Use this section if you qualify for the earned income credit. You qualify if you have met all the rules in Parts A and B, or all the rules in Parts A and C.

This part of the chapter explains how to figure the amount of your credit. You have two choices.

1. Have the IRS figure the credit for you. If you want to do this, see IRS Will Figure the Credit for You.
2. Figure the credit yourself. If you want to do this, see How To Figure the Credit Yourself.

Qualifying child information (Schedule EIC). Whether the IRS figures your credit or you figure it yourself, you must give the IRS information about your qualifying child. To do this, complete Schedule EIC and attach it to your Form 1040 or Form 1040A.

The information you enter on Schedule EIC must show that the child meets all the tests for a qualifying child. (See rule B-2.) The schedule has space for information about only two qualifying children because the amount of your credit is the same whether you have two, three, or more qualifying children.

Do not file Form 1040EZ if you have a qualifying child and qualify for the credit. You must file Form 1040 or Form 1040A.

IRS Will Figure the Credit for You

The IRS will figure the amount of your earned income credit for you if you follow the steps explained in this section.

Please do not follow these steps unless you qualify for the earned income credit. Read the rules in sections A, B, and C to see if you qualify.

If you want the IRS to also figure the amount of your income tax, see Publication 967, The IRS Will Figure Your Tax.

Form 1040

If you file Form 1040 and want the IRS to figure your credit for you, follow these steps.

1. Print EIC directly to the right of line 59a. Also, if you have any earned income that is not taxed, enter the amount and type of that income on line 59b. See Table 37-2 for examples of earned income that is not taxed. Then, if you have any of the situations listed later under Special Instructions, follow those instructions.
2. Complete all other parts of your return that apply to you (including line 54), but do not fill in lines 64, 65, or 68. If you do not have a qualifying child, stop here.
3. If you have a qualifying child, complete Schedule EIC according to its instructions. Be sure to enter the child's social security number on line 4 of that schedule. If you do not, your credit may be reduced or disallowed. Attach Schedule EIC to your return.

Form 1040A

If you file Form 1040A and want the IRS to figure your credit for you, follow these steps.

1. Print EIC directly to the right of line 37a. Also, if you have earned income that is not taxed, enter the amount and type of that income on line 37b. See Table 37-2 for examples of earned income that is not taxed. Then, if you have any of the situations listed later under Special Instructions, follow those instructions.
2. Complete all other parts of your return that apply to you (including line 33), but do not fill in lines 39, 40, or 43. If you do not have a qualifying child, stop here.
3. If you have a qualifying child, complete Schedule EIC according to its instructions. Be sure to enter the child's social security number on line 4 of that schedule. If you do not, your credit may be reduced or disallowed. Attach Schedule EIC to your return.

Form 1040EZ

If you file Form 1040EZ and want the IRS to figure your credit for you, follow these steps.

1. Print EIC in the space to the right of the word "below" on line 8b. Also, if you have earned income that is not taxed, enter the amount and type in the spaces marked "Type "and "$" on line 8b. See Table 37-2 for examples of earned income that is not taxed. Then, if you have any of the situations listed later under Special Instructions, follow those instructions.
2. Complete all other parts of your return that apply to you, but do not fill in lines 9, 11a, or 12.

Special Instructions

Use the following special instructions, if the situation applies to you.

Minister or member of a religious order. If you were a member of the clergy who is filing Schedule SE and line 2 of that schedule includes an amount that is also included on Form 1040, line 7, print "Clergy" directly to the right of line 59a, Form 1040. Also show the amount included on both lines (for example, "Clergy $800"). If you received a housing allowance or were provided housing and you were required to include the allowance or the rental value of the parsonage on Schedule SE, line 2, do not include it as nontaxable earned income on line 59b of Form 1040.

Household employee. If you were a household employee who did not receive a Form W-2 because your employer paid you less than $1,100 in 1998, print "HSH" and the amount paid that was not reported on Form W-2 in the space to the right of the words "W-2 form(s)" on line 1 (Form 1040EZ), or on the dotted line next to line 7 (Form 1040), or in the space to the left of line 7 (Form 1040A). Also, be sure to include that amount in the total for line 1 of Form 1040EZ or line 7 of either Form 1040 or Form 1040A.

Inmates. If you were an inmate in a penal institution and the total on line 1 (Form 1040EZ) or line 7 (Form 1040 or Form 1040A), includes an amount paid for your work in the institution, print "PRI" and the amount paid in the space to the right of the words "W-2 form(s)" on line 1 (Form 1040EZ), or on the dotted line next to line 7 (Form 1040), or in the space to the left of line 7 (Form 1040A).

How To Figure the Credit Yourself

To figure the amount of your earned income credit, you must use the Earned Income Credit Worksheet (EIC Worksheet) in the instruction booklet for Form 1040, Form 1040A, or Form 1040EZ, and the Earned Income Credit (EIC) Table in the tax form instruction booklet. This part of this chapter explains how to use the EIC Worksheet and how to report the credit on your return.

The amount of your earned income credit depends on:

• Whether you have no qualifying child, one qualifying child, or two or more qualifying children,
• The amount of your earned income (defined in rule A-1) and modified AGI (defined in rule B-1 or rule C-1), and
• Whether you owe alternative minimum tax.

Alternative minimum tax (AMT). The tax laws give special treatment to some kinds of income and expenses. This special treatment could substantially reduce or eliminate an individual's income tax. So that taxpayers who benefit from these laws will pay at least a minimum amount of tax, there is a special tax called the AMT.

You must reduce your earned income credit by the amount of any AMT you have for the tax year.

You may owe the AMT if you file Form 1040 or Form 1040A and your taxable income for regular tax purposes, combined with any of the adjustments and preference items that apply to you, totals more than:

• $45,000 if you are married filing a joint return (or a qualifying widow(er) with a dependent child), or
• $33,750 if your filing status is head of household or single.

See the instructions for line 51 (Form 1040) or line 34 (Form 1040A) for more information.

Form 1040 and EIC Worksheet. If you file Form 1040 and want to figure the credit yourself, follow these steps.

1. Go to your form instruction booklet and turn to the instructions for Lines 59a and 59b and look for the Earned Income Credit Worksheet--Line 59a.
2. Complete the EIC Worksheet according to its instructions. If you were self-employed or used Schedule C or C-EZ as a statutory employee, complete the separate worksheet in the Form 1040 instructions booklet for line 5 of the EIC Worksheet. Find the amount of your credit in the EIC Table in your instruction booklet.
3. Enter the amount of your earned income credit from line 10 of the EIC Worksheet on Form 1040, line 59a. But if you owe the alternative minimum tax (Form 1040, line 51), subtract it from the amount on line 10 of the EIC Worksheet and enter the result (if more than zero) on Form 1040, line 59a. Then replace the amount on line 10 of the EIC Worksheet with the amount entered on Form 1040, line 59a.
4. Enter the amount and type of any nontaxable earned income (from line 4 of the EIC Worksheet) on Form 1040, line 59b.
5. Keep the EIC Worksheet for your records. Do not attach it to your income tax return. If you do not have a qualifying child, stop here.
6. If you have a qualifying child, complete Schedule EIC according to its instructions. Be sure to enter the child's social security number on line 4 of that schedule. If you do not, your credit may be reduced or disallowed. Attach Schedule EIC to your return.

Form 1040A and EIC Worksheet. If you file Form 1040A and want to figure the credit yourself, follow these steps.

1. Go to your form instruction booklet and turn to the instructions for Lines 37a and 37b and look for the Earned Income Credit Worksheet--Line 37a.
2. Complete the EIC Worksheet according to its instructions. Find the amount of your credit in the EIC Table in your form instruction booklet.
3. Enter the amount of your earned income credit from line 9 of the EIC Worksheet on Form 1040A, line 37a. But if you owe the alternative minimum tax (Form 1040A, line 34), subtract it from the amount on line 9 of the EIC Worksheet and enter the result (if more than zero) on Form 1040A, line 37a. Then replace the amount on line 9 of the EIC Worksheet with the amount entered on Form 1040A, line 37a.
4. Enter the amount and type of any nontaxable earned income (from line 4 of the EIC Worksheet) on Form 1040A, line 37b.
5. Keep the EIC Worksheet for your records. Do not attach it to your income tax return. If you do not have a qualifying child, stop here.
6. If you have a qualifying child, complete Schedule EIC according to its instructions. Be sure to enter the child's social security number on line 4 of that schedule. If you do not, your credit may be reduced or disallowed. Attach Schedule EIC to your return.

Form 1040EZ and EIC Worksheet. If you file Form 1040EZ and want to figure the credit yourself, follow these steps.

1. Go to your form instruction booklet and turn to the instructions for Lines 8a and 8b and look for the Earned Income Credit Worksheet--Line 8a.
2. Complete the EIC Worksheet according to its instructions. Find the amount of your credit in the EIC Table in your form instruction booklet.
3. Enter the amount of your earned income credit from line 9 of the EIC Worksheet on Form 1040EZ, line 8a.
4. Enter the amount and type of any nontaxable earned income (line 4 of the EIC Worksheet) on Form 1040EZ, line 8b.
5. Keep the EIC Worksheet for your records. Do not attach it to your income tax return.

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