Earned income credit is more. The amount of credit has increased for 1998. The most you can receive is:

• $2,271 with one qualifying child,
• $3,756 with more than one qualifying child, or
• $341 without a qualifying child.

Earned income amount is more. The amount you can earn and still get the credit has increased for 1998. The amount you earn must be less than:

• $26,473 with one qualifying child,
• $30,095 with more than one qualifying child, or
• $10,030 without a qualifying child.

Investment income amount is more. The maximum amount of investment income you can have and still get the credit has increased for 1998. You can have investment income up to $2,300. For most people, investment income is taxable interest and dividends, tax-exempt interest, and capital gain net income. To get more detailed information, see A-2, Investment Income Limit, later.

Modified AGI (adjusted gross income). Beginning in 1998, your modified AGI used to limit your credit includes:

1. Tax-exempt interest, and
2. The nontaxable part of a pension, annuity, or individual retirement arrangement (IRA) distribution, except any amount that is nontaxable due to a trustee-to-trustee transfer or a rollover distribution.

Also, the amount of business losses that must be added back to AGI to figure modified AGI has increased from 50% to 75%.

If you qualify for the 1999 advance payment of the earned income credit, use these increases to figure your 1999 modified AGI.

See Publication 596, Earned Income Credit, for more detailed information on modified AGI.

New form to Claim EIC after disallowance. You will now have to file Form 8862, Information To Claim Earned Income Credit After Disallowance to claim earned income credit if you are denied the credit as a result of deficiency procedures. See Publication 596 for more information.

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