Where can I get more information?
Q1. What is the Earned Income Tax Credit (EITC)?
A1. The Earned Income Tax Credit (EITC) is a refundable Federal tax credit for eligible individuals and families who work and have earned income under $33,692 ($34,692 for married filing jointly). The EITC reduces the amount of tax you owe, and it may give you a refund.
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Q2. Who can claim the credit?
A2. To claim the EITC on your 2003 tax return, you must meet all of the following rules:
1. You must have a valid social security number that allows you to work.
Additionally, to claim the EITC, you must have a Social Security Number (SSN) for you, your spouse (if filing a joint return), and your qualifying child.
A SSN is a number issued by the Social Security Administration to a U.S. citizen or to a person who has permission from the INS to work in the United States.
You cannot get the earned income tax credit if the SSN was issued solely for use in applying for or receiving federally funded benefits.
You cannot get the credit if, instead of an SSN, you, your spouse, or your 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 for a child to adopting parents who cannot get an SSN for the child being adopted until the adoption is final.
2. You must have earned income during the year.
3. Your earned income and modified AGI must each be less than:
* $11,230 ($12,230 for married filing jointly) if you have no qualifying children, or;
* $29,666 ($30,666 for married filing jointly) if you have one qualifying child, or;
* $33,692 ($34,692 for married filing jointly) if you have more than one qualifying child.
4. Your investment income cannot be more than $2,600.
5. Your filing status can be any filing status EXCEPT married filing a separate return.
6. You cannot be a qualifying child of another person. If you are filing a joint return, neither you nor your spouse can be a qualifying child of another person.
7. Your qualifying child cannot be used by more than one person to claim the EIC.
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Q3. What if I was denied the EITC last year?
A3. If you received a notice of deficiency denying your earned income tax credit for a previous year and you want to claim the EITC for tax year 2003, you need to complete Form 8862, Information to Claim Earned Income Credit After Disallowance, and attach it to your 2003 tax return unless the following situation applies to you.
1) You are claiming the EIC without a qualifying child for 2003, and
2) Your EIC for the earlier year was reduced or disallowed solely because one or both of the children listed on your Schedule EIC were not your qualifying children for that year.
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Q4. Who is a qualifying child?
A4. Basically, a qualifying child is a child who:
1. Is your son, daughter, adopted child, grandchild, great-grandchild, stepchild, or eligible foster child, and;
2. Was (at the end of the tax year) under age 19 or under age 24 and a full-time student, or; permanently and totally disabled at any age during the year; and
3. Lived with you in the United States for more than half of the tax year.
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Q5. Who is an eligible foster child?
A5. A child is your eligible foster child for the earned income tax credit if all the following apply.
1. The child is placed with you by an authorized placement agency. (An authorized placement agency includes a state or local government agency or court. It also includes a tax-exempt organization licensed by a state.)
2. You care for that child as you would your own child.
3. The child lived with you for more than half of the tax year, except for temporary absences.
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Q6. What is Earned Income?
A6. Earned income includes all the taxable income and wages you get from working.
There are two ways to get earned income:
1. You work for someone who pays you, or;
2. You work in a business you own.
Taxable earned income includes:
· Wages, salaries, and tips;
· Union strike benefits;
· Long-term disability benefits received prior to minimum retirement age;
· Net earnings from self-employment.
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Q7. How do I figure my credit?
A7. Once you know that you qualify for the EITC, you need to know how to figure the amount of the credit. You have two choices of how to figure the credit:
- Have the IRS figure the credit for you. If you would like the IRS to do this, see Publication 596, Earned Income Credit, or Figure the credit yourself. To do this 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 instruction booklet.
For more information, see Chapter 4, Figuring and Claiming the EITC, in Publication 596.
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Q8. Where can I get more information?
A8. Publication 596, Earned Income Credit, explains the rules to qualify for and to claim the EITC and Advance EITC.
A free copy of IRS forms and/or publications is available for download or by calling the Internal Revenue Service at 1-800-829-3676.
See Publication 910, Guide to Free Tax Services, for a list of free tax publications.
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