free1040taxreturn com See Rule 3 . Www free1040taxreturn com Example 10. Www free1040taxreturn com The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Www free1040taxreturn com In this case, only your husband will be allowed to treat Joey as a qualifying child. Www free1040taxreturn com This is because, during 2013, the boy lived with him longer than with you. Www free1040taxreturn com You cannot claim the EIC (either with or without a qualifying child). Www free1040taxreturn com 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. Www free1040taxreturn com See Rule 3 . Www free1040taxreturn com Example 11. Www free1040taxreturn com You, your 5-year-old son and your son's father lived together all year. Www free1040taxreturn com You and your son's father are not married. Www free1040taxreturn com 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. Www free1040taxreturn com Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Www free1040taxreturn com Neither of you had any other income. Www free1040taxreturn com Your son's father agrees to let you treat the child as a qualifying child. Www free1040taxreturn com 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. Www free1040taxreturn com Example 12. Www free1040taxreturn com 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. Www free1040taxreturn com In this case, only your son's father will be allowed to treat your son as a qualifying child. Www free1040taxreturn com This is because his AGI, $14,000, is more than your AGI, $12,000. Www free1040taxreturn com You cannot claim the EIC (either with or without a qualifying child). Www free1040taxreturn com Example 13. Www free1040taxreturn com You and your 7-year-old niece, your sister's child, lived with your mother all year. Www free1040taxreturn com You are 25 years old, and your AGI is $9,300. Www free1040taxreturn com Your only income was from a part-time job. Www free1040taxreturn com Your mother's AGI is $15,000. Www free1040taxreturn com Her only income was from her job. Www free1040taxreturn com Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Www free1040taxreturn com 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. Www free1040taxreturn com However, only your mother can treat her as a qualifying child. Www free1040taxreturn com This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Www free1040taxreturn com Special rule for divorced or separated parents (or parents who live apart). Www free1040taxreturn com   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. Www free1040taxreturn com 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 times during the last 6 months of 2013, whether or not they are or were married. Www free1040taxreturn com The child received over half of his or her support for the year from the parents. Www free1040taxreturn com The child is in the custody of one or both parents for more than half of 2013. Www free1040taxreturn com Either of the following statements is true. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com  For details, see chapter 3. Www free1040taxreturn com Also see Applying Rule 9 to divorced or separated parents (or parents who live apart) , next. Www free1040taxreturn com Applying Rule 9 to divorced or separated parents (or parents who live apart). Www free1040taxreturn com   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. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com Example 1. Www free1040taxreturn com You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Www free1040taxreturn com Your AGI is $10,000. Www free1040taxreturn com Your mother’s AGI is $25,000. Www free1040taxreturn com Your son's father did not live with you or your son. Www free1040taxreturn com Under the special rule for children of 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. Www free1040taxreturn com 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. Www free1040taxreturn com You and your mother did not have any child care expenses or dependent care benefits. Www free1040taxreturn com 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. Www free1040taxreturn com Example 2. Www free1040taxreturn com The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Www free1040taxreturn com Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Www free1040taxreturn com Example 3. Www free1040taxreturn com 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. Www free1040taxreturn com Your mother also claims him as a qualifying child for head of household filing status. Www free1040taxreturn com You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Www free1040taxreturn com The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Www free1040taxreturn com Rule 10. Www free1040taxreturn com You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Www free1040taxreturn com ) if all of the following statements are true. Www free1040taxreturn com You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Www free1040taxreturn com Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Www free1040taxreturn com 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. Www free1040taxreturn com You lived with that person in the United States for more than half of the year. Www free1040taxreturn com 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). Www free1040taxreturn com For more details about the tests to be a qualifying child, see Rule 8 . Www free1040taxreturn com If you are a qualifying child of another taxpayer, you cannot claim the EIC. Www free1040taxreturn com 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. Www free1040taxreturn com Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Www free1040taxreturn com Example. Www free1040taxreturn com You and your daughter lived with your mother all year. Www free1040taxreturn com You are 22 years old, unmarried, and attended a trade school full time. Www free1040taxreturn com You had a part-time job and earned $5,700. Www free1040taxreturn com You had no other income. Www free1040taxreturn com Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Www free1040taxreturn com She can claim the EIC if she meets all the other requirements. Www free1040taxreturn com Because you are your mother's qualifying child, you cannot claim the EIC. Www free1040taxreturn com This is so even if your mother cannot or does not claim the EIC. Www free1040taxreturn com Child of person not required to file a return. Www free1040taxreturn com   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. Www free1040taxreturn com Example. Www free1040taxreturn com 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. Www free1040taxreturn com As a result, you are not your mother's qualifying child. Www free1040taxreturn com You can claim the EIC if you meet all the other requirements to do so. Www free1040taxreturn com   See Rule 10 in Publication 596 for additional examples. Www free1040taxreturn com Part C. Www free1040taxreturn com Rules If You Do Not Have a Qualifying Child Read this part if you: Do not have a qualifying child, and Have met all the rules in Part A . Www free1040taxreturn com  Part C discusses Rules 11 through 14. Www free1040taxreturn com You must meet all four of these rules, in addition to the rules in Parts A and D , to qualify for the earned income credit without a qualifying child. Www free1040taxreturn com If you have a qualifying child, the rules in this part do not apply to you. Www free1040taxreturn com You can claim the credit only if you meet all the rules in Parts A, B, and D. Www free1040taxreturn com See Rule 8 to find out if you have a qualifying child. Www free1040taxreturn com Rule 11. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com It does not matter which spouse meets the age test, as long as one of the spouses does. Www free1040taxreturn com You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Www free1040taxreturn com 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. Www free1040taxreturn com If neither you nor your spouse meets the age test, you cannot claim the EIC. Www free1040taxreturn com Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www free1040taxreturn com Death of spouse. Www free1040taxreturn com   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. Www free1040taxreturn com Example 1. Www free1040taxreturn com You are age 28 and unmarried. Www free1040taxreturn com You meet the age test. Www free1040taxreturn com Example 2—spouse meets age test. Www free1040taxreturn com You are married and filing a joint return. Www free1040taxreturn com You are age 23 and your spouse is age 27. Www free1040taxreturn com You meet the age test because your spouse is at least age 25 but under age 65. Www free1040taxreturn com Example 3—spouse dies in 2013. Www free1040taxreturn com You are married and filing a joint return with your spouse who died in August 2013. Www free1040taxreturn com You are age 67. Www free1040taxreturn com Your spouse would have become age 65 in November 2013. Www free1040taxreturn com Because your spouse was under age 65 when she died, you meet the age test. Www free1040taxreturn com Rule 12. Www free1040taxreturn com 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. Www free1040taxreturn com 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. Www free1040taxreturn com If you are not sure whether someone else can claim you (or your spouse, if filing a joint return) as a dependent, read the rules for claiming a dependent in chapter 3. Www free1040taxreturn com If someone else can claim you (or your spouse, if filing a joint return) as a dependent on his or her return, but does not, you still cannot claim the credit. Www free1040taxreturn com Example 1. Www free1040taxreturn com In 2013, you were age 25, single, and living at home with your parents. Www free1040taxreturn com You worked and were not a student. Www free1040taxreturn com You earned $7,500. Www free1040taxreturn com Your parents cannot claim you as a dependent. Www free1040taxreturn com 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. Www free1040taxreturn com You meet this rule. Www free1040taxreturn com You can claim the EIC if you meet all the other requirements. Www free1040taxreturn com Example 2. Www free1040taxreturn com The facts are the same as in Example 1 , except that you earned $2,000. Www free1040taxreturn com Your parents can claim you as a dependent but decide not to. Www free1040taxreturn com You do not meet this rule. Www free1040taxreturn com You cannot claim the credit because your parents could have claimed you as a dependent. Www free1040taxreturn com Joint returns. Www free1040taxreturn com   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Www free1040taxreturn com   However, another person may be able to claim you as a dependent if you and your spouse file a joint return only to get a refund of income tax withheld or estimated tax paid. Www free1040taxreturn com But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Www free1040taxreturn com Example 1. Www free1040taxreturn com You are 26 years old. Www free1040taxreturn com You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Www free1040taxreturn com Neither you nor your wife is required to file a tax return. Www free1040taxreturn com You do not have a child. Www free1040taxreturn com Taxes were taken out of your pay, so you file a joint return only to get a refund of the withheld taxes. Www free1040taxreturn com Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Www free1040taxreturn com They can claim exemptions for you and your wife if all the other tests to do so are met. Www free1040taxreturn com Example 2. Www free1040taxreturn com The facts are the same as in Example 1 except no taxes were taken out of your pay. Www free1040taxreturn com 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. Www free1040taxreturn com Because claiming the EIC is your reason for filing the return, you are not filing it only to get a refund of income tax withheld or estimated tax paid. Www free1040taxreturn com Your parents cannot claim an exemption for either you or your wife. Www free1040taxreturn com Rule 13. Www free1040taxreturn com You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Www free1040taxreturn com ) if all of the following statements are true. Www free1040taxreturn com You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Www free1040taxreturn com Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or a descendant of any of them). Www free1040taxreturn com 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 (as defined in Rule 8 ), and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Www free1040taxreturn com You lived with that person in the United States for more than half of the year. Www free1040taxreturn com 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). Www free1040taxreturn com For more details about the tests to be a qualifying child, see Rule 8 . Www free1040taxreturn com If you are a qualifying child of another taxpayer, you cannot claim the EIC. Www free1040taxreturn com 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. Www free1040taxreturn com Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www free1040taxreturn com Example. Www free1040taxreturn com You lived with your mother all year. Www free1040taxreturn com You are age 26, unmarried, and permanently and totally disabled. Www free1040taxreturn com Your only income was from a community center where you went three days a week to answer telephones. Www free1040taxreturn com You earned $5,000 for the year and provided more than half of your own support. Www free1040taxreturn com Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Www free1040taxreturn com She can claim the EIC if she meets all the other requirements. Www free1040taxreturn com Because you are a qualifying child of your mother, you cannot claim the EIC. Www free1040taxreturn com This is so even if your mother cannot or does not claim the EIC. Www free1040taxreturn com Joint returns. Www free1040taxreturn com   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Www free1040taxreturn com   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return for the year only to get a refund of income tax withheld or estimated tax paid. Www free1040taxreturn com But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Www free1040taxreturn com Child of person not required to file a return. Www free1040taxreturn com   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. Www free1040taxreturn com Example. Www free1040taxreturn com You lived all year with your father. Www free1040taxreturn com You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Www free1040taxreturn com You have no other income, no children, and provided more than half of your own support. Www free1040taxreturn com Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Www free1040taxreturn com As a result, you are not your father's qualifying child. Www free1040taxreturn com You can claim the EIC if you meet all the other requirements to do so. Www free1040taxreturn com   See Rule 13 in Publication 596 for additional examples. Www free1040taxreturn com Rule 14. Www free1040taxreturn com 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. Www free1040taxreturn com If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www free1040taxreturn com United States. Www free1040taxreturn com   This means the 50 states and the District of Columbia. Www free1040taxreturn com It does not include Puerto Rico or U. Www free1040taxreturn com S. Www free1040taxreturn com possessions such as Guam. Www free1040taxreturn com Homeless shelter. Www free1040taxreturn com   Your home can be any location where you regularly live. Www free1040taxreturn com You do not need a traditional home. Www free1040taxreturn com If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Www free1040taxreturn com Military personnel stationed outside the United States. Www free1040taxreturn com   U. Www free1040taxreturn com S. Www free1040taxreturn com military personnel stationed outside the United States on extended active duty (defined in Rule 8 ) are considered to live in the United States during that duty period for purposes of the EIC. Www free1040taxreturn com Part D. Www free1040taxreturn com Figuring and Claiming the EIC Read this part if you have met all the rules in Parts A and B, or all the rules in Parts A and C. Www free1040taxreturn com Part D discusses Rule 15 . Www free1040taxreturn com You must meet this rule, in addition to the rules in Parts A and B , or Parts A and C , to qualify for the earned income credit. Www free1040taxreturn com This part of the chapter also explains how to figure the amount of your credit. Www free1040taxreturn com You have two choices. Www free1040taxreturn com Have the IRS figure the EIC for you. Www free1040taxreturn com If you want to do this, see IRS Will Figure the EIC for You . Www free1040taxreturn com Figure the EIC yourself. Www free1040taxreturn com If you want to do this, see How To Figure the EIC Yourself . Www free1040taxreturn com Rule 15. Www free1040taxreturn com 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. Www free1040taxreturn com Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Www free1040taxreturn com Employee pay is earned income only if it is taxable. Www free1040taxreturn com Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Www free1040taxreturn com But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Www free1040taxreturn com Earned income is explained in detail in Rule 7 . Www free1040taxreturn com Figuring earned income. Www free1040taxreturn com   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. Www free1040taxreturn com   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. Www free1040taxreturn com   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). Www free1040taxreturn com You will then reduce that amount by any amount included on that line and described in the following list: Scholarship or fellowship grants not reported on a Form W-2, Inmate's income, and Pension or annuity from deferred compensation plans. Www free1040taxreturn com Scholarship or fellowship grants not reported on a Form W-2. Www free1040taxreturn com   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. Www free1040taxreturn com Inmate's income. Www free1040taxreturn com   Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Www free1040taxreturn com This includes amounts received for work performed while in a work release program or while in a halfway house. Www free1040taxreturn com 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). Www free1040taxreturn com Pension or annuity from deferred compensation plans. Www free1040taxreturn com   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. Www free1040taxreturn com 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). Www free1040taxreturn com This amount may be reported in box 11 of your Form W-2. Www free1040taxreturn com If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or annuity. Www free1040taxreturn com Clergy. Www free1040taxreturn com   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 reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. Www free1040taxreturn com Put “Clergy” on the dotted line next to line 64a (Form 1040). Www free1040taxreturn com Church employees. Www free1040taxreturn com    A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. Www free1040taxreturn com If you received wages as a