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2013 1040 Ez

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2013 1040 Ez

2013 1040 ez 15. 2013 1040 ez   Selling Your Home Table of Contents Reminder Introduction Useful Items - You may want to see: Main Home Figuring Gain or LossSelling Price Amount Realized Adjusted Basis Amount of Gain or Loss Dispositions Other Than Sales Determining Basis Excluding the GainMaximum Exclusion Ownership and Use Tests Reduced Maximum Exclusion Business Use or Rental of Home Reporting the SaleSeller-financed mortgage. 2013 1040 ez More information. 2013 1040 ez Special SituationsException for sales to related persons. 2013 1040 ez Recapturing (Paying Back) a Federal Mortgage Subsidy Reminder Home sold with undeducted points. 2013 1040 ez  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of the sale. 2013 1040 ez See Mortgage ending early under Points in chapter 23. 2013 1040 ez Introduction This chapter explains the tax rules that apply when you sell your main home. 2013 1040 ez In most cases, your main home is the one in which you live most of the time. 2013 1040 ez If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). 2013 1040 ez See Excluding the Gain , later. 2013 1040 ez Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. 2013 1040 ez If you have gain that cannot be excluded, it is taxable. 2013 1040 ez Report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040). 2013 1040 ez You may also have to complete Form 4797, Sales of Business Property. 2013 1040 ez See Reporting the Sale , later. 2013 1040 ez If you have a loss on the sale, you generally cannot deduct it on your return. 2013 1040 ez However, you may need to report it. 2013 1040 ez See Reporting the Sale , later. 2013 1040 ez The following are main topics in this chapter. 2013 1040 ez Figuring gain or loss. 2013 1040 ez Basis. 2013 1040 ez Excluding the gain. 2013 1040 ez Ownership and use tests. 2013 1040 ez Reporting the sale. 2013 1040 ez Other topics include the following. 2013 1040 ez Business use or rental of home. 2013 1040 ez Recapturing a federal mortgage subsidy. 2013 1040 ez Useful Items - You may want to see: Publication 523 Selling Your Home 530 Tax Information for Homeowners 547 Casualties, Disasters, and Thefts Form (and Instructions) Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 8828 Recapture of Federal Mortgage Subsidy 8949 Sales and Other Dispositions of Capital Assets Main Home This section explains the term “main home. 2013 1040 ez ” Usually, the home you live in most of the time is your main home and can be a: House, Houseboat, Mobile home, Cooperative apartment, or Condominium. 2013 1040 ez To exclude gain under the rules of this chapter, you in most cases must have owned and lived in the property as your main home for at least 2 years during the 5-year period ending on the date of sale. 2013 1040 ez Land. 2013 1040 ez   If you sell the land on which your main home is located, but not the house itself, you cannot exclude any gain you have from the sale of the land. 2013 1040 ez However, if you sell vacant land used as part of your main home and that is adjacent to it, you may be able to exclude the gain from the sale under certain circumstances. 2013 1040 ez See Vacant land under Main Home in Publication 523 for more information. 2013 1040 ez Example. 2013 1040 ez You buy a piece of land and move your main home to it. 2013 1040 ez Then you sell the land on which your main home was located. 2013 1040 ez This sale is not considered a sale of your main home, and you cannot exclude any gain on the sale of the land. 2013 1040 ez More than one home. 2013 1040 ez   If you have more than one home, you can exclude gain only from the sale of your main home. 2013 1040 ez You must include in income gain from the sale of any other home. 2013 1040 ez If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time during the year. 2013 1040 ez Example 1. 2013 1040 ez You own two homes, one in New York and one in Florida. 2013 1040 ez From 2009 through 2013, you live in the New York home for 7 months and in the Florida residence for 5 months of each year. 2013 1040 ez In the absence of facts and circumstances indicating otherwise, the New York home is your main home. 2013 1040 ez You would be eligible to exclude the gain from the sale of the New York home but not of the Florida home in 2013. 2013 1040 ez Example 2. 2013 1040 ez You own a house, but you live in another house that you rent. 2013 1040 ez The rented house is your main home. 2013 1040 ez Example 3. 2013 1040 ez You own two homes, one in Virginia and one in New Hampshire. 2013 1040 ez In 2009 and 2010, you lived in the Virginia home. 2013 1040 ez In 2011 and 2012, you lived in the New Hampshire home. 2013 1040 ez In 2013, you lived again in the Virginia home. 2013 1040 ez Your main home in 2009, 2010, and 2013 is the Virginia home. 2013 1040 ez Your main home in 2011 and 2012 is the New Hampshire home. 2013 1040 ez You would be eligible to exclude gain from the sale of either home (but not both) in 2013. 2013 1040 ez Property used partly as your main home. 2013 1040 ez   If you use only part of the property as your main home, the rules discussed in this publication apply only to the gain or loss on the sale of that part of the property. 2013 1040 ez For details, see Business Use or Rental of Home , later. 2013 1040 ez Figuring Gain or Loss To figure the gain or loss on the sale of your main home, you must know the selling price, the amount realized, and the adjusted basis. 2013 1040 ez Subtract the adjusted basis from the amount realized to get your gain or loss. 2013 1040 ez     Selling price     − Selling expenses       Amount realized       Amount realized     − Adjusted basis       Gain or loss   Selling Price The selling price is the total amount you receive for your home. 2013 1040 ez It includes money and the fair market value of any other property or any other services you receive and all notes, mortgages or other debts assumed by the buyer as part of the sale. 2013 1040 ez Payment by employer. 2013 1040 ez   You may have to sell your home because of a job transfer. 2013 1040 ez If your employer pays you for a loss on the sale or for your selling expenses, do not include the payment as part of the selling price. 2013 1040 ez Your employer will include it as wages in box 1 of your Form W-2, and you will include it in your income on Form 1040, line 7. 2013 1040 ez Option to buy. 2013 1040 ez   If you grant an option to buy your home and the option is exercised, add the amount you receive for the option to the selling price of your home. 2013 1040 ez If the option is not exercised, you must report the amount as ordinary income in the year the option expires. 2013 1040 ez Report this amount on Form 1040, line 21. 2013 1040 ez Form 1099-S. 2013 1040 ez   If you received Form 1099-S, Proceeds From Real Estate Transactions, box 2 (Gross proceeds) should show the total amount you received for your home. 2013 1040 ez   However, box 2 will not include the fair market value of any services or property other than cash or notes you received or will receive. 2013 1040 ez Instead, box 4 will be checked to indicate your receipt or expected receipt of these items. 2013 1040 ez Amount Realized The amount realized is the selling price minus selling expenses. 2013 1040 ez Selling expenses. 2013 1040 ez   Selling expenses include: Commissions, Advertising fees, Legal fees, and Loan charges paid by the seller, such as loan placement fees or “points. 2013 1040 ez ” Adjusted Basis While you owned your home, you may have made adjustments (increases or decreases) to the basis. 2013 1040 ez This adjusted basis must be determined before you can figure gain or loss on the sale of your home. 2013 1040 ez For information on how to figure your home's adjusted basis, see Determining Basis , later. 2013 1040 ez Amount of Gain or Loss To figure the amount of gain or loss, compare the amount realized to the adjusted basis. 2013 1040 ez Gain on sale. 2013 1040 ez   If the amount realized is more than the adjusted basis, the difference is a gain and, except for any part you can exclude, in most cases is taxable. 2013 1040 ez Loss on sale. 2013 1040 ez   If the amount realized is less than the adjusted basis, the difference is a loss. 2013 1040 ez A loss on the sale of your main home cannot be deducted. 2013 1040 ez Jointly owned home. 2013 1040 ez   If you and your spouse sell your jointly owned home and file a joint return, you figure your gain or loss as one taxpayer. 2013 1040 ez Separate returns. 2013 1040 ez   If you file separate returns, each of you must figure your own gain or loss according to your ownership interest in the home. 2013 1040 ez Your ownership interest is generally determined by state law. 2013 1040 ez Joint owners not married. 2013 1040 ez   If you and a joint owner other than your spouse sell your jointly owned home, each of you must figure your own gain or loss according to your ownership interest in the home. 2013 1040 ez Each of you applies the rules discussed in this chapter on an individual basis. 2013 1040 ez Dispositions Other Than Sales Some special rules apply to other dispositions of your main home. 2013 1040 ez Foreclosure or repossession. 2013 1040 ez   If your home was foreclosed on or repossessed, you have a disposition. 2013 1040 ez See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments, to determine if you have ordinary income, gain, or loss. 2013 1040 ez Abandonment. 2013 1040 ez   If you abandon your home, see Publication 4681 to determine if you have ordinary income, gain, or loss. 2013 1040 ez Trading (exchanging) homes. 2013 1040 ez   If you trade your old home for another home, treat the trade as a sale and a purchase. 2013 1040 ez Example. 2013 1040 ez You owned and lived in a home with an adjusted basis of $41,000. 2013 1040 ez A real estate dealer accepted your old home as a trade-in and allowed you $50,000 toward a new home priced at $80,000. 2013 1040 ez This is treated as a sale of your old home for $50,000 with a gain of $9,000 ($50,000 – $41,000). 2013 1040 ez If the dealer had allowed you $27,000 and assumed your unpaid mortgage of $23,000 on your old home, your sales price would still be $50,000 (the $27,000 trade-in allowed plus the $23,000 mortgage assumed). 2013 1040 ez Transfer to spouse. 2013 1040 ez   If you transfer your home to your spouse or you transfer it to your former spouse incident to your divorce, you in most cases have no gain or loss. 2013 1040 ez This is true even if you receive cash or other consideration for the home. 2013 1040 ez As a result, the rules in this chapter do not apply. 2013 1040 ez More information. 2013 1040 ez   If you need more information, see Transfer to spouse in Publication 523 and Property Settlements in Publication 504, Divorced or Separated Individuals. 2013 1040 ez Involuntary conversion. 2013 1040 ez   You have a disposition when your home is destroyed or condemned and you receive other property or money in payment, such as insurance or a condemnation award. 2013 1040 ez This is treated as a sale and you may be able to exclude all or part of any gain from the destruction or condemnation of your home, as explained later under Special Situations . 2013 1040 ez Determining Basis You need to know your basis in your home to figure any gain or loss when you sell it. 2013 1040 ez Your basis in your home is determined by how you got the home. 2013 1040 ez Generally, your basis is its cost if you bought it or built it. 2013 1040 ez If you got it in some other way (inheritance, gift, etc. 2013 1040 ez ), your basis is generally either its fair market value when you received it or the adjusted basis of the previous owner. 2013 1040 ez While you owned your home, you may have made adjustments (increases or decreases) to your home's basis. 2013 1040 ez The result of these adjustments is your home's adjusted basis, which is used to figure gain or loss on the sale of your home. 2013 1040 ez See Adjusted Basis , later. 2013 1040 ez You can find more information on basis and adjusted basis in chapter 13 of this publication and in Publication 523. 2013 1040 ez Cost As Basis The cost of property is the amount you paid for it in cash, debt obligations, other property, or services. 2013 1040 ez Purchase. 2013 1040 ez   If you bought your home, your basis is its cost to you. 2013 1040 ez This includes the purchase price and certain settlement or closing costs. 2013 1040 ez In most cases, your purchase price includes your down payment and any debt, such as a first or second mortgage or notes you gave the seller in payment for the home. 2013 1040 ez If you build, or contract to build, a new home, your purchase price can include costs of construction, as discussed in Publication 523. 2013 1040 ez Settlement fees or closing costs. 2013 1040 ez   When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. 2013 1040 ez You can include in your basis some of the settlement fees and closing costs you paid for buying the home, but not the fees and costs for getting a mortgage loan. 2013 1040 ez A fee paid for buying the home is any fee you would have had to pay even if you paid cash for the home (that is, without the need for financing). 2013 1040 ez    Chapter 13 lists some of the settlement fees and closing costs that you can include in the basis of property, including your home. 2013 1040 ez It also lists some settlement costs that cannot be included in basis. 2013 1040 ez   Also see Publication 523 for additional items and a discussion of basis other than cost. 2013 1040 ez Adjusted Basis Adjusted basis is your cost or other basis increased or decreased by certain amounts. 2013 1040 ez To figure your adjusted basis, you can use Worksheet 1 in Publication 523. 2013 1040 ez Do not use Worksheet 1 if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent. 2013 1040 ez Increases to basis. 2013 1040 ez   These include the following. 2013 1040 ez Additions and other improvements that have a useful life of more than 1 year. 2013 1040 ez Special assessments for local improvements. 2013 1040 ez Amounts you spent after a casualty to restore damaged property. 2013 1040 ez Improvements. 2013 1040 ez   These add to the value of your home, prolong its useful life, or adapt it to new uses. 2013 1040 ez You add the cost of additions and other improvements to the basis of your property. 2013 1040 ez   For example, putting a recreation room or another bathroom in your unfinished basement, putting up a new fence, putting in new plumbing or wiring, putting on a new roof, or paving your unpaved driveway are improvements. 2013 1040 ez An addition to your house, such as a new deck, a sunroom, or a new garage, is also an improvement. 2013 1040 ez Repairs. 2013 1040 ez   These maintain your home in good condition but do not add to its value or prolong its life. 2013 1040 ez You do not add their cost to the basis of your property. 2013 1040 ez   Examples of repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering, and replacing broken window panes. 2013 1040 ez Decreases to basis. 2013 1040 ez   These include the following. 2013 1040 ez Discharge of qualified principal residence indebtedness that was excluded from income. 2013 1040 ez Some or all of the cancellation of debt income that was excluded due to your bankruptcy or insolvency. 2013 1040 ez For details, see Publication 4681. 2013 1040 ez Gain you postponed from the sale of a previous home before May 7, 1997. 2013 1040 ez Deductible casualty losses. 2013 1040 ez Insurance payments you received or expect to receive for casualty losses. 2013 1040 ez Payments you received for granting an easement or right-of-way. 2013 1040 ez Depreciation allowed or allowable if you used your home for business or rental purposes. 2013 1040 ez Energy-related credits allowed for expenditures made on the residence. 2013 1040 ez (Reduce the increase in basis otherwise allowable for expenditures on the residence by the amount of credit allowed for those expenditures. 2013 1040 ez ) Adoption credit you claimed for improvements added to the basis of your home. 2013 1040 ez Nontaxable payments from an adoption assistance program of your employer you used for improvements you added to the basis of your home. 2013 1040 ez Energy conservation subsidy excluded from your gross income because you received it (directly or indirectly) from a public utility after 1992 to buy or install any energy conservation measure. 2013 1040 ez An energy conservation measure is an installation or modification primarily designed either to reduce consumption of electricity or natural gas or to improve the management of energy demand for a home. 2013 1040 ez District of Columbia first-time homebuyer credit (allowed on the purchase of a principal residence in the District of Columbia beginning on August 5, 1997 and before January 1, 2012). 2013 1040 ez General sales taxes (allowed beginning 2004 and ending before 2014) claimed as an itemized deduction on Schedule A (Form 1040) that were imposed on the purchase of personal property, such as a houseboat used as your home or a mobile home. 2013 1040 ez Discharges of qualified principal residence indebtedness. 2013 1040 ez   You may be able to exclude from gross income a discharge of qualified principal residence indebtedness. 2013 1040 ez This exclusion applies to discharges made after 2006 and before 2014. 2013 1040 ez If you choose to exclude this income, you must reduce (but not below zero) the basis of the principal residence by the amount excluded from your gross income. 2013 1040 ez   File Form 982 with your tax return. 2013 1040 ez See the form's instructions for detailed information. 2013 1040 ez Recordkeeping. 2013 1040 ez You should keep records to prove your home's adjusted basis. 2013 1040 ez Ordinarily, you must keep records for 3 years after the due date for filing your return for the tax year in which you sold your home. 2013 1040 ez But if you sold a home before May 7, 1997, and postponed tax on any gain, the basis of that home affects the basis of the new home you bought. 2013 1040 ez Keep records proving the basis of both homes as long as they are needed for tax purposes. 2013 1040 ez The records you should keep include: Proof of the home's purchase price and purchase expenses, Receipts and other records for all improvements, additions, and other items that affect the home's adjusted basis, Any worksheets or other computations you used to figure the adjusted basis of the home you sold, the gain or loss on the sale, the exclusion, and the taxable gain, Any Form 982 you filed to report any discharge of qualified principal residence indebtedness, Any Form 2119, Sale of Your Home, you filed to postpone gain from the sale of a previous home before May 7, 1997, and Any worksheets you used to prepare Form 2119, such as the Adjusted Basis of Home Sold Worksheet or the Capital Improvements Worksheet from the Form 2119 instructions, or other source of computations. 2013 1040 ez Excluding the Gain You may qualify to exclude from your income all or part of any gain from the sale of your main home. 2013 1040 ez This means that, if you qualify, you will not have to pay tax on the gain up to the limit described under Maximum Exclusion , next. 2013 1040 ez To qualify, you must meet the ownership and use tests described later. 2013 1040 ez You can choose not to take the exclusion by including the gain from the sale in your gross income on your tax return for the year of the sale. 2013 1040 ez You can use Worksheet 2 in Publication 523 to figure the amount of your exclusion and your taxable gain, if any. 2013 1040 ez If you have any taxable gain from the sale of your home, you may have to increase your withholding or make estimated tax payments. 2013 1040 ez See Publication 505, Tax Withholding and Estimated Tax. 2013 1040 ez Maximum Exclusion You can exclude up to $250,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if all of the following are true. 2013 1040 ez You meet the ownership test. 2013 1040 ez You meet the use test. 2013 1040 ez During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home. 2013 1040 ez For details on gain allocated to periods of nonqualified use, see Periods of nonqualified use , later. 2013 1040 ez You may be able to exclude up to $500,000 of the gain (other than gain allocated to periods of nonqualified use) on the sale of your main home if you are married and file a joint return and meet the requirements listed in the discussion of the special rules for joint returns, later, under Married Persons . 2013 1040 ez Ownership and Use Tests To claim the exclusion, you must meet the ownership and use tests. 2013 1040 ez This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). 2013 1040 ez Exception. 2013 1040 ez   If you owned and lived in the property as your main home for less than 2 years, you can still claim an exclusion in some cases. 2013 1040 ez However, the maximum amount you may be able to exclude will be reduced. 2013 1040 ez See Reduced Maximum Exclusion , later. 2013 1040 ez Example 1—home owned and occupied for at least 2 years. 2013 1040 ez Mya bought and moved into her main home in September 2011. 2013 1040 ez She sold the home at a gain in October 2013. 2013 1040 ez During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. 2013 1040 ez She meets the ownership and use tests. 2013 1040 ez Example 2—ownership test met but use test not met. 2013 1040 ez Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. 2013 1040 ez He later sold the home for a gain. 2013 1040 ez He owned the home during the entire 5-year period ending on the date of sale. 2013 1040 ez He meets the ownership test but not the use test. 2013 1040 ez He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion (explained later). 2013 1040 ez Period of Ownership and Use The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time. 2013 1040 ez You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. 2013 1040 ez Temporary absence. 2013 1040 ez   Short temporary absences for vacations or other seasonal absences, even if you rent out the property during the absences, are counted as periods of use. 2013 1040 ez The following examples assume that the reduced maximum exclusion (discussed later) does not apply to the sales. 2013 1040 ez Example 1. 2013 1040 ez David Johnson, who is single, bought and moved into his home on February 1, 2011. 2013 1040 ez Each year during 2011 and 2012, David left his home for a 2-month summer vacation. 2013 1040 ez David sold the house on March 1, 2013. 2013 1040 ez Although the total time David used his home is less than 2 years (21 months), he meets the requirement and may exclude gain. 2013 1040 ez The 2-month vacations are short temporary absences and are counted as periods of use in determining whether David used the home for the required 2 years. 2013 1040 ez Example 2. 2013 1040 ez Professor Paul Beard, who is single, bought and moved into a house on August 18, 2010. 2013 1040 ez He lived in it as his main home continuously until January 5, 2012, when he went abroad for a 1-year sabbatical leave. 2013 1040 ez On February 6, 2013, 1 month after returning from the leave, Paul sold the house at a gain. 2013 1040 ez Because his leave was not a short temporary absence, he cannot include the period of leave to meet the 2-year use test. 2013 1040 ez He cannot exclude any part of his gain, because he did not use the residence for the required 2 years. 2013 1040 ez Ownership and use tests met at different times. 2013 1040 ez   You can meet the ownership and use tests during different 2-year periods. 2013 1040 ez However, you must meet both tests during the 5-year period ending on the date of the sale. 2013 1040 ez Example. 2013 1040 ez Beginning in 2002, Helen Jones lived in a rented apartment. 2013 1040 ez The apartment building was later converted to condominiums, and she bought her same apartment on December 3, 2010. 2013 1040 ez In 2011, Helen became ill and on April 14 of that year she moved to her daughter's home. 2013 1040 ez On July 12, 2013, while still living in her daughter's home, she sold her condominium. 2013 1040 ez Helen can exclude gain on the sale of her condominium because she met the ownership and use tests during the 5-year period from July 13, 2008, to July 12, 2013, the date she sold the condominium. 2013 1040 ez She owned her condominium from December 3, 2010, to July 12, 2013 (more than 2 years). 2013 1040 ez She lived in the property from July 13, 2008 (the beginning of the 5-year period), to April 14, 2011 (more than 2 years). 2013 1040 ez The time Helen lived in her daughter's home during the 5-year period can be counted toward her period of ownership, and the time she lived in her rented apartment during the 5-year period can be counted toward her period of use. 2013 1040 ez Cooperative apartment. 2013 1040 ez   If you sold stock as a tenant-stockholder in a cooperative housing corporation, the ownership and use tests are met if, during the 5-year period ending on the date of sale, you: Owned the stock for at least 2 years, and Lived in the house or apartment that the stock entitles you to occupy as your main home for at least 2 years. 2013 1040 ez Exceptions to Ownership and Use Tests The following sections contain exceptions to the ownership and use tests for certain taxpayers. 2013 1040 ez Exception for individuals with a disability. 2013 1040 ez   There is an exception to the use test if: You become physically or mentally unable to care for yourself, and You owned and lived in your home as your main home for a total of at least 1 year during the 5-year period before the sale of your home. 2013 1040 ez Under this exception, you are considered to live in your home during any time within the 5-year period that you own the home and live in a facility (including a nursing home) licensed by a state or political subdivision to care for persons in your condition. 2013 1040 ez If you meet this exception to the use test, you still have to meet the 2-out-of-5-year ownership test to claim the exclusion. 2013 1040 ez Previous home destroyed or condemned. 2013 1040 ez   For the ownership and use tests, you add the time you owned and lived in a previous home that was destroyed or condemned to the time you owned and lived in the replacement home on whose sale you wish to exclude gain. 2013 1040 ez This rule applies if any part of the basis of the home you sold depended on the basis of the destroyed or condemned home. 2013 1040 ez Otherwise, you must have owned and lived in the same home for 2 of the 5 years before the sale to qualify for the exclusion. 2013 1040 ez Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps. 2013 1040 ez   You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve on “qualified official extended duty” as a member of the uniformed services or Foreign Service of the United States, or as an employee of the intelligence community. 2013 1040 ez You can choose to have the 5-year test period for ownership and use suspended during any period you or your spouse serve outside the United States either as an employee of the Peace Corps on "qualified official extended duty" or as an enrolled volunteer or volunteer leader of the Peace Corps. 2013 1040 ez This means that you may be able to meet the 2-year use test even if, because of your service, you did not actually live in your home for at least the required 2 years during the 5-year period ending on the date of sale. 2013 1040 ez   If this helps you qualify to exclude gain, you can choose to have the 5-year test period suspended by filing a return for the year of sale that does not include the gain. 2013 1040 ez For more information about the suspension of the 5-year test period, see Members of the uniformed services or Foreign Service, employees of the intelligence community, or employees or volunteers of the Peace Corps in Publication 523. 2013 1040 ez Married Persons If you and your spouse file a joint return for the year of sale and one spouse meets the ownership and use tests, you can exclude up to $250,000 of the gain. 2013 1040 ez (But see Special rules for joint returns , next. 2013 1040 ez ) Special rules for joint returns. 2013 1040 ez   You can exclude up to $500,000 of the gain on the sale of your main home if all of the following are true. 2013 1040 ez You are married and file a joint return for the year. 2013 1040 ez Either you or your spouse meets the ownership test. 2013 1040 ez Both you and your spouse meet the use test. 2013 1040 ez During the 2-year period ending on the date of the sale, neither you nor your spouse excluded gain from the sale of another home. 2013 1040 ez If either spouse does not satisfy all these requirements, the maximum exclusion that can be claimed by the couple is the total of the maximum exclusions that each spouse would qualify for if not married and the amounts were figured separately. 2013 1040 ez For this purpose, each spouse is treated as owning the property during the period that either spouse owned the property. 2013 1040 ez Example 1—one spouse sells a home. 2013 1040 ez Emily sells her home in June 2013 for a gain of $300,000. 2013 1040 ez She marries Jamie later in the year. 2013 1040 ez She meets the ownership and use tests, but Jamie does not. 2013 1040 ez Emily can exclude up to $250,000 of gain on a separate or joint return for 2013. 2013 1040 ez The $500,000 maximum exclusion for certain joint returns does not apply because Jamie does not meet the use test. 2013 1040 ez Example 2—each spouse sells a home. 2013 1040 ez The facts are the same as in Example 1 except that Jamie also sells a home in 2013 for a gain of $200,000 before he marries Emily. 2013 1040 ez He meets the ownership and use tests on his home, but Emily does not. 2013 1040 ez Emily can exclude $250,000 of gain and Jamie can exclude $200,000 of gain on the respective sales of their individual homes. 2013 1040 ez However, Emily cannot use Jamie's unused exclusion to exclude more than $250,000 of gain. 2013 1040 ez Therefore, Emily and Jamie must recognize $50,000 of gain on the sale of Emily's home. 2013 1040 ez The $500,000 maximum exclusion for certain joint returns does not apply because Emily and Jamie do not both meet the use test for the same home. 2013 1040 ez Sale of main home by surviving spouse. 2013 1040 ez   If your spouse died and you did not remarry before the date of sale, you are considered to have owned and lived in the property as your main home during any period of time when your spouse owned and lived in it as a main home. 2013 1040 ez   If you meet all of the following requirements, you may qualify to exclude up to $500,000 of any gain from the sale or exchange of your main home. 2013 1040 ez The sale or exchange took place after 2008. 2013 1040 ez The sale or exchange took place no more than 2 years after the date of death of your spouse. 2013 1040 ez You have not remarried. 2013 1040 ez You and your spouse met the use test at the time of your spouse's death. 2013 1040 ez You or your spouse met the ownership test at the time of your spouse's death. 2013 1040 ez Neither you nor your spouse excluded gain from the sale of another home during the last 2 years. 2013 1040 ez Example. 2013 1040 ez   Harry owned and used a house as his main home since 2009. 2013 1040 ez Harry and Wilma married on July 1, 2013, and from that date they use Harry's house as their main home. 2013 1040 ez Harry died on August 15, 2013, and Wilma inherited the property. 2013 1040 ez Wilma sold the property on September 3, 2013, at which time she had not remarried. 2013 1040 ez Although Wilma owned and used the house for less than 2 years, Wilma is considered to have satisfied the ownership and use tests because her period of ownership and use includes the period that Harry owned and used the property before death. 2013 1040 ez Home transferred from spouse. 2013 1040 ez   If your home was transferred to you by your spouse (or former spouse if the transfer was incident to divorce), you are considered to have owned it during any period of time when your spouse owned it. 2013 1040 ez Use of home after divorce. 2013 1040 ez   You are considered to have used property as your main home during any period when: You owned it, and Your spouse or former spouse is allowed to live in it under a divorce or separation instrument and uses it as his or her main home. 2013 1040 ez Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. 2013 1040 ez This applies to those who: Fail to meet the ownership and use tests, or Have used the exclusion within 2 years of selling their current home. 2013 1040 ez In both cases, to qualify for a reduced exclusion, the sale of your main home must be due to one of the following reasons. 2013 1040 ez A change in place of employment. 2013 1040 ez Health. 2013 1040 ez Unforeseen circumstances. 2013 1040 ez Unforeseen circumstances. 2013 1040 ez   The sale of your main home is because of an unforeseen circumstance if your primary reason for the sale is the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home. 2013 1040 ez   See Publication 523 for more information and to use Worksheet 3 to figure your reduced maximum exclusion. 2013 1040 ez Business Use or Rental of Home You may be able to exclude gain from the sale of a home you have used for business or to produce rental income. 2013 1040 ez But you must meet the ownership and use tests. 2013 1040 ez Periods of nonqualified use. 2013 1040 ez   In most cases, gain from the sale or exchange of your main home will not qualify for the exclusion to the extent that the gains are allocated to periods of nonqualified use. 2013 1040 ez Nonqualified use is any period after 2008 during which neither you nor your spouse (or your former spouse) used the property as a main home with the following exceptions. 2013 1040 ez Exceptions. 2013 1040 ez   A period of nonqualified use does not include: Any portion of the 5-year period ending on the date of the sale or exchange after the last date you (or your spouse) use the property as a main home; Any period (not to exceed an aggregate period of 10 years) during which you (or your spouse) are serving on qualified official extended duty: As a member of the uniformed services; As a member of the Foreign Service of the United States; or As an employee of the intelligence community; and Any other period of temporary absence (not to exceed an aggregate period of 2 years) due to change of employment, health conditions, or such other unforeseen circumstances as may be specified by the IRS. 2013 1040 ez The gain resulting from the sale of the property is allocated between qualified and nonqualified use periods based on the amount of time the property was held for qualified and nonqualified use. 2013 1040 ez Gain from the sale or exchange of a main home allocable to periods of qualified use will continue to qualify for the exclusion for the sale of your main home. 2013 1040 ez Gain from the sale or exchange of property allocable to nonqualified use will not qualify for the exclusion. 2013 1040 ez Calculation. 2013 1040 ez   To figure the portion of the gain allocated to the period of nonqualified use, multiply the gain by the following fraction:   Total nonqualified use during the period of ownership after 2008      Total period of ownership     This calculation can be found in Worksheet 2, line 10, in Publication 523. 2013 1040 ez Example 1. 2013 1040 ez On May 23, 2007, Amy, who is unmarried for all years in this example, bought a house. 2013 1040 ez She moved in on that date and lived in it until May 31, 2009, when she moved out of the house and put it up for rent. 2013 1040 ez The house was rented from June 1, 2009, to March 31, 2011. 2013 1040 ez Amy claimed depreciation deductions in 2009 through 2011 totaling $10,000. 2013 1040 ez Amy moved back into the house on April 1, 2011, and lived there until she sold it on January 31, 2013, for a gain of $200,000. 2013 1040 ez During the 5-year period ending on the date of the sale (January 31, 2008-January 31, 2013), Amy owned and lived in the house for more than 2 years as shown in the following table. 2013 1040 ez Five Year Period Used as  Home Used as  Rental 1/31/08 – 5/31/09 16 months       6/1/09 – 3/31/11   22 months 4/1/11 – 1/31/13 22 months         38 months 22 months During the period Amy owned the house (2,080 days), her period of nonqualified use was 668 days. 2013 1040 ez Amy divides 668 by 2,080 and obtains a decimal (rounded to at least three decimal places) of 0. 2013 1040 ez 321. 2013 1040 ez To figure her gain attributable to the period of nonqualified use, she multiplies $190,000 (the gain not attributable to the $10,000 depreciation deduction) by 0. 2013 1040 ez 321. 2013 1040 ez Because the gain attributable to periods of nonqualified use is $60,990, Amy can exclude $129,010 of her gain. 2013 1040 ez Example 2. 2013 1040 ez William owned and used a house as his main home from 2007 through 2010. 2013 1040 ez On January 1, 2011, he moved to another state. 2013 1040 ez He rented his house from that date until April 30, 2013, when he sold it. 2013 1040 ez During the 5-year period ending on the date of sale (May 1, 2008-April 30, 2013), William owned and lived in the house for more than 2 years. 2013 1040 ez He must report the sale on Form 4797 because it was rental property at the time of sale. 2013 1040 ez Because the period of nonqualified use does not include any part of the 5-year period after the last date William lived in the house, he has no period of nonqualified use. 2013 1040 ez Because he met the ownership and use tests, he can exclude gain up to $250,000. 2013 1040 ez However, he cannot exclude the part of the gain equal to the depreciation he claimed or could have claimed for renting the house, as explained next. 2013 1040 ez Depreciation after May 6, 1997. 2013 1040 ez   If you were entitled to take depreciation deductions because you used your home for business purposes or as rental property, you cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997. 2013 1040 ez If you can show by adequate records or other evidence that the depreciation allowed was less than the amount allowable, then you may limit the amount of gain recognized to the depreciation allowed. 2013 1040 ez See Publication 544 for more information. 2013 1040 ez Property used partly for business or rental. 2013 1040 ez   If you used property partly as a home and partly for business or to produce rental income, see Publication 523. 2013 1040 ez Reporting the Sale Do not report the 2013 sale of your main home on your tax return unless: You have a gain and do not qualify to exclude all of it, You have a gain and choose not to exclude it, or You received Form 1099-S. 2013 1040 ez If any of these conditions apply, report the entire gain or loss. 2013 1040 ez For details on how to report the gain or loss, see the Instructions for Schedule D (Form 1040) and the Instructions for Form 8949. 2013 1040 ez If you used the home for business or to produce rental income, you may have to use Form 4797 to report the sale of the business or rental part (or the sale of the entire property if used entirely for business or rental). 2013 1040 ez See Business Use or Rental of Home in Publication 523 and the Instructions for Form 4797. 2013 1040 ez Installment sale. 2013 1040 ez    Some sales are made under arrangements that provide for part or all of the selling price to be paid in a later year. 2013 1040 ez These sales are called “installment sales. 2013 1040 ez ” If you finance the buyer's purchase of your home yourself instead of having the buyer get a loan or mortgage from a bank, you probably have an installment sale. 2013 1040 ez You may be able to report the part of the gain you cannot exclude on the installment basis. 2013 1040 ez    Use Form 6252, Installment Sale Income, to report the sale. 2013 1040 ez Enter your exclusion on line 15 of Form 6252. 2013 1040 ez Seller-financed mortgage. 2013 1040 ez   If you sell your home and hold a note, mortgage, or other financial agreement, the payments you receive in most cases consist of both interest and principal. 2013 1040 ez You must separately report as interest income the interest you receive as part of each payment. 2013 1040 ez If the buyer of your home uses the property as a main or second home, you must also report the name, address, and social security number (SSN) of the buyer on line 1 of Schedule B (Form 1040A or 1040). 2013 1040 ez The buyer must give you his or her SSN, and you must give the buyer your SSN. 2013 1040 ez Failure to meet these requirements may result in a $50 penalty for each failure. 2013 1040 ez If either you or the buyer does not have and is not eligible to get an SSN, see Social Security Number in chapter 1. 2013 1040 ez More information. 2013 1040 ez   For more information on installment sales, see Publication 537, Installment Sales. 2013 1040 ez Special Situations The situations that follow may affect your exclusion. 2013 1040 ez Sale of home acquired in a like-kind exchange. 2013 1040 ez   You cannot claim the exclusion if: You acquired your home in a like-kind exchange (also known as a section 1031 exchange), or your basis in your home is determined by reference to the basis of the home in the hands of the person who acquired the property in a like-kind exchange (for example, you received the home from that person as a gift), and You sold the home during the 5-year period beginning with the date your home was acquired in the like-kind exchange. 2013 1040 ez Gain from a like-kind exchange is not taxable at the time of the exchange. 2013 1040 ez This means that gain will not be taxed until you sell or otherwise dispose of the property you receive. 2013 1040 ez To defer gain from a like-kind exchange, you must have exchanged business or investment property for business or investment property of a like kind. 2013 1040 ez For more information about like-kind exchanges, see Publication 544, Sales and Other Dispositions of Assets. 2013 1040 ez Home relinquished in a like-kind exchange. 2013 1040 ez   If you use your main home partly for business or rental purposes and then exchange the home for another property, see Publication 523. 2013 1040 ez Expatriates. 2013 1040 ez   You cannot claim the exclusion if the expatriation tax applies to you. 2013 1040 ez The expatriation tax applies to certain U. 2013 1040 ez S. 2013 1040 ez citizens who have renounced their citizenship (and to certain long-term residents who have ended their residency). 2013 1040 ez For more information about the expatriation tax, see Expatriation Tax in chapter 4 of Publication 519, U. 2013 1040 ez S. 2013 1040 ez Tax Guide for Aliens. 2013 1040 ez Home destroyed or condemned. 2013 1040 ez   If your home was destroyed or condemned, any gain (for example, because of insurance proceeds you received) qualifies for the exclusion. 2013 1040 ez   Any part of the gain that cannot be excluded (because it is more than the maximum exclusion) can be postponed under the rules explained in: Publication 547, in the case of a home that was destroyed, or Publication 544, chapter 1, in the case of a home that was condemned. 2013 1040 ez Sale of remainder interest. 2013 1040 ez   Subject to the other rules in this chapter, you can choose to exclude gain from the sale of a remainder interest in your home. 2013 1040 ez If you make this choice, you cannot choose to exclude gain from your sale of any other interest in the home that you sell separately. 2013 1040 ez Exception for sales to related persons. 2013 1040 ez   You cannot exclude gain from the sale of a remainder interest in your home to a related person. 2013 1040 ez Related persons include your brothers, sisters, half-brothers, half-sisters, spouse, ancestors (parents, grandparents, etc. 2013 1040 ez ), and lineal descendants (children, grandchildren, etc. 2013 1040 ez ). 2013 1040 ez Related persons also include certain corporations, partnerships, trusts, and exempt organizations. 2013 1040 ez Recapturing (Paying Back) a Federal Mortgage Subsidy If you financed your home under a federally subsidized program (loans from tax-exempt qualified mortgage bonds or loans with mortgage credit certificates), you may have to recapture all or part of the benefit you received from that program when you sell or otherwise dispose of your home. 2013 1040 ez You recapture the benefit by increasing your federal income tax for the year of the sale. 2013 1040 ez You may have to pay this recapture tax even if you can exclude your gain from income under the rules discussed earlier; that exclusion does not affect the recapture tax. 2013 1040 ez Loans subject to recapture rules. 2013 1040 ez   The recapture applies to loans that: Came from the proceeds of qualified mortgage bonds, or Were based on mortgage credit certificates. 2013 1040 ez The recapture also applies to assumptions of these loans. 2013 1040 ez When recapture applies. 2013 1040 ez   Recapture of the federal mortgage subsidy applies only if you meet both of the following conditions. 2013 1040 ez You sell or otherwise dispose of your home at a gain within the first 9 years after the date you close your mortgage loan. 2013 1040 ez Your income for the year of disposition is more than that year's adjusted qualifying income for your family size for that year (related to the income requirements a person must meet to qualify for the federally subsidized program). 2013 1040 ez When recapture does not apply. 2013 1040 ez   Recapture does not apply in any of the following situations. 2013 1040 ez Your mortgage loan was a qualified home improvement loan (QHIL) of not more than $15,000 used for alterations, repairs, and improvements that protect or improve the basic livability or energy efficiency of your home. 2013 1040 ez Your mortgage loan was a QHIL of not more than $150,000 in the case of a QHIL used to repair damage from Hurricane Katrina to homes in the hurricane disaster area; a QHIL funded by a qualified mortgage bond that is a qualified Gulf Opportunity Zone Bond; or a QHIL for an owner-occupied home in the Gulf Opportunity Zone (GO Zone), Rita GO Zone, or Wilma GO Zone. 2013 1040 ez For more information, see Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. 2013 1040 ez Also see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. 2013 1040 ez The home is disposed of as a result of your death. 2013 1040 ez You dispose of the home more than 9 years after the date you closed your mortgage loan. 2013 1040 ez You transfer the home to your spouse, or to your former spouse incident to a divorce, where no gain is included in your income. 2013 1040 ez You dispose of the home at a loss. 2013 1040 ez Your home is destroyed by a casualty, and you replace it on its original site within 2 years after the end of the tax year when the destruction happened. 2013 1040 ez The replacement period is extended for main homes destroyed in a federally declared disaster area, a Midwestern disaster area, the Kansas disaster area, and the Hurricane Katrina disaster area. 2013 1040 ez For more information, see Replacement Period in Publication 547. 2013 1040 ez You refinance your mortgage loan (unless you later meet the conditions listed previously under When recapture applies ). 2013 1040 ez Notice of amounts. 2013 1040 ez   At or near the time of settlement of your mortgage loan, you should receive a notice that provides the federally subsidized amount and other information you will need to figure your recapture tax. 2013 1040 ez How to figure and report the recapture. 2013 1040 ez    The recapture tax is figured on Form 8828. 2013 1040 ez If you sell your home and your mortgage is subject to recapture rules, you must file Form 8828 even if you do not owe a recapture tax. 2013 1040 ez Attach Form 8828 to your Form 1040. 2013 1040 ez For more information, see Form 8828 and its instructions. 2013 1040 ez Prev  Up  Next   Home   More Online Publications
 
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Filing Season Update

Latest Information on Tax Season and Refunds


Common Refund Questions and Answers Updated

Feb. 26, 2014

Will ordering a transcript help you determine when you’ll get your refund?

No, a tax transcript will not help you determine when you will get your refund. This is among the common myths and misconceptions that are often repeated in social media. The codes listed on tax transcripts do not provide any early insight into when a refund will be issued. The best way to check on your refund is by visiting “Where’s My Refund?” While transcripts include a lot of detailed information regarding actions taken on your account, the codes do not mean the same thing for everyone and they do not necessarily reflect how any of these actions do or do not impact the amount or timing of your refund. IRS transcripts are best and most often used to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation.

For more answers to common refund questions visit our 2014 Tax Season Refund Frequently Asked Questions page.

Refund Update

Feb. 21, 2014

The IRS issues more than 9 out of 10 refunds in less than 21 days from the day the IRS receives tax returns. Recent filing season data, as of Feb. 14 shows the IRS has already issued more than 31 million refunds this year. While the IRS works hard to issue refunds as quickly as possible some tax returns take longer to process than others for many reasons including when a return is incomplete, includes errors, includes Form 8379, Injured Spouse Allocation, or needs further review.

The IRS reminds taxpayers that the 21 day timeframe begins when you are notified by your preparer or tax preparation software company that the IRS has acknowledged acceptance of your tax return. Acceptance in this case means the IRS has accepted the return for processing. Further reviews may still be necessary. This year, Jan. 31 was the first day the IRS could start processing tax returns; even though you or your preparer may have submitted a return electronically before that date.

The best advice for all taxpayers is to check Where’s My Refund on IRS.gov. The Where’s My Refund web and phone tools are updated just once a day so there is no need to check more often. If we need more information to process your return, we will contact you — usually by mail. IRS phone and walk-in representatives can only research the status of a refund if it’s been 21 days or more since the return was filed electronically, more than 6 weeks since a paper return was mailed, or if Where’s My Refund? directs you to contact us.

IRS Statement on 1121
Feb. 12, 2014

Note to Taxpayers


The IRS is off to a strong start to the tax season. Through early February, millions of refunds worth billions of dollars have already been issued. There are no major issues with tax refunds or processing at this time.

Every year, especially at the start of tax season, people are concerned about getting their refunds quickly. The IRS issues nine out of 10 refunds to taxpayers in less than 21 days after the IRS receives the return. Some refunds take longer because of other factors, including IRS work to prevent refund fraud and identity theft. There are many questions about the process. The best source of information about refunds is on IRS.gov, including the YouTube video on the refund process and refund FAQ page.

Early February 1121 Information


A very small percentage of taxpayers may see an 1121 reference number if they check “Where’s My Refund?” after they initially were provided a projected refund date by the tool. The IRS is aware of this situation, and emphasizes that the small group of taxpayers who see this reference number should continue checking Where’s My Refund for an update. If we need more information to process their return, we will contact them — usually by mail.

The IRS began processing returns on Jan. 31, and we’ve already issued millions of refunds. The IRS works hard to issue refunds as quickly as possible, but as part of our effort to prevent improper payments some tax returns take longer to process than others for many reasons, such as when a return includes errors, is incomplete, or needs further review. We apologize for any confusion or inconvenience.

Q: What should taxpayers do if they receive an 1121 reference number when they check Where’s My Refund?

A: The best advice for all taxpayers is to continue checking Where’s My Refund for a refund date. If we need more information to process their return, we will contact them — usually by mail. The web and phone tools are updated just once a day so there is no need to check more often. Our phone and walk-in representatives can only research the status of a refund if it’s been 21 days or more since the return was filed electronically, more than 6 weeks since a paper return was mailed, or if Where’s My Refund? directs a taxpayer to contact us as in the case of those who see the 1121 reference number.

Q: I read in social media that a reference number 1121 means I’m being audited. Is that true?

A: No, this code is simply a reference number that our telephone representatives use to help them research your account. It does not mean the taxpayer is being audited. If the IRS needs more information to process the return, we will contact the taxpayer — usually by mail.
 

Page Last Reviewed or Updated: 14-Mar-2014

The 2013 1040 Ez

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