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Amending Tax Returns

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Amending Tax Returns

Amending tax returns 4. Amending tax returns   Underpayment Penalty for 2013 Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: General RuleFarmers and fishermen. Amending tax returns Higher income taxpayers. Amending tax returns Minimum required for higher income taxpayers. Amending tax returns Estate or trust payments of estimated tax. Amending tax returns Lowering or eliminating the penalty. Amending tax returns ExceptionsLess Than $1,000 Due No Tax Liability Last Year Figuring Your Required Annual Payment (Part I) Short Method for Figuring the Penalty (Part III) Regular Method for Figuring the Penalty (Part IV)Figuring Your Underpayment (Part IV, Section A) Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Annualized Income Installment Method (Schedule AI) Farmers and Fishermen Waiver of PenaltyFarmers and fishermen. Amending tax returns Introduction If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty. Amending tax returns You may understand this chapter better if you can refer to a copy of your latest federal income tax return. Amending tax returns No penalty. Amending tax returns   Generally, you will not have to pay a penalty for 2013 if any of the following apply. Amending tax returns The total of your withholding and timely estimated tax payments was at least as much as your 2012 tax. Amending tax returns (See Special rules for certain individuals for higher income taxpayers and farmers and fishermen. Amending tax returns ) The tax balance due on your 2013 return is no more than 10% of your total 2013 tax, and you paid all required estimated tax payments on time. Amending tax returns Your total tax for 2013 (defined later) minus your withholding is less than $1,000. Amending tax returns You did not have a tax liability for 2012. Amending tax returns You did not have any withholding taxes and your current year tax (less any household employment taxes) is less than $1,000. Amending tax returns IRS can figure the penalty for you. Amending tax returns   If you think you owe the penalty, but you do not want to figure it yourself when you file your tax return, you may not have to. Amending tax returns Generally, the IRS will figure the penalty for you and send you a bill. Amending tax returns   You only need to figure your penalty in the following three situations. Amending tax returns You are requesting a waiver of part, but not all, of the penalty. Amending tax returns You are using the annualized income installment method to figure the penalty. Amending tax returns You are treating the federal income tax withheld from your income as paid on the dates actually withheld. Amending tax returns However, if these situations do not apply to you, and you think you can lower or eliminate your penalty, complete Form 2210 or Form 2210-F and attach it to your return. Amending tax returns See Form 2210 , later. Amending tax returns Topics - This chapter discusses: The general rule for the underpayment penalty, Special rules for certain individuals, Exceptions to the underpayment penalty, How to figure your underpayment and the amount of your penalty on Form 2210, and How to ask the IRS to waive the penalty. Amending tax returns Useful Items - You may want to see: Form (and Instructions) 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2210-F Underpayment of Estimated Tax by Farmers and Fishermen See chapter 5 for information about getting these forms. Amending tax returns General Rule In general, you may owe a penalty for 2013 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of: 90% of your 2013 tax, or 100% of your 2012 tax. Amending tax returns (Your 2012 tax return must cover a 12-month period. Amending tax returns ) Your 2013 tax, for this purpose, is defined under Total tax for 2013 , later. Amending tax returns Special rules for certain individuals. Amending tax returns   There are special rules for farmers and fishermen and certain higher income taxpayers. Amending tax returns Farmers and fishermen. Amending tax returns   If at least two-thirds of your gross income for 2012 or 2013 is from farming or fishing, substitute  662/3% for 90% in (1) above. Amending tax returns   See Farmers and Fishermen , later. Amending tax returns Higher income taxpayers. Amending tax returns   If your AGI for 2012 was more than $150,000 ($75,000 if your 2013 filing status is married filing a separate return), substitute 110% for 100% in (2) under General Rule . Amending tax returns This rule does not apply to farmers or fishermen. Amending tax returns   For 2012, AGI is the amount shown on Form 1040, line 37; Form 1040A, line 21; and Form 1040EZ, line 4. Amending tax returns Penalty figured separately for each period. Amending tax returns   Because the penalty is figured separately for each payment period, you may owe a penalty for an earlier payment period even if you later paid enough to make up the underpayment. Amending tax returns This is true even if you are due a refund when you file your income tax return. Amending tax returns Example. Amending tax returns You did not make estimated tax payments for 2013 because you thought you had enough tax withheld from your wages. Amending tax returns Early in January 2014, you made an estimate of your total 2013 tax. Amending tax returns Then you realized that your withholding was $2,000 less than the amount needed to avoid a penalty for underpayment of estimated tax. Amending tax returns On January 10, you made an estimated tax payment of $3,000, which is the difference between your withholding and your estimate of your total tax. Amending tax returns Your final return shows your total tax to be $50 less than your estimate, so you are due a refund. Amending tax returns You do not owe a penalty for your payment due January 15, 2014. Amending tax returns However, you may owe a penalty through January 10, 2014, the day you made the $3,000 payment, for your underpayments for the earlier payment periods. Amending tax returns Minimum required each period. Amending tax returns   You will owe a penalty for any 2013 payment period for which your estimated tax payment plus your withholding for the period and overpayments applied from previous periods was less than the smaller of: 22. Amending tax returns 5% of your 2013 tax, or 25% of your 2012 tax. Amending tax returns (Your 2012 tax return must cover a 12-month period. Amending tax returns ) Minimum required for higher income taxpayers. Amending tax returns   If you are subject to the rule for higher income taxpayers, discussed above, substitute 27. Amending tax returns 5% for 25% in (2) under General Rule . Amending tax returns When penalty is charged. Amending tax returns   If you miss a payment or you paid less than the minimum required in a period, you may be charged an underpayment penalty from the date the amount was due to the date the payment is made. Amending tax returns If a payment is mailed, the date of the U. Amending tax returns S. Amending tax returns postmark is considered the date of payment. Amending tax returns   If a payment is made electronically, the date the payment is shown on your payment account (checking, savings, etc. Amending tax returns ) is considered to be the date of payment. Amending tax returns Estate or trust payments of estimated tax. Amending tax returns   If you have estimated taxes credited to you from an estate or trust (Schedule K-1 (Form 1041)), treat the payment as made by you on January 15, 2014. Amending tax returns Amended returns. Amending tax returns    If you file an amended return by the due date of your original return, use the tax shown on your amended return to figure your required estimated tax payments. Amending tax returns If you file an amended return after the due date of the original return, use the tax shown on the original return. Amending tax returns   However, if you and your spouse file a joint return after the due date to replace separate returns you originally filed by the due date, use the tax shown on the joint return to figure your required estimated tax payments. Amending tax returns This rule applies only if both original separate returns were filed on time. Amending tax returns 2012 separate returns and 2013 joint return. Amending tax returns    If you file a joint return with your spouse for 2013, but you filed separate returns for 2012, your 2012 tax is the total of the tax shown on your separate returns. Amending tax returns You filed a separate return if you filed as single, head of household, or married filing separately. Amending tax returns 2012 joint return and 2013 separate returns. Amending tax returns    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, your 2012 tax is your share of the tax on the joint return. Amending tax returns You are filing a separate return if you file as single, head of household, or married filing separately. Amending tax returns   To figure your share of the taxes on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2012 using the same filing status as for 2013. Amending tax returns Then multiply the tax on the joint return by the following fraction. Amending tax returns   The tax you would have paid had you filed a separate return   The total tax you and your spouse would have paid had you filed separate returns Example. Amending tax returns Lisa and Paul filed a joint return for 2012 showing taxable income of $49,000 and a tax of $6,484. Amending tax returns Of the $49,000 taxable income, $41,000 was Lisa's and the rest was Paul's. Amending tax returns For 2013, they file married filing separately. Amending tax returns Lisa figures her share of the tax on the 2012 joint return as follows. Amending tax returns 2012 tax on $41,000 based on a separate return $ 6,286 2012 tax on $8,000 based on a  separate return 803 Total $ 7,089 Lisa's percentage of total tax  ($6,286 ÷ $ 7,089) 88. Amending tax returns 67% Lisa's part of tax on joint return ($6,484 × 88. Amending tax returns 67%) $ 5,749 Form 2210. Amending tax returns   In most cases, you do not need to file Form 2210. Amending tax returns The IRS will figure the penalty for you and send you a bill. Amending tax returns If you want us to figure the penalty for you, leave the penalty line on your return blank. Amending tax returns Do not file Form 2210. Amending tax returns   To determine if you should file Form 2210, see Part II of Form 2210. Amending tax returns If you decide to figure your penalty, complete Part I, Part II, and either Part III or Part IV of the form and the Penalty Worksheet in the Instructions for Form 2210. Amending tax returns If you use Form 2210, you cannot file Form 1040EZ. Amending tax returns   On Form 1040, enter the amount of your penalty on line 77. Amending tax returns If you owe tax on line 76, add the penalty to your tax due and show your total payment on line 76. Amending tax returns If you are due a refund, subtract the penalty from the overpayment and enter the result on line 73. Amending tax returns   On Form 1040A, enter the amount of your penalty on line 46. Amending tax returns If you owe tax on line 45, add the penalty to your tax due and show your total payment on line 45. Amending tax returns If you are due a refund, subtract the penalty from the overpayment and enter the result on line 42. Amending tax returns Lowering or eliminating the penalty. Amending tax returns    You may be able to lower or eliminate your penalty if you file Form 2210. Amending tax returns You must file Form 2210 with your return if any of the following applies. Amending tax returns You request a waiver. Amending tax returns See Waiver of Penalty , later. Amending tax returns You use the annualized income installment method. Amending tax returns See the explanation of this method under Annualized Income Installment Method (Schedule AI) . Amending tax returns You use your actual withholding for each payment period for estimated tax purposes. Amending tax returns See Actual withholding method under Figuring Your Underpayment (Part IV, Section A). Amending tax returns You base any of your required installments on the tax shown on your 2012 return and you filed or are filing a joint return for either 2012 or 2013, but not for both years. Amending tax returns Exceptions Generally, you do not have to pay an underpayment penalty if either: Your total tax is less than $1,000, or You had no tax liability last year. Amending tax returns Less Than $1,000 Due You do not owe a penalty if the total tax shown on your return minus the amount you paid through withholding (including excess social security and tier 1 railroad retirement (RRTA) tax withholding) is less than $1,000. Amending tax returns Total tax for 2013. Amending tax returns   For 2013, your total tax on Form 1040 is the amount on line 61 reduced by the following. Amending tax returns    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Amending tax returns Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Amending tax returns The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Amending tax returns Any refundable credit amounts listed on lines 64a, 65, 66, 70, and any credit from Form 8885 included on line 71. Amending tax returns   If you filed Form 1040A, your 2013 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Amending tax returns   If you filed Form 1040EZ, your 2013 total tax is the amount on line 10 reduced by the amount on line 8a. Amending tax returns Note. Amending tax returns When figuring the amount on line 60, include household employment taxes only if you had federal income tax withheld from your income or you would owe the penalty even if you did not include those taxes. Amending tax returns Paid through withholding. Amending tax returns    For 2013, the amount you paid through withholding on Form 1040 is the amount on line 62 plus any excess social security or tier 1 RRTA tax withholding on line 69. Amending tax returns Add to that any write-in amount on line 72 identified as “Form 8689. Amending tax returns ” On Form 1040A, the amount you paid through withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included on line 41. Amending tax returns On Form 1040EZ, it is the amount on line 7. Amending tax returns No Tax Liability Last Year You do not owe a penalty if you had no tax liability last year and you were a U. Amending tax returns S. Amending tax returns citizen or resident for the whole year. Amending tax returns For this rule to apply, your tax year must have included all 12 months of the year. Amending tax returns You had no tax liability for 2012 if your total tax was zero or you were not required to file an income tax return. Amending tax returns Example. Amending tax returns Ray, who is single and 22 years old, was unemployed for a few months during 2012. Amending tax returns He earned $6,700 in wages before he was laid off, and he received $1,400 in unemployment compensation afterwards. Amending tax returns He had no other income. Amending tax returns Even though he had gross income of $8,100, he did not have to pay income tax because his gross income was less than the filing requirement for a single person under age 65 ($9,750 for 2012). Amending tax returns He filed a return only to have his withheld income tax refunded to him. Amending tax returns In 2013, Ray began regular work as an independent contractor. Amending tax returns Ray made no estimated tax payments in 2013. Amending tax returns Even though he did owe tax at the end of the year, Ray does not owe the underpayment penalty for 2013 because he had no tax liability in 2012. Amending tax returns Total tax for 2012. Amending tax returns   For 2012, your total tax on Form 1040 is the amount on line 61 reduced by the following. Amending tax returns    Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 (line 57). Amending tax returns Any tax included on line 58 for excess contributions to IRAs, Archer MSAs, Coverdell education savings accounts, and health savings accounts, or any tax on excess accumulations in qualified retirement plans. Amending tax returns The following write-ins on line 60: Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance, Tax on excess golden parachute payments, Excise tax on insider stock compensation from an expatriated corporation, Look-back interest due under section 167(g), Look-back interest due under section 460(b), Recapture of federal mortgage subsidy, and Additional tax on advance payments of health coverage tax credit when not eligible. Amending tax returns Any refundable credit amounts listed on lines 64a, 65, 66, 70, and credits from Forms 8801 (line 27 only), and 8885 included on line 71. Amending tax returns   If you filed Form 1040A, your 2012 total tax is the amount on line 35 reduced by any refundable credits on lines 38a, 39, and 40. Amending tax returns   If you filed Form 1040EZ, your 2012 total tax is the amount on line 11 reduced by the amount on line 8a. Amending tax returns Figuring Your Required Annual Payment (Part I) Figure your required annual payment in Part I of Form 2210, following the line-by-line instructions. Amending tax returns If you rounded the entries on your tax return to whole dollars, you can round on Form 2210. Amending tax returns Example. Amending tax returns The tax on Lori Lane's 2012 return was $12,400. Amending tax returns Her AGI was not more than $150,000 for either 2012 or 2013. Amending tax returns The tax on her 2013 return (Form 1040, line 55) is $13,044. Amending tax returns Line 56 (self-employment tax) is $8,902. Amending tax returns Her 2013 total tax is $21,946. Amending tax returns For 2013, Lori had $1,600 income tax withheld and made four equal estimated tax payments ($1,000 each). Amending tax returns 90% of her 2013 tax is $19,751. Amending tax returns Because she paid less than her 2012 tax ($12,400) and less than 90% of her 2013 tax ($19,751), and does not meet an exception, Lori knows that she owes a penalty for underpayment of estimated tax. Amending tax returns The IRS will figure the penalty for Lori, but she decides to figure it herself on Form 2210 and pay it with her taxes when she files her tax return. Amending tax returns Lori's required annual payment is $12,400 (100% of 2012 tax) because that is smaller than 90% of her 2013 tax. Amending tax returns Different 2012 filing status. Amending tax returns    If you file a separate return for 2013, but you filed a joint return with your spouse for 2012, see 2012 joint return and 2013 separate returns , earlier, to figure the amount to enter as your 2012 tax on line 8 of Form 2210. Amending tax returns Short Method for Figuring the Penalty (Part III) You may be able to use the short method in Part III of Form 2210 to figure your penalty for underpayment of estimated tax. Amending tax returns If you qualify to use this method, it will result in the same penalty amount as the regular method. Amending tax returns However, either the annualized income installment method or the actual withholding method, explained later, may result in a smaller penalty. Amending tax returns You can use the short method only if you meet one of the following requirements. Amending tax returns You made no estimated tax payments for 2013 (it does not matter whether you had income tax withholding). Amending tax returns You paid the same amount of estimated tax on each of the four payment due dates. Amending tax returns If you do not meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the Penalty Worksheet in the instructions. Amending tax returns Note. Amending tax returns If any payment was made before the due date, you can use the short method, but the penalty may be less if you use the regular method. Amending tax returns However, if the payment was only a few days early, the difference is likely to be small. Amending tax returns You cannot use the short method if any of the following apply. Amending tax returns You made any estimated tax payments late. Amending tax returns You checked box C or D in Part II of Form 2210. Amending tax returns You are filing Form 1040NR or 1040NR-EZ and you did not receive wages as an employee subject to U. Amending tax returns S. Amending tax returns income tax withholding. Amending tax returns If you use the short method, you cannot use the annualized income installment method to figure your underpayment for each payment period. Amending tax returns Also, you cannot use your actual withholding during each period to figure your payments for each period. Amending tax returns These methods, which may give you a smaller penalty amount, are explained under Figuring Your Underpayment (Part IV, Section A). Amending tax returns Complete Part III of Form 2210 following the line-by-line instructions in the Instructions for Form 2210. Amending tax returns Regular Method for Figuring the Penalty (Part IV) You can use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if you paid one or more estimated tax payments earlier than the due date. Amending tax returns You must use the regular method in Part IV of Form 2210 to figure your penalty for underpayment of estimated tax if any of the following apply to you. Amending tax returns You paid one or more estimated tax payments on a date after the due date. Amending tax returns You paid at least one, but less than four, installments of estimated tax. Amending tax returns You paid estimated tax payments in un- equal amounts. Amending tax returns You use the annualized income installment method to figure your underpayment for each payment period. Amending tax returns You use your actual withholding during each payment period to figure your payments. Amending tax returns Under the regular method, figure your underpayment for each payment period in Section A, then figure your penalty using the Penalty Worksheet in the Instructions for Form 2210. Amending tax returns Enter the results on line 27 of Section B. Amending tax returns Figuring Your Underpayment (Part IV, Section A) Figure your underpayment of estimated tax for each payment period in Section A following the line-by-line instructions in the Instructions for Form 2210. Amending tax returns Complete lines 20 through 26 of the first column before going to line 20 of the next column. Amending tax returns Required installments—line 18. Amending tax returns   Your required payment for each payment period (line 18) is usually one-fourth of your required annual payment (Part I, line 9). Amending tax returns This method—the regular method—is the one to use if you received your income evenly throughout the year. Amending tax returns   However, if you did not receive your income evenly throughout the year, you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Amending tax returns First complete Schedule AI (Form 2210), then enter the amounts from line 25 of that schedule on line 18 of Form 2210, Part IV. Amending tax returns See Annualized Income Installment Method (Schedule AI), later. Amending tax returns Payments made—line 19. Amending tax returns   Enter in each column the total of: Your estimated tax paid after the due date for the previous column and by the due date shown at the top of the column, and One-fourth of your withholding. Amending tax returns For special rules for figuring your payments, see Form 2210 instructions for line 19. Amending tax returns   If you file Form 1040, your withholding is the amount on line 62, plus any excess social security or tier 1 RRTA tax withholding on line 69. Amending tax returns If you file Form 1040A, your withholding is the amount on line 36 plus any excess social security or tier 1 RRTA tax withholding included in line 41. Amending tax returns Actual withholding method. Amending tax returns    Instead of using one-fourth of your withholding for each quarter, you can choose to use the amounts actually withheld by each due date. Amending tax returns You can make this choice separately for the tax withheld from your wages and for all other withholding. Amending tax returns This includes any excess social security and tier 1 RRTA tax withheld. Amending tax returns   Using your actual withholding may result in a smaller penalty if most of your withholding occurred early in the year. Amending tax returns   If you use your actual withholding, you must check box D in Form 2210, Part II. Amending tax returns Then complete Form 2210 using the regular method (Part IV) and file it with your return. Amending tax returns Worksheet for Form 2210, Part IV, Section B—Figuring the Penalty Figure the amount of your penalty for Section B using the Penalty Worksheet in the Form 2210 instructions. Amending tax returns The penalty is imposed on each underpayment amount shown on Form 2210, Section A, line 25, for the number of days that it remained unpaid. Amending tax returns For 2013, there are four rate periods—April 16 through June 30, July 1 through September 30, October 1 through December 31, and January 1, 2014 through April 15, 2014. Amending tax returns A 3% rate applies to all four periods. Amending tax returns Payments. Amending tax returns    Before completing the Penalty Worksheet, it may be helpful to make a list of the payments you made and income tax withheld after the due date (or the last day payments could be made on time) for the earliest payment period an underpayment occurred. Amending tax returns For example, if you had an underpayment for the first payment period, list your payments after April 15, 2013. Amending tax returns You can use the table in the Form 2210 instructions to make your list. Amending tax returns Follow those instructions for listing income tax withheld and payments made with your return. Amending tax returns Use the list to determine when each underpayment was paid. Amending tax returns   If you mail your estimated tax payments, use the date of the U. Amending tax returns S. Amending tax returns postmark as the date of payment. Amending tax returns Line 1b. Amending tax returns   Apply the payments listed to underpayment balance in the first column until it is fully paid. Amending tax returns Apply payments in the order made. Amending tax returns Figuring the penalty. Amending tax returns   If an underpayment was paid in two or more payments on different dates, you must figure the penalty separately for each payment. Amending tax returns On line 3 of the Penalty Worksheet enter the number of days between the due date (line 2) and the date of each payment on line 1b. Amending tax returns On line 4 figure the penalty for the amount of each payment applied on line 1b or the amount remaining unpaid. Amending tax returns If no payments are applied, figure the penalty on the amount on line 1a. Amending tax returns Aid for counting days. Amending tax returns    Table 4-1 provides a simple method for counting the number of days between a due date and a payment date. Amending tax returns Find the number for the date the payment was due by going across to the column of the month the payment was due and moving down the column to the due date. Amending tax returns In the same manner, find the number for the date the payment was made. Amending tax returns Subtract the due date “number” from the payment date “number. Amending tax returns ”   For example, if a payment was due on June 15 (61), but was not paid until September 1 (139), the payment was 78 (139 – 61) days late. Amending tax returns Table 4-1. Amending tax returns Calendar To Determine the Number of Days a Payment Is Late Instructions. Amending tax returns Use this table with Form 2210 if you are completing Part IV, Section B. Amending tax returns First, find the number for the payment due date by going across to the column of the month the payment was due and moving down the column to the due date. Amending tax returns Then, in the same manner, find the number for the date the payment was made. Amending tax returns Finally, subtract the due date number from the payment date number. Amending tax returns The result is the number of days the payment is late. Amending tax returns Example. Amending tax returns The payment due date is June 15 (61). Amending tax returns The payment was made on November 4 (203). Amending tax returns The payment is 142 days late (203 – 61). Amending tax returns Tax Year 2013 Day of 2013 2013 2013 2013 2013 2013 2013 2013 2013 2014 2014 2014 2014 Month April May June July Aug. Amending tax returns Sept. Amending tax returns Oct. Amending tax returns Nov. Amending tax returns Dec. Amending tax returns Jan. Amending tax returns Feb. Amending tax returns Mar. Amending tax returns Apr. Amending tax returns 1   16 47 77 108 139 169 200 230 261 292 320 351 2   17 48 78 109 140 170 201 231 262 293 321 352 3   18 49 79 110 141 171 202 232 263 294 322 353 4   19 50 80 111 142 172 203 233 264 295 323 354 5   20 51 81 112 143 173 204 234 265 296 324 355 6   21 52 82 113 144 174 205 235 266 297 325 356 7   22 53 83 114 145 175 206 236 267 298 326 357 8   23 54 84 115 146 176 207 237 268 299 327 358 9   24 55 85 116 147 177 208 238 269 300 328 359 10   25 56 86 117 148 178 209 239 270 301 329 360 11   26 57 87 118 149 179 210 240 271 302 330 361 12   27 58 88 119 150 180 211 241 272 303 331 362 13   28 59 89 120 151 181 212 242 273 304 332 363 14   29 60 90 121 152 182 213 243 274 305 333 364 15 0 30 61 91 122 153 183 214 244 275 306 334 365 16 1 31 62 92 123 154 184 215 245 276 307 335   17 2 32 63 93 124 155 185 216 246 277 308 336   18 3 33 64 94 125 156 186 217 247 278 309 337   19 4 34 65 95 126 157 187 218 248 279 310 338   20 5 35 66 96 127 158 188 219 249 280 311 339   21 6 36 67 97 128 159 189 220 250 281 312 340   22 7 37 68 98 129 160 190 221 251 282 313 341   23 8 38 69 99 130 161 191 222 252 283 314 342   24 9 39 70 100 131 162 192 223 253 284 315 343   25 10 40 71 101 132 163 193 224 254 285 316 344   26 11 41 72 102 133 164 194 225 255 286 317 345   27 12 42 73 103 134 165 195 226 256 287 318 346   28 13 43 74 104 135 166 196 227 257 288 319 347   29 14 44 75 105 136 167 197 228 258 289   348   30 15 45 76 106 137 168 198 229 259 290   349   31   46   107 138   199   260 291   350   Annualized Income Installment Method (Schedule AI) If you did not receive your income evenly throughout the year (for example, your income from a shop you operated at a marina was much larger in the summer than it was during the rest of the year), you may be able to lower or eliminate your penalty by figuring your underpayment using the annualized income installment method. Amending tax returns Under this method, your required installment (Part IV, line 18) for one or more payment periods may be less than one-fourth of your required annual payment. Amending tax returns To figure your underpayment using this method, complete Form 2210, Schedule AI. Amending tax returns Schedule AI annualizes your tax at the end of each payment period based on your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. Amending tax returns If you use the annualized income installment method, you must check box C in Part II of Form 2210. Amending tax returns Also, you must attach Form 2210 and Schedule AI to your return. Amending tax returns If you use Schedule AI for any payment due date, you must use it for all payment due dates. Amending tax returns Completing Schedule AI. Amending tax returns   Follow the Form 2210 instructions to complete Schedule AI. Amending tax returns For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. Amending tax returns If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and all deductions actually paid during the period. Amending tax returns Note. Amending tax returns Each period includes amounts from the previous period(s). Amending tax returns Period (a) includes items for January 1 through March 31. Amending tax returns Period (b) includes items for January 1 through May 31. Amending tax returns Period (c) includes items for January 1 through August 31. Amending tax returns Period (d) includes items for the entire year. Amending tax returns Farmers and Fishermen If you are a farmer or fisherman, the following special rules for underpayment of estimated tax apply to you. Amending tax returns The penalty for underpaying your 2013 estimated tax will not apply if you file your return and pay all the tax due by March 3, 2014. Amending tax returns If you are a fiscal year taxpayer, the penalty will not apply if you file your return and pay the tax due by the first day of the third month after the end of your tax year. Amending tax returns Any penalty you owe for underpaying your 2013 estimated tax will be figured from one payment due date, January 15, 2014. Amending tax returns The underpayment penalty for 2013 is figured on the difference between the amount of 2013 withholding plus estimated tax paid by the due date and the smaller of: 662/3% (rather than 90%) of your 2013 tax, or 100% of the tax shown on your 2012 return. Amending tax returns Even if these special rules apply to you, you will not owe the penalty if you meet either of the two conditions discussed under Exceptions . Amending tax returns See Who Must Pay Estimated Tax in chapter 2 for the definition of a farmer or fisherman who is eligible for these special rules. Amending tax returns Form 2210-F. Amending tax returns   Use Form 2210-F to figure any underpayment penalty. Amending tax returns Do not attach it to your return unless you check a box in Part I. Amending tax returns However, if none of the boxes apply to you and you owe a penalty, you do not need to attach Form 2210-F. Amending tax returns Enter the amount from line 16 on Form 1040, line 77 and add the penalty to any balance due on your return or subtract it from your refund. Amending tax returns Keep your filled-in Form 2210-F for your records. Amending tax returns    If none of the boxes on Form 2210-F apply to you and you owe a penalty, the IRS can figure your penalty and send you a bill. Amending tax returns Waiver of Penalty The IRS can waive the penalty for underpayment if either of the following applies. Amending tax returns You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty. Amending tax returns You retired (after reaching age 62) or became disabled in 2012 or 2013 and both the following requirements are met. Amending tax returns You had a reasonable cause for not making the payment. Amending tax returns Your underpayment was not due to willful neglect. Amending tax returns How to request a waiver. Amending tax returns   To request a waiver, see the Instructions for Form 2210. Amending tax returns Farmers and fishermen. Amending tax returns   To request a waiver, see the Instructions for Form 2210-F. Amending tax returns Federally declared disaster. Amending tax returns   Certain estimated tax payment deadlines for taxpayers who reside or have a business in a federally declared disaster area are postponed for a period during and after the disaster. Amending tax returns During the processing of your tax return, the IRS automatically identifies taxpayers located in a covered disaster area (by county or parish) and applies the appropriate penalty relief. Amending tax returns Do not file Form 2210 or 2210-F if your underpayment was due to a federally declared disaster. Amending tax returns If you still owe a penalty after the automatic waiver is applied, we will send you a bill. Amending tax returns   Individuals, estates, and trusts not in a covered disaster area but whose books, records, or tax professionals' offices are in a covered area are also entitled to relief. Amending tax returns Also eligible are relief workers affiliated with a recognized government or charitable organization assisting in the relief activities in a covered disaster area. Amending tax returns If you meet either of these eligibility requirements, you must call the IRS disaster hotline at 1-866-562-5227 and identify yourself as eligible for this relief. Amending tax returns   Details on the applicable disaster postponement period can be found at IRS. Amending tax returns gov. Amending tax returns Enter Tax Relief in Disaster Situations. Amending tax returns Select the federally declared disaster that affected you. Amending tax returns    Worksheet 4-1. Amending tax returns 2013 Form 2210, Schedule AI—Line 12 Qualified Dividends and Capital Gain Tax Worksheet Note. Amending tax returns To figure the annualized entries for lines 2, 3, and 5 below, multiply the expected amount for the period by the  annualization amount on line 2 of Schedule AI for the same period. Amending tax returns                   1. Amending tax returns Enter line 11 of your Schedule AI, or line 3 from Worksheet 4-2 1. Amending tax returns       2. Amending tax returns Enter your annualized qualified dividends for the period 2. Amending tax returns           3. Amending tax returns Are you filing Schedule D?               □ Yes. Amending tax returns Enter the smaller of your annualized amount from line 15 or line 16 of Schedule D. Amending tax returns If either line 15 or line 16 is blank or a loss, enter -0-. Amending tax returns 3. Amending tax returns             □ No. Amending tax returns Enter your annualized capital gain distributions from Form 1040, line 13             4. Amending tax returns Add lines 2 and 3   4. Amending tax returns           5. Amending tax returns If you are claiming investment interest expense on Form 4952, enter your annualized amount from line 4g of that form. Amending tax returns Otherwise, enter -0-   5. Amending tax returns           6. Amending tax returns Subtract line 5 from line 4. Amending tax returns If zero or less, enter -0- 6. Amending tax returns       7. Amending tax returns Subtract line 6 from line 1. Amending tax returns If zero or less, enter -0- 7. Amending tax returns       8. Amending tax returns Enter: $36,900 if single or married filing separately, $73,800 if married filing jointly or qualifying widow(er), $49,400 if head of household. Amending tax returns 8. Amending tax returns       9. Amending tax returns Enter the smaller of line 1 or line 8 9. Amending tax returns       10. Amending tax returns Enter the smaller of line 7 or line 9 10. Amending tax returns       11. Amending tax returns Subtract line 10 from line 9. Amending tax returns This amount is taxed at 0% 11. Amending tax returns       12. Amending tax returns Enter the smaller of line 1 or line 6 12. Amending tax returns       13. Amending tax returns Enter the amount from line 11 13. Amending tax returns       14. Amending tax returns Subtract line 13 from line 12 14. Amending tax returns       15. Amending tax returns Multiply line 14 by 15% (. Amending tax returns 15) 15. Amending tax returns   16. Amending tax returns Figure the tax on the amount on line 7. Amending tax returns If the amount on line 7 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Amending tax returns If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 16. Amending tax returns   17. Amending tax returns Add lines 15 and 16 17. Amending tax returns   18. Amending tax returns Figure the tax on the amount on line 1. Amending tax returns If the amount on line 1 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Amending tax returns If the amount on line 1 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 18. Amending tax returns   19. Amending tax returns Tax on all taxable income. Amending tax returns Enter the smaller of line 17 or line 18. Amending tax returns Also enter this amount on line 12 of Schedule AI in the appropriate column. Amending tax returns However, if you are using this worksheet to figure the tax on the amount on line 3 of Worksheet 4-2, enter the amount from line 19 on Worksheet 4-2, line 4 19. Amending tax returns   Worksheet 4-2. Amending tax returns 2013 Form 2210, Schedule AI—Line 12 Foreign Earned Income Tax Worksheet Before you begin:If Schedule AI, line 11, is zero for the period, do not complete this worksheet. Amending tax returns             1. Amending tax returns Enter the amount from line 11 of Schedule AI for the period 1. Amending tax returns   2. Amending tax returns Enter the annualized amount* of foreign earned income and housing amount excluded or deducted (from  Form 2555, lines 45 and 50, or Form 2555-EZ, line 18) in figuring the amount entered for the period on line 1  of Schedule AI 2. Amending tax returns   3. Amending tax returns Add lines 1 and 2 3. Amending tax returns   4. Amending tax returns Tax on the amount on line 3. Amending tax returns Use the Tax Table, Tax Computation Worksheet, Form 8615**, Qualified Dividends and Capital Gain Tax Worksheet***, or Schedule D Tax Worksheet***, whichever applies. Amending tax returns See the 2013 Instructions for Form 1040, line 44, to find out which tax computation method to use. Amending tax returns (Note. Amending tax returns You do not have to use the same method for each period on Schedule AI. Amending tax returns ) 4. Amending tax returns   5. Amending tax returns Tax on the amount on line 2. Amending tax returns If the amount on line 2 is less than $100,000, use the Tax Table in the 2013 Form 1040 instructions to figure this tax. Amending tax returns If the amount on line 7 is $100,000 or more, use the Tax Computation Worksheet in the 2013 Form 1040 instructions 5. Amending tax returns   6. Amending tax returns Subtract line 5 from line 4. Amending tax returns Enter the result here and on line 12 of Schedule AI. Amending tax returns If zero or less,  enter -0- 6. Amending tax returns             * To figure the annualized amount for line 2, multiply the exclusion or deduction for the period by the annualization amount on line 2 of Schedule AI for the same period. Amending tax returns     ** If you use Form 8615 to figure the tax on line 4 above, enter the amount from line 3 above on line 4 of Form 8615. Amending tax returns If the child's parent files Form 2555 or 2555-EZ, enter the amounts from lines 3 and 4 of the parent's Foreign Earned Income Tax Worksheet on lines 6 and 10, respectively, of Form 8615. Amending tax returns Complete the rest of Form 8615 according to its instructions. Amending tax returns Then complete lines 5 and 6 above. Amending tax returns     *** Enter the amount from line 3 above on line 1 of the Qualified Dividends and Capital Gain Tax Worksheet (or Worksheet 4-1 in this chapter) or the Schedule D Tax Worksheet, whichever worksheet you use to figure the tax on line 4 above. Amending tax returns Complete that worksheet through line 6 (line 10 if you use the Schedule D Tax Worksheet). Amending tax returns Next, determine if you have a capital gain excess. Amending tax returns     Figuring capital gain excess. Amending tax returns To find out if you have a capital gain excess for the appropriate period, subtract line 11 of Schedule AI from line 6 of Worksheet 4-1 or your Qualified Dividends and Capital Gain Tax Worksheet (line 10 of your Schedule D Tax Worksheet). Amending tax returns If the result is more than zero, that amount is your capital gain excess. Amending tax returns     No capital gain excess. Amending tax returns If you do not have a capital gain excess, complete the rest of Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or the Schedule D Tax Worksheet according to the worksheet's instructions. Amending tax returns Then complete lines 5 and 6 above. Amending tax returns     Capital gain excess. Amending tax returns If you have a capital gain excess, complete a second Worksheet 4-1, Qualified Dividends and Capital Gain Tax Worksheet, or Schedule D Tax Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Amending tax returns Then complete lines 5 and 6 above. Amending tax returns     Make the modifications below only for purposes of filling out Worksheet 4-2 above. Amending tax returns     a. Amending tax returns Reduce (but not below zero) the amount you otherwise would enter on line 3 of your Worksheet 4-1, line 3 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 9 of your Schedule D Tax Worksheet by your capital gain excess. Amending tax returns     b. Amending tax returns Reduce (but not below zero) the amount you otherwise would enter on line 2 of your Worksheet 4-1, line 2 of your Qualified Dividends and Capital Gain Tax Worksheet, or line 6 of your Schedule D Tax Worksheet by any of your capital gain excess not used in (a) above. Amending tax returns     c. Amending tax returns Reduce (but not below zero) the amount on your Schedule D (Form 1040), line 18, by your capital gain excess. Amending tax returns     d. Amending tax returns Include your capital gain excess as a loss on line 16 of your Unrecaptured Section 1250 Gain Worksheet in the 2013 Instructions for Schedule D (Form 1040). 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National AIDS Policy Office

Part of the Domestic Policy Council, the National AIDS Policy Office works to reduce the number of new HIV infections in the U.S. through various education initiatives. The office also helps to coordinate the care and treatment of citizens with HIV/AIDS, and also helps to coordinate the U.S. response to the global AIDS pandemic.

Contact the Agency or Department

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Phone Number: (202) 456-4533

The Amending Tax Returns

Amending tax returns Publication 596 - Main Content Table of Contents Chapter 1—Rules for EveryoneRule 1—Adjusted Gross Income (AGI) Limits Rule 2—You Must Have a Valid Social Security Number (SSN) Rule 3—Your Filing Status Cannot Be Married Filing Separately Rule 4—You Must Be a U. Amending tax returns S. Amending tax returns Citizen or Resident Alien All Year Rule 5—You Cannot File Form 2555 or Form 2555-EZ Rule 6—Your Investment Income Must Be $3,300 or Less Rule 7—You Must Have Earned Income Chapter 2—Rules If You Have a Qualifying ChildRule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer Chapter 3—Rules If You Do Not Have a Qualifying ChildRule 11—You Must Be at Least Age 25 but Under Age 65 Rule 12—You Cannot Be the Dependent of Another Person Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer Rule 14—You Must Have Lived in the United States More Than Half of the Year Chapter 4—Figuring and Claiming the EICRule 15—Earned Income Limits IRS Will Figure the EIC for You How To Figure the EIC Yourself Schedule EIC Chapter 5—Disallowance of the EICForm 8862 Are You Prohibited From Claiming the EIC for a Period of Years? Chapter 6—Detailed ExamplesExample 1—Sharon Rose Example 2—Cynthia and Jerry Grey Chapter 1—Rules for Everyone This chapter discusses Rules 1 through 7. Amending tax returns You must meet all seven rules to qualify for the earned income credit. Amending tax returns If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the publication. Amending tax returns If you meet all seven rules in this chapter, then read either chapter 2 or chapter 3 (whichever applies) for more rules you must meet. Amending tax returns Rule 1—Adjusted Gross Income (AGI) Limits 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. Amending tax returns Adjusted gross income (AGI). Amending tax returns   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Amending tax returns   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Amending tax returns You do not need to read the rest of this publication. Amending tax returns Example—AGI is more than limit. Amending tax returns Your AGI is $38,550, you are single, and you have one qualifying child. Amending tax returns You cannot claim the EIC because your AGI is not less than $37,870. Amending tax returns 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. Amending tax returns Community property. Amending tax returns   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. Amending tax returns This is different from the community property rules that apply under Rule 7. Amending tax returns Rule 2—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). Amending tax returns Any qualifying child listed on Schedule EIC also must have a valid SSN. Amending tax returns (See Rule 8 if you have a qualifying child. Amending tax returns ) 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. Amending tax returns An example of a federally funded benefit is Medicaid. Amending tax returns 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. Amending tax returns S. Amending tax returns citizen or permanent resident, ask the SSA for a new social security card without the legend. Amending tax returns If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Amending tax returns S. Amending tax returns Individual Income Tax Return, to claim the EIC. Amending tax returns U. Amending tax returns S. Amending tax returns citizen. Amending tax returns   If you were a U. Amending tax returns S. Amending tax returns citizen when you received your SSN, you have a valid SSN. Amending tax returns Valid for work only with INS authorization or DHS authorization. Amending tax returns   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. Amending tax returns SSN missing or incorrect. Amending tax returns   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Amending tax returns Other taxpayer identification number. Amending tax returns   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). Amending tax returns ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Amending tax returns No SSN. Amending tax returns   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). Amending tax returns You cannot claim the EIC. Amending tax returns Getting an SSN. Amending tax returns   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 with the SSA. Amending tax returns You can get Form SS-5 online at www. Amending tax returns socialsecurity. Amending tax returns gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Amending tax returns Filing deadline approaching and still no SSN. Amending tax returns   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Amending tax returns Request an automatic 6-month extension of time to file your return. Amending tax returns You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Amending tax returns S. Amending tax returns Individual Income Tax Return. Amending tax returns For more information, see the instructions for Form 4868. Amending tax returns File the return on time without claiming the EIC. Amending tax returns After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Amending tax returns Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Amending tax returns Rule 3—Your Filing Status Cannot Be “Married Filing Separately” If you are married, you usually must file a joint return to claim the EIC. Amending tax returns Your filing status cannot be “Married filing separately. Amending tax returns ” Spouse did not live with you. Amending tax returns   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. Amending tax returns In that case, you may be able to claim the EIC. Amending tax returns For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Amending tax returns Rule 4—You Must Be a U. Amending tax returns S. Amending tax returns 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. Amending tax returns You can use that filing status only if one spouse is a U. Amending tax returns S. Amending tax returns citizen or resident alien and you choose to treat the nonresident spouse as a U. Amending tax returns S. Amending tax returns resident. Amending tax returns If you make this choice, you and your spouse are taxed on your worldwide income. Amending tax returns If you need more information on making this choice, get Publication 519, U. Amending tax returns S. Amending tax returns Tax Guide for Aliens. Amending tax returns 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). Amending tax returns Rule 5—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. Amending tax returns You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Amending tax returns U. Amending tax returns S. Amending tax returns possessions are not foreign countries. Amending tax returns See Publication 54, Tax Guide for U. Amending tax returns S. Amending tax returns Citizens and Resident Aliens Abroad, for more detailed information. Amending tax returns Rule 6—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. Amending tax returns If your investment income is more than $3,300, you cannot claim the credit. Amending tax returns Form 1040EZ. Amending tax returns   If you file Form 1040EZ, your investment income is the total of the amount on line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Amending tax returns Form 1040A. Amending tax returns   If you file Form 1040A, your investment income is the total of the amounts on lines 8a (taxable interest), 8b (tax-exempt interest), 9a (ordinary dividends), and 10 (capital gain distributions) on that form. Amending tax returns Form 1040. Amending tax returns   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Amending tax returns    Worksheet 1. Amending tax returns Investment Income If You Are Filing Form 1040 Use this worksheet to figure investment income for the earned income credit when you file Form 1040. Amending tax returns Interest and Dividends         1. Amending tax returns Enter any amount from Form 1040, line 8a 1. Amending tax returns   2. Amending tax returns Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Amending tax returns   3. Amending tax returns Enter any amount from Form 1040, line 9a 3. Amending tax returns   4. Amending tax returns Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. Amending tax returns (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Amending tax returns ) 4. Amending tax returns   Capital Gain Net Income         5. Amending tax returns Enter the amount from Form 1040, line 13. Amending tax returns If the amount on that line is a loss, enter -0- 5. Amending tax returns       6. Amending tax returns Enter any gain from Form 4797, Sales of Business Property, line 7. Amending tax returns If the amount on that line is a loss, enter -0-. Amending tax returns (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Amending tax returns ) 6. Amending tax returns       7. Amending tax returns Substract line 6 of this worksheet from line 5 of this worksheet. Amending tax returns (If the result is less than zero, enter -0-. Amending tax returns ) 7. Amending tax returns   Royalties and Rental Income From Personal Property         8. Amending tax returns Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21 8. Amending tax returns       9. Amending tax returns Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36 9. Amending tax returns       10. Amending tax returns Subtract the amount on line 9 of this worksheet from the amount on line 8. Amending tax returns (If the result is less than zero, enter -0-. Amending tax returns ) 10. Amending tax returns   Passive Activities         11. Amending tax returns Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Amending tax returns (g)), 34a (col. Amending tax returns (d)), or 40). Amending tax returns (See instructions below for lines 11 and 12. Amending tax returns ) 11. Amending tax returns       12. Amending tax returns Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Amending tax returns (f)), 34b (col. Amending tax returns (c)), or 40). Amending tax returns (See instructions below for lines 11 and 12. Amending tax returns ) 12. Amending tax returns       13. Amending tax returns Combine the amounts on lines 11 and 12 of this worksheet. Amending tax returns (If the result is less than zero, enter -0-. Amending tax returns ) 13. Amending tax returns   14. Amending tax returns Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Amending tax returns Enter the total. Amending tax returns This is your investment income 14. Amending tax returns   15. Amending tax returns Is the amount on line 14 more than $3,300? ❑ Yes. Amending tax returns You cannot take the credit. Amending tax returns  ❑ No. Amending tax returns Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule 7, next). Amending tax returns       Instructions for lines 11 and 12. Amending tax returns In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss) included on line 26 of Schedule E or any amount included in your earned income. Amending tax returns To find out if the income on line 26 or line 40 of Schedule E is from a passive activity, see the Schedule E instructions. Amending tax returns If any of the rental real estate income (or loss) included on Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26. Amending tax returns Worksheet 2. Amending tax returns Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Amending tax returns Note. Amending tax returns Fill out a separate Worksheet 2 for each Form 8814. Amending tax returns     1. Amending tax returns Enter the amount from Form 8814, line 2a 1. Amending tax returns   2. Amending tax returns Enter the amount from Form 8814, line 2b 2. Amending tax returns   3. Amending tax returns Subtract line 2 from line 1 3. Amending tax returns   4. Amending tax returns Enter the amount from Form 8814, line 1a 4. Amending tax returns   5. Amending tax returns Add lines 3 and 4 5. Amending tax returns   6. Amending tax returns Enter the amount of the child's Alaska Permanent Fund dividend 6. Amending tax returns   7. Amending tax returns Divide line 6 by line 5. Amending tax returns Enter the result as a decimal (rounded to at least three places) 7. Amending tax returns   8. Amending tax returns Enter the amount from Form 8814, line 12 8. Amending tax returns   9. Amending tax returns Multiply line 7 by line 8 9. Amending tax returns   10. Amending tax returns Subtract line 9 from line 8. Amending tax returns Enter the result on line 4 of Worksheet 1 10. Amending tax returns     (If filing more than one Form 8814, enter on line 4 of Worksheet 1 the total of the amounts on line 10 of all Worksheets 2. Amending tax returns )     Example—completing Worksheet 2. Amending tax returns Your 10-year-old child has taxable interest income of $400, an Alaska Permanent Fund dividend of $1,000, and ordinary dividends of $1,100, of which $500 are qualified dividends. Amending tax returns You choose to report this income on your return. Amending tax returns You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Amending tax returns After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Amending tax returns On Worksheet 2, you enter $2,100 on line 1, $500 on line 2, $1,600 on line 3, $400 on line 4, $2,000 on line 5, $1,000 on line 6, 0. Amending tax returns 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Amending tax returns You then enter $200 on line 4 of Worksheet 1. Amending tax returns Rule 7—You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Amending tax returns If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Amending tax returns If you are an employee, earned income includes all the taxable income you get from your employer. Amending tax returns Rule 15 has information that will help you figure the amount of your earned income. Amending tax returns If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Amending tax returns Earned Income Earned income includes all of the following types of income. Amending tax returns Wages, salaries, tips, and other taxable employee pay. Amending tax returns Employee pay is earned income only if it is taxable. Amending tax returns Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Amending tax returns But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Amending tax returns Net earnings from self-employment. Amending tax returns Gross income received as a statutory employee. Amending tax returns Wages, salaries, and tips. Amending tax returns    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Amending tax returns You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Amending tax returns Nontaxable combat pay election. Amending tax returns   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Amending tax returns The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Amending tax returns Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Amending tax returns For details, see Nontaxable combat pay in chapter 4. Amending tax returns Net earnings from self-employment. Amending tax returns   You may have net earnings from self-employment if: You own your own business, or You are a minister or member of a religious order. Amending tax returns Minister's housing. Amending tax returns   The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. Amending tax returns For that reason, it is included in earned income for the EIC (except in the cases described in Approved Form 4361 or Form 4029 , below). Amending tax returns Statutory employee. Amending tax returns   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Amending tax returns You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Amending tax returns Strike benefits. Amending tax returns   Strike benefits paid by a union to its members are earned income. Amending tax returns 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. Amending tax returns Each approved form exempts certain income from social security taxes. Amending tax returns Each form is discussed here in terms of what is or is not earned income for the EIC. Amending tax returns Form 4361. Amending tax returns   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Amending tax returns This includes wages, salaries, tips, and other taxable employee compensation. Amending tax returns A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Amending tax returns Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Amending tax returns Examples include fees for performing marriages and honoraria for delivering speeches. Amending tax returns Form 4029. Amending tax returns   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Amending tax returns However, amounts you received as a self-employed individual do not count as earned income. Amending tax returns Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Amending tax returns 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. Amending tax returns Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Amending tax returns You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Amending tax returns Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Amending tax returns Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Amending tax returns Disability insurance payments. Amending tax returns   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Amending tax returns It does not matter whether you have reached minimum retirement age. Amending tax returns If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Amending tax returns ” 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. Amending tax returns Do not include any of these items in your earned income. Amending tax returns Earnings while an inmate. Amending tax returns   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Amending tax returns This includes amounts for work performed while in a work release program or while in a halfway house. Amending tax returns Workfare payments. Amending tax returns   Nontaxable workfare payments are not earned income for the EIC. Amending tax returns 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 sufficient private sector employment is not available, or (2) community service program activities. Amending tax returns Community property. Amending tax returns   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. Amending tax returns That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Amending tax returns 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. Amending tax returns Nevada, Washington, and California domestic partners. Amending tax returns   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Amending tax returns Your earned income for the EIC does not include any amount earned by your partner. Amending tax returns Your earned income includes the entire amount you earned. Amending tax returns For details, see Publication 555. Amending tax returns Conservation Reserve Program (CRP) payments. Amending tax returns   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. Amending tax returns Nontaxable military pay. Amending tax returns   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Amending tax returns Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Amending tax returns See Publication 3, Armed Forces' Tax Guide, for more information. Amending tax returns    Combat pay. Amending tax returns You can elect to include your nontaxable combat pay in earned income for the EIC. Amending tax returns See Nontaxable combat pay in chapter 4. Amending tax returns Chapter 2—Rules If You Have a Qualifying Child If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. Amending tax returns This chapter discusses Rules 8 through 10. Amending tax returns You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit with a qualifying child. Amending tax returns You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Amending tax returns (You cannot file Form 1040EZ. Amending tax returns ) You also must complete Schedule EIC and attach it to your return. Amending tax returns If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Amending tax returns No qualifying child. Amending tax returns   If you do not meet Rule 8, you do not have a qualifying child. Amending tax returns Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Amending tax returns Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Amending tax returns The fours tests are: Relationship, Age, Residency, and Joint return. Amending tax returns The four tests are illustrated in Figure 1. Amending tax returns The paragraphs that follow contain more information about each test. Amending tax returns 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). Amending tax returns The following definitions clarify the relationship test. Amending tax returns Adopted child. Amending tax returns   An adopted child is always treated as your own child. Amending tax returns The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Amending tax returns Foster child. Amending tax returns   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Amending tax returns (An authorized placement agency includes a state or local government agency. Amending tax returns It also includes a tax-exempt organization licensed by a state. Amending tax returns In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Amending tax returns ) Example. Amending tax returns 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. Amending tax returns Debbie is your foster child. Amending tax returns Figure 1. Amending tax returns Tests for Qualifying Child Please click here for the text description of the image. Amending tax returns Conditions for Qualifying Child 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. Amending tax returns The following examples and definitions clarify the age test. Amending tax returns Example 1—child not under age 19. Amending tax returns Your son turned 19 on December 10. Amending tax returns 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. Amending tax returns Example 2—child not younger than you or your spouse. Amending tax returns Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Amending tax returns He is not disabled. Amending tax returns Both you and your spouse are 21 years old, and you file a joint return. Amending tax returns Your brother is not your qualifying child because he is not younger than you or your spouse. Amending tax returns Example 3—child younger than your spouse but not younger than you. Amending tax returns The facts are the same as in Example 2 except that your spouse is 25 years old. Amending tax returns Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Amending tax returns Student defined. Amending tax returns   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. Amending tax returns   The 5 calendar months need not be consecutive. Amending tax returns   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. Amending tax returns School defined. Amending tax returns   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Amending tax returns However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Amending tax returns Vocational high school students. Amending tax returns   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. Amending tax returns Permanently and totally disabled. Amending tax returns   Your child is permanently and totally disabled if both of the following apply. Amending tax returns He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Amending tax returns A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Amending tax returns Residency Test Your child must have lived with you in the United States for more than half of 2013. Amending tax returns The following definitions clarify the residency test. Amending tax returns United States. Amending tax returns   This means the 50 states and the District of Columbia. Amending tax returns It does not include Puerto Rico or U. Amending tax returns S. Amending tax returns possessions such as Guam. Amending tax returns Homeless shelter. Amending tax returns   Your home can be any location where you regularly live. Amending tax returns You do not need a traditional home. Amending tax returns 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. Amending tax returns Military personnel stationed outside the United States. Amending tax returns   U. Amending tax returns S. Amending tax returns 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. Amending tax returns Extended active duty. Amending tax returns   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Amending tax returns 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. Amending tax returns Birth or death of child. Amending tax returns    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. Amending tax returns Temporary absences. Amending tax returns   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. Amending tax returns Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Amending tax returns Kidnapped child. Amending tax returns   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. Amending tax returns The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Amending tax returns This treatment applies for all years until the child is returned. Amending tax returns 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. Amending tax returns   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Amending tax returns Joint Return Test To meet this test, the child cannot file a joint return for the year. Amending tax returns Exception. Amending tax returns   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. Amending tax returns Example 1—child files joint return. Amending tax returns You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Amending tax returns He earned $25,000 for the year. Amending tax returns The couple files a joint return. Amending tax returns Because your daughter and her husband file a joint return, she is not your qualifying child. Amending tax returns Example 2—child files joint return to get refund of tax withheld. Amending tax returns Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Amending tax returns They do not have a child. Amending tax returns Neither is required to file a tax return. Amending tax returns Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Amending tax returns The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Amending tax returns Example 3—child files joint return to claim American opportunity credit. Amending tax returns The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Amending tax returns 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. Amending tax returns Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to claim a refund of income tax withheld or estimated tax paid. Amending tax returns The exception to the joint return test does not apply, so your son is not your qualifying child. Amending tax returns Married child. Amending tax returns   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. Amending tax returns    Social security number. Amending tax returns Your 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. Amending tax returns 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), issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Amending tax returns   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. Amending tax returns For more information about SSNs, see Rule 2. Amending tax returns Rule 9—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. Amending tax returns However, only one of these persons can actually treat the child as a qualifying child. Amending tax returns 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). Amending tax returns The exemption for the child. Amending tax returns The child tax credit. Amending tax returns Head of household filing status. Amending tax returns The credit for child and dependent care expenses. Amending tax returns The exclusion for dependent care benefits. Amending tax returns The EIC. Amending tax returns The other person cannot take any of these benefits based on this qualifying child. Amending tax returns In other words, you and the other person cannot agree to divide these tax benefits between you. Amending tax returns The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Amending tax returns The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Amending tax returns However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Amending tax returns Tiebreaker rules. Amending tax returns   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. Amending tax returns If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Amending tax returns 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. Amending tax returns 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. Amending tax returns 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. Amending tax returns 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. Amending tax returns 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. Amending tax returns 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. Amending tax returns See Example 8. Amending tax returns   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. Amending tax returns See Examples 1 through 13. Amending tax returns   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 chapter 3 for people who do not have a qualifying child. Amending tax returns If the other person cannot claim the EIC. Amending tax returns   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. Amending tax returns See Examples 6 and 7. Amending tax returns 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 in this chapter. Amending tax returns Examples. Amending tax returns    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Amending tax returns Example 1—child lived with parent and grandparent. Amending tax returns You and your 2-year-old son Jimmy lived with your mother all year. Amending tax returns You are 25 years old, unmarried, and your AGI is $9,000. Amending tax returns Your only income was $9,000 from a part-time job. Amending tax returns Your mother's only income was $20,000 from her job, and her AGI is $20,000. Amending tax returns Jimmy's father did not live with you or Jimmy. Amending tax returns The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Amending tax returns 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. Amending tax returns However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier in this chapter for which that person qualifies). Amending tax returns He is not a qualifying child of anyone else, including his father. Amending tax returns 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). Amending tax returns Example 2—parent has higher AGI than grandparent. Amending tax returns The facts are the same as in Example 1 except your AGI is $25,000. Amending tax returns Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Amending tax returns Only you can claim him. Amending tax returns Example 3—two persons claim same child. Amending tax returns The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Amending tax returns 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. Amending tax returns 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. Amending tax returns Example 4—qualifying children split between two persons. Amending tax returns 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. Amending tax returns Only one of you can claim each child. Amending tax returns However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Amending tax returns For example, if you claim one child, your mother can claim the other two. Amending tax returns Example 5—taxpayer who is a qualifying child. Amending tax returns The facts are the same as in Example 1 except that you are only 18 years old. Amending tax returns This means you are a qualifying child of your mother. Amending tax returns Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Amending tax returns Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Amending tax returns 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. Amending tax returns Example 6—grandparent with too much earned income to claim EIC. Amending tax returns The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Amending tax returns Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Amending tax returns Example 7—parent with too much earned income to claim EIC. Amending tax returns The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Amending tax returns Your earned income is too high for you to claim the EIC. Amending tax returns But your mother cannot claim the EIC either, because her AGI is not higher than yours. Amending tax returns Example 8—child lived with both parents and grandparent. Amending tax returns 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 AGI of $30,000 on a joint return. Amending tax returns 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. Amending tax returns 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. Amending tax returns In other words, each parent's AGI can be treated as $15,000. Amending tax returns Example 9—separated parents. Amending tax returns You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Amending tax returns In August and September, Joey lived with you. Amending tax returns For the rest of the year, Joey lived with your husband, who is Joey's father. Amending tax returns 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. Amending tax returns 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. Amending tax returns You and your husband will file separate returns. Amending tax returns Your husband agrees to let you treat Joey as a qualifying child. Amending tax returns 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. Amending tax returns However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Amending tax returns See Rule 3. Amending tax returns Example 10—separated parents claim same child. Amending tax returns The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Amending tax returns In this case, only your husband will be allowed to treat Joey as a qualifying child. Amending tax returns This is because, during 2013, the boy lived with him longer than with you. Amending tax returns You cannot claim the EIC (either with or without a qualifying child). Amending tax returns 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. Amending tax returns See Rule 3. Amending tax returns Example 11—unmarried parents. Amending tax returns You, your 5-year-old son, and your son's father lived together all year. Amending tax returns You and your son's father are not married. Amending tax returns 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. Amending tax returns Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Amending tax returns Neither of you had any other income. Amending tax returns Your son's father agrees to let you treat the child as a qualifying child. Amending tax returns 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. Amending tax returns Example 12—unmarried parents claim same child. Amending tax returns 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. Amending tax returns In this case, only your son's father will be allowed to treat your son as a qualifying child. Amending tax returns This is because his AGI, $14,000, is more than your AGI, $12,000. Amending tax returns You cannot claim the EIC (either with or without a qualifying child). Amending tax returns Example 13—child did not live with a parent. Amending tax returns You and your 7-year-old niece, your sister's child, lived with your mother all year. Amending tax returns You are 25 years old, and your AGI is $9,300. Amending tax returns Your only income was from a part-time job. Amending tax returns Your mother's AGI is $15,000. Amending tax returns Her only income was from her job. Amending tax returns Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Amending tax returns 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. Amending tax returns However, only your mother can treat her as a qualifying child. Amending tax returns This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Amending tax returns Special rule for divorced or separated parents (or parents who live apart). Amending tax returns   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. Amending tax returns 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 time during the last 6 months of 2013, whether or not they are or were married. Amending tax returns The child received over half of his or her support for the year from the parents. Amending tax returns The child is in the custody of one or both parents for more than half of 2013. Amending tax returns Either of the following statements is true. Amending tax returns 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. Amending tax returns 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. Amending tax returns 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. Amending tax returns For details, see Publication 501. Amending tax returns Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Amending tax returns Applying Rule 9 to divorced or separated parents (or parents who live apart). Amending tax returns   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. Amending tax returns 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. Amending tax returns 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. Amending tax returns Example 1. Amending tax returns You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Amending tax returns Your AGI is $10,000. Amending tax returns Your mother’s AGI is $25,000. Amending tax returns Your son's father did not live with you or your son. Amending tax returns Under the Special rule for 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. Amending tax returns 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. Amending tax returns You and your mother did not have any child care expenses or dependent care benefits. Amending tax returns 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. Amending tax returns Example 2. Amending tax returns The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Amending tax returns Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Amending tax returns Example 3. Amending tax returns 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. Amending tax returns Your mother also claims him as a qualifying child for head of household filing status. Amending tax returns You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Amending tax returns The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Amending tax returns Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Amending tax returns ) if all of the following statements are true. Amending tax returns You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Amending tax returns Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Amending tax returns 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. Amending tax returns You lived with that person in the United States for more than half of the year. Amending tax returns 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). Amending tax returns For more details about the tests to be a qualifying child, see Rule 8. Amending tax returns If you are a qualifying child of another taxpayer, you cannot claim the EIC. Amending tax returns 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. Amending tax returns Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Amending tax returns Example. Amending tax returns You and your daughter lived with your mother all year. Amending tax returns You are 22 years old, unmarried, and attended a trade school full time. Amending tax returns You had a part-time job and earned $5,700. Amending tax returns You had no other income. Amending tax returns Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Amending tax returns She can claim the EIC if she meets all the other requirements. Amending tax returns Because you are your mother's qualifying child, you cannot claim the EIC. Amending tax returns This is so even if your mother cannot or does not claim the EIC. Amending tax returns Child of person not required to file a return. Amending tax returns   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you met 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. Amending tax returns Example 1—return not required. Amending tax returns 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. Amending tax returns As a result, you are not your mother's qualifying child. Amending tax returns You can claim the EIC if you meet all the other requirements to do so. Amending tax returns Example 2—return filed to get refund of tax withheld. Amending tax returns The facts are the same as in Example 1 except your mother had wages of $1,500 and had income tax withheld from her wages. Amending tax returns She files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Amending tax returns As a result, you are not your mother's qualifying child. Amending tax returns You can claim the EIC if you meet all the other requirements to do so. Amending tax returns Example 3—return filed to get EIC. Amending tax returns The facts are the same as in Example 2 except your mother claimed the EIC on her return. Amending tax returns Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Amending tax returns As a result, you are your mother's qualifying child. Amending tax returns You cannot claim the EIC. Amending tax returns Chapter 3—Rules If You Do Not Have a Qualifying Child Use this chapter if you do not have a qualifying child and have met all the rules in chapter 1. Amending tax returns This chapter discusses Rules 11 through 14. Amending tax returns You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. Amending tax returns You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Amending tax returns If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Amending tax returns If you have a qualifying child. Amending tax returns   If you meet Rule 8, you have a qualifying child. Amending tax returns If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Amending tax returns Rule 11—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. Amending tax returns 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. Amending tax returns It does not matter which spouse meets the age test, as long as one of the spouses does. Amending tax returns You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Amending tax returns 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. Amending tax returns If neither you nor your spouse meets the age test, you cannot claim the EIC. Amending tax returns Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amending tax returns Death of spouse. Amending tax returns   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. Amending tax returns Example 1. Amending tax returns You are age 28 and unmarried. Amending tax returns You meet the age test. Amending tax returns Example 2—spouse meets age test. Amending tax returns You are married and filing a joint return. Amending tax returns You are age 23 and your spouse is age 27. Amending tax returns You meet the age test because your spouse is at least age 25 but under age 65. Amending tax returns Example 3—spouse dies in 2013. Amending tax returns You are married and filing a joint return with your spouse who died in August 2013. Amending tax returns You are age 67. Amending tax returns Your spouse would have become age 65 in November 2013. Amending tax returns Because your spouse was under age 65 when she died, you meet the age test. Amending tax returns Rule 12—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. Amending tax returns 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. Amending tax returns If you are not sure whether someone else can claim you as a dependent, get Publication 501 and read the rules for claiming a dependent. Amending tax returns If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Amending tax returns Example 1. Amending tax returns In 2013, you were age 25, single, and living at home with your parents. Amending tax returns You worked and were not a student. Amending tax returns You earned $7,500. Amending tax returns Your parents cannot claim you as a dependent. Amending tax returns 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. Amending tax returns You meet this rule. Amending tax returns You can claim the EIC if you meet all the other requirements. Amending tax returns Example 2. Amending tax returns The facts are the same as in Example 1, except that you earned $2,000. Amending tax returns Your parents can claim you as a dependent but decide not to. Amending tax returns You do not meet this rule. Amending tax returns You cannot claim the credit because your parents could have claimed you as a dependent. Amending tax returns Joint returns. Amending tax returns   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Amending tax returns   However, another person may be able to claim you as a dependent if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Amending tax returns But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Amending tax returns Example 1—return filed to get refund of tax withheld. Amending tax returns You are 26 years old. Amending tax returns You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Amending tax returns Neither you nor your wife is required to file a tax return. Amending tax returns You do not have a child. Amending tax returns Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Amending tax returns Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Amending tax returns They can claim exemptions for you and your wife if all the other tests to do so are met. Amending tax returns Example 2—return filed to get EIC. Amending tax returns The facts are the same as in Example 1except no taxes were taken out of your pay. Amending tax returns 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. Amending tax returns Because claiming the EIC is your reason for filing the return, you are not filing it only to claim a refund of income tax withheld or estimated tax paid. Amending tax returns Your parents cannot claim an exemption for either you or your wife. Amending tax returns Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Amending tax returns ) if all of the following statements are true. Amending tax returns You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Amending tax returns Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Amending tax returns 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. Amending tax returns You lived with that person in the United States for more than half of the year. Amending tax returns 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). Amending tax returns For more details about the tests to be a qualifying child, see Rule 8. Amending tax returns If you are a qualifying child of another taxpayer, you cannot claim the EIC. Amending tax returns 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. Amending tax returns Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amending tax returns Example. Amending tax returns You lived with your mother all year. Amending tax returns You are age 26, unmarried, and permanently and totally disabled. Amending tax returns Your only income was from a community center where you went three days a week to answer telephones. Amending tax returns You earned $5,000 for the year and provided more than half of your own support. Amending tax returns Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Amending tax returns She can claim the EIC if she meets all the other requirements. Amending tax returns Because you are a qualifying child of your mother, you cannot claim the EIC. Amending tax returns This is so even if your mother cannot or does not claim the EIC. Amending tax returns Joint returns. Amending tax returns   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Amending tax returns   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Amending tax returns But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Amending tax returns Child of person not required to file a return. Amending tax returns   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. Amending tax returns Example 1—return not required. Amending tax returns You lived all year with your father. Amending tax returns You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Amending tax returns You have no other income, no children, and provided more than half of your own support. Amending tax returns Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Amending tax returns As a result, you are not your father's qualifying child. Amending tax returns You can claim the EIC if you meet all the other requirements to do so. Amending tax returns Example 2—return filed to get refund of tax withheld. Amending tax returns The facts are the same as in Example 1 except your father had wages of $1,500 and had income tax withheld from his wages. Amending tax returns He files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Amending tax returns As a result, you are not your father's qualifying child. Amending tax returns You can claim the EIC if you meet all the other requirements to do so. Amending tax returns Example 3—return filed to get EIC. Amending tax returns The facts are the same as in Example 2 except your father claimed the EIC on his return. Amending tax returns Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Amending tax returns As a result, you are your father's qualifying child. Amending tax returns You cannot claim the EIC. Amending tax returns Rule 14—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. Amending tax returns If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Amending tax returns United States. Amending tax returns   This means the 50 states and the District of Columbia. Amending tax returns It does not include Puerto Rico or U. Amending tax returns S. Amending tax returns possessions such as Guam. Amending tax returns Homeless shelter. Amending tax returns   Your home can be any location where you regularly live. Amending tax returns You do not need a traditional home. Amending tax returns If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Amending tax returns Military personnel stationed outside the United States. Amending tax returns   U. Amending tax returns S. Amending tax returns military personnel stationed outside the United States on extended active duty (defined in chapter 2) are considered to live in the United States during that duty period for purposes of the EIC. Amending tax returns Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Amending tax returns You need to know the amount of your earned income to see if you meet the rule in this chapter. Amending tax returns You also need to know that amount to figure your EIC. Amending tax returns Rule 15—Earned Income Limits 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. Amending tax returns Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Amending tax returns Employee pay is earned income only if it is taxable. Amending tax returns Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Amending tax returns But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Amending tax returns Earned income is explained in detail in Rule 7 in chapter 1. Amending tax returns Figuring earned income. Amending tax returns   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. Amending tax returns   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. Amending tax returns   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). Amending tax returns You will then reduce that amount by any amount included on that line and described in the following list. Amending tax returns Scholarship or fellowship grants not reported on a Form W-2. Amending tax returns 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. Amending tax returns Inmate's income. Amending tax returns Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Amending tax returns This includes amounts received for work performed while in a work release program or while in a halfway house. Amending tax returns 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). Amending tax returns Pension or annuity from deferred compensation plans. Amending tax returns 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. Amending tax returns 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). Amending tax returns This amount may be reported in box 11 of your Form W-2. Amending tax returns If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Amending tax returns Clergy. Amending tax returns   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 re