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Free State Federal Tax Filing

Free state federal tax filing Publication 957 - Main Content Table of Contents 1. Free state federal tax filing What is Back Pay?Reporting Back Pay Back Pay Under a Statute Nonstatutory Back Pay Format for Report to the SSA Questions 2. Free state federal tax filing Special Wage PaymentsReporting Special Wage Payments Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments Nonqualified Deferred Compensation and Section 457 Plans Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) PlansSpecial rule for box 11 of Form W-2 (distributions and deferral in the same year). Free state federal tax filing 1. Free state federal tax filing What is Back Pay? Back pay is pay received in a tax year(s) for actual or deemed employment in an earlier tax year(s). Free state federal tax filing For social security coverage and benefit purposes, all back pay, whether or not under a statute, is wages if it is payment for covered employment. Free state federal tax filing Damages for personal injury, interest, penalties, and legal fees included with back pay awards are not wages. Free state federal tax filing Report all back pay. Free state federal tax filing However, the tax year(s) for which back pay is credited as wages for social security purposes is different if it is awarded under a statute. Free state federal tax filing See Back Pay Under a Statute , later, for more information. Free state federal tax filing Reporting Back Pay The Internal Revenue Service (IRS) and the SSA consider back pay awards to be wages. Free state federal tax filing However, for income tax purposes, the IRS treats all back pay as wages in the year paid. Free state federal tax filing Employers should use Form W-2, Wage and Tax Statement, or electronic wage reports to report back pay as wages in the year they actually pay the employee. Free state federal tax filing The SSA no longer accepts reports on tapes, cartridges, and diskettes. Free state federal tax filing Example. Free state federal tax filing In 2012, Terry Morris earned wages of $50,000. Free state federal tax filing In the same year, she received $100,000 in settlement of a back pay case against her employer that covered the periods January 2007 through December 2011. Free state federal tax filing Her employer properly reflected social security wages of $110,100 and Medicare wages of $150,000 on her 2012 Form W-2. Free state federal tax filing However, if an employer did not include back pay wages on a previously filed Form W-2, magnetic media, or electronically filed wage report, the employer should prepare a wage correction report, Form W-2c, Corrected Wage and Tax Statement, or electronically filed report, to add the back pay award to the wages previously reported. Free state federal tax filing Example. Free state federal tax filing If, in the above example, Terry Morris' employer had prepared her 2012 Form W-2 reporting social security and Medicare wages of only $50,000 each, the employer would have to correct that report. Free state federal tax filing A Form W-2c correcting the 2012 Form W-2 would show previously reported social security and Medicare wages of $50,000 and the correct amount of $110,100 for social security wages and $150,000 for Medicare wages. Free state federal tax filing SSA treatment of back pay under a statute. Free state federal tax filing   Under the law, the SSA credits back pay awarded under a statute to an individual's earnings record in the period(s) the wages should have been paid. Free state federal tax filing This is important because wages not credited to the proper year may result in lower social security benefits or failure to meet the requirements for benefits. Free state federal tax filing   However, back pay under statute payments will remain posted to the employee's social security earnings record in the year reported on Form W-2 (or Form W-2c) unless the employer or employee notifies the SSA (in a separate, special report) of the back pay under a statute payment. Free state federal tax filing Then, the SSA can allocate the statutory back pay to the appropriate periods. Free state federal tax filing   If a back pay award is not made under a statute, the SSA credits back pay as wages in the year paid. Free state federal tax filing    If employers do notify the SSA of this payment, they should prepare a special report (with the information noted below) and send it to: Social Security Administration Attn: CPS Back Pay Staff 7-B-15 SWT 1500 Woodlawn Drive Baltimore, MD 21241-0001 Be sure to send this special report to the above address because the SSA handles it separately from other reports. Free state federal tax filing    If you paid the back pay award in the same tax year to which it applies, report the wages on that year's Form W-2. Free state federal tax filing No further action is necessary. Free state federal tax filing Example. Free state federal tax filing In 2012, Judy Wilson received a salary of $30,000 and a back pay under statute award of $2,000 for the period January through June 2012. Free state federal tax filing Her employer properly reported wages of $32,000 for social security and Medicare on her 2012 Form W-2. Free state federal tax filing No further action is necessary. Free state federal tax filing Information the SSA needs to properly credit back pay under a statute (special report). Free state federal tax filing   After you complete the special report, you or the employee should send it to the SSA when or after you submit the Form W-2 (on paper or electronically) to the SSA for the year you pay the statutory back pay to the employee. Free state federal tax filing There is no statute of limitations on the filing of the special report to enable the SSA to allocate the wages. Free state federal tax filing The special report must include the following information. Free state federal tax filing The employer's name, address, and employer identification number (EIN). Free state federal tax filing A signed statement citing the federal or state statute under which the payment was made. Free state federal tax filing If the statute is not identified, the SSA will assume the payment was not under a statute and will not allocate to earlier period(s). Free state federal tax filing The name and telephone number of a person to contact. Free state federal tax filing The SSA may have additional questions concerning the back pay case or the individual employee's information. Free state federal tax filing A list of employees receiving the payment and the following information for each employee: The tax year you paid and reported the back pay. Free state federal tax filing The employee's social security number (SSN). Free state federal tax filing The employee's name (as shown on his or her social security card). Free state federal tax filing The amount of the back pay award excluding any amounts specifically designated otherwise, for example, damages for personal injury, interest, penalties, and legal fees. Free state federal tax filing The period(s) the back pay award covers (beginning and ending dates—month and year). Free state federal tax filing The other wages paid subject to social security and/or Medicare taxes and reported in the same year as the back pay award (if none, show zero)*. Free state federal tax filing Do not include the back pay award shown in that wage report. Free state federal tax filing If you originally submitted the report under an establishment number, show that number and the amount of money that is to remain under that establishment number. Free state federal tax filing The amount to allocate to each reporting period*. Free state federal tax filing This includes any amount you want allocated (if applicable) to the tax year of the award payment. Free state federal tax filing If you do not give the SSA specific amounts to allocate, the SSA does the allocation by dividing the back pay award by the number of months or years covered by the award. Free state federal tax filing *Note. Free state federal tax filing   For periods before January 1, 1978 (before January 1, 1981, for state and local government employers covered by a Section 218 agreement), show the wage amounts for each calendar quarter ending March 31, June 30, September 30, and December 31. Free state federal tax filing For all tax years, show and identify the social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) separately. Free state federal tax filing MQGE is applicable to federal employees beginning in 1983, and for certain state and local government employees beginning in 1986. Free state federal tax filing For tax years 1991 and later, list the social security and Medicare wages separately. Free state federal tax filing If you originally reported the individual's wages under an establishment or payroll record unit number, show the amount of wages to remain in the award year for that number and furnish that number to the SSA along with the EIN. Free state federal tax filing Back Pay Under a Statute Back pay awarded under a statute is a payment by an employer following an award, determination, or agreement approved or sanctioned by a court or government agency responsible for enforcing a federal or state statute that protects an employee's right to employment or wages. Free state federal tax filing Examples of pertinent statutes include: Age Discrimination in Employment Act, Americans with Disabilities Act, Equal Pay Act, Fair Labor Standards Act, National Labor Relations Act, State minimum wage laws, and State statutes that protect rights to employment and wages. Free state federal tax filing Payments based on laws that have a similar effect to those listed above also may qualify as payments made under a statute. Free state federal tax filing Back pay awards, under some of the statutes listed above, may be compensation for personal injury and not pay for employment. Free state federal tax filing Such awards are not wages for social security coverage purposes. Free state federal tax filing If a court-approved or sanctioned settlement agreement states that the agreement is not an admission of discrimination, liability, or act of wrongdoing, the statement does not change the nature of a back pay award. Free state federal tax filing The payments made in such a settlement may still be back pay and wages under the rules discussed here. Free state federal tax filing Nonstatutory Back Pay A payment for back wages negotiated between an employer and employee without an award, determination, or agreement approved or sanctioned by a court or government agency, the payment is not made under a statute. Free state federal tax filing Delayed wage payments and retroactive pay increases resulting from union negotiation or payments under local ordinances or regulations are back pay and are wages. Free state federal tax filing However, they are not payments made under a statute. Free state federal tax filing If you are uncertain whether the back pay award was under a qualified statute, you may need to contact your personnel department or legal counsel or the attorney who filed the suit. Free state federal tax filing Format for Report to the SSA Use the format shown in Table 1, later, to send the SSA the information needed to properly credit back pay under a statute. Free state federal tax filing In a cover letter, include: Name and address of the employer, Statute under which you paid the back pay, Name and telephone number of the employer contact, and Signature of the reporting official. Free state federal tax filing Under certain circumstances, back pay may be a special wage payment and excluded from wages counted under the social security earnings test. Free state federal tax filing If you pay back pay to an employee age 61 or older, report it to the SSA in accordance with this section. Free state federal tax filing Read Special Wage Payments, later, for additional reporting instructions. Free state federal tax filing Questions If you have questions concerning back pay under a statute, call the SSA at 1-800-772-6270. Free state federal tax filing Exception. Free state federal tax filing   If you are a state or local government employer who was covered by an agreement under Section 218 of the Social Security Act before January 1, 1987, and you paid a back pay award before January 1, 1987, which you did not report to the SSA, contact your state Social Security Administrator's office. Free state federal tax filing Table 1. Free state federal tax filing Format for Report (Under Covering Letter) to Request SSA to Allocate Back Pay Under Statute Wages Employer's EIN: xx-xxxxxxx Tax Year in Which Award Payment Was Paid: 2012 (1) SSN and Employee Name (2)1 Award Amount and Period(s) (3)2,3 Other Soc. Free state federal tax filing Sec. Free state federal tax filing /Med. Free state federal tax filing Wages Paid In Award Year (4)3 Allocation     Soc. Free state federal tax filing Sec. Free state federal tax filing Med. Free state federal tax filing /MQGE Year Soc. Free state federal tax filing Sec. Free state federal tax filing Med. Free state federal tax filing /MQGE xxx-xx-xxxx HELEN T. Free state federal tax filing SMITH $100,000 1/2009 - 12/2012 $40,000 $40,000 2009 2010 2011 2012 $20,000 25,000 27,000 28,000 $20,000 25,000 27,000 28,000 xxx-xx-xxxx SAM W. Free state federal tax filing EVANS 30,000 7/89-12/91 -0- -0- 1989 1990 1991   6,000 12,000 12,000 xxx-xx-xxxx ROLAND S. Free state federal tax filing ADAMS 15,000 7/80-12/81 -0- -0- 9/80 12/80 1981 3,500 3,500 8,000   1Exclude amounts specifically designated as damages, penalties, etc. Free state federal tax filing  2Exclude the amount of back pay, if any, included in that amount. Free state federal tax filing  3For periods before January 1, 1978 (and for state and local government (Section 218) employers before January 1, 1981), show the wage amounts by calendar quarters. Free state federal tax filing The social security and/or Medicare Qualified Government Employment (MQGE) wages (where applicable) must be shown separately FOR ALL YEARS. Free state federal tax filing (Wages subject ONLY to MQGE would be shown in the Medicare/MQGE column; no wages would be shown in the Soc. Free state federal tax filing Sec. Free state federal tax filing column. Free state federal tax filing ) For tax years 1991 and later, the social security and Medicare wages must be listed separately. Free state federal tax filing Explanation of examples. Free state federal tax filing Helen T. Free state federal tax filing Smith–The back pay award, excluding interest, was $100,000 for the periods 1/2009-12/2012. Free state federal tax filing In 2012, this employee was also paid $40,000 in other wages. Free state federal tax filing (Her Form W-2 for 2012 reported $110,100 for social security and $140,000 for Medicare. Free state federal tax filing The SSA allocation will result in adjusted posted wages of $68,000 for social security and $68,000 for Medicare for 2012. Free state federal tax filing ) Sam W. Free state federal tax filing Evans–The back pay award was $30,000 for the periods 7/89-12/91. Free state federal tax filing This employee was hired in 1989 and was subject to MQGE only. Free state federal tax filing He was no longer employed by this governmental employer in 2012. Free state federal tax filing (His Form W-2 for 2012 reported $30,000 for social security and $30,000 for Medicare. Free state federal tax filing After the SSA allocation, he will not have any net posted wages for 2012. Free state federal tax filing ) Roland S. Free state federal tax filing Adams–The back pay award was $15,000 for the periods 7/80-12/81. Free state federal tax filing He was no longer employed by this state and local government (Section 218) employer in 2012. Free state federal tax filing (His Form W-2 for 2012 reported $15,000 for social security and $15,000 for Medicare; after the SSA allocation, he will not have any net posted wages for 2012. Free state federal tax filing ) If the state Social Security Administrator's office needs more information, they can contact the SSA at the following address:   Social Security Administration Office of Income Security Programs Office of Earnings and Program Integrity Policy 6401 Security Boulevard 2506 OPS Baltimore, MD 21235 2. Free state federal tax filing Special Wage Payments A special wage payment (SWP) is an amount paid by an employer to an employee (or former employee) for services performed in a prior year. Free state federal tax filing Employers should report to the SSA special wage payments made to employees and former employees who are recipients of social security retirement benefits. Free state federal tax filing Special wage payments made to a retired employee receiving social security or to an employee who continues to work while receiving social security benefits may reduce the benefits the individual receives if not reported to the SSA. Free state federal tax filing Special wage payments may include (but are not limited to): Accumulated sick and vacation pay, Back pay, Bonuses, Deferred compensation, Payments because of retirement, Sales commissions, Severance pay, and Stock options. Free state federal tax filing Note. Free state federal tax filing Payments made after retirement that are part of the normal payroll cycle should not be routinely reported as special wage payments. Free state federal tax filing Earnings Test. Free state federal tax filing   Benefits paid to a social security beneficiary under full retirement age may be reduced if the beneficiary continues to work. Free state federal tax filing The SSA uses the information in boxes 1, 3, and 5 of Form W-2 to determine the beneficiary's current year earnings. Free state federal tax filing Special wage payments, which are for services performed in a prior year, will increase the current year earnings on Form W-2, which also may result in a reduction in the beneficiary's benefits. Free state federal tax filing If a benefit is reduced because of a special wage payment, the beneficiary must get documentation from the employer before the SSA can restore the deducted portion. Free state federal tax filing Therefore, employer reports of special wage payments help prevent incorrect benefit reductions. Free state federal tax filing Reporting Special Wage Payments Employers must report special wage payments for income tax purposes and social security and Medicare taxes in the year received. Free state federal tax filing Report income, social security, and/or Medicare taxes for special wage payments on Form W-2. Free state federal tax filing See Nonqualified Deferred Compensation and Section 457 Plans, later, for reporting nonqualified deferred compensation plan deferrals and payments on Form W-2. Free state federal tax filing In addition, report to the SSA special wage payments made during the reporting year to retired employees and employees who continue to work while receiving social security benefits. Free state federal tax filing Submit reports after the close of the tax year. Free state federal tax filing To avoid delays in processing, submit reports in time to reach the SSA by April 1. Free state federal tax filing Use one of the following reporting methods. Free state federal tax filing Electronic reporting. Free state federal tax filing   Special wage payment files can be sent electronically by logging onto Business Services Online (BSO) via the socialsecurity. Free state federal tax filing gov website. Free state federal tax filing BSO enables organizations and authorized individuals to conduct business with and submit confidential information to the Social Security Administration. Free state federal tax filing You must register to use this website. Free state federal tax filing The web address is www. Free state federal tax filing socialsecurity. Free state federal tax filing gov/bso/bsowelcome. Free state federal tax filing htm. Free state federal tax filing   Use the specifications and record layout shown in  Table 2, later. Free state federal tax filing Only one file at a time may be submitted. Free state federal tax filing If your file is large (>10MB), or you have a slow internet connection, the transmission will be faster if the file is zipped. Free state federal tax filing A zipped file contains a file that has been compressed to reduce its file size. Free state federal tax filing WinZip and PKZIP are examples of acceptable compression packages. Free state federal tax filing   Electronic submissions not meeting the specifications in Table 2 will be rejected. Free state federal tax filing Paper listing. Free state federal tax filing   A paper listing can be used to report special wage payments to several employees. Free state federal tax filing Use the format shown in Table 3, later. Free state federal tax filing Submit paper listings to the local SSA office nearest your place of business. Free state federal tax filing Visit www. Free state federal tax filing socialsecurity. Free state federal tax filing gov/locator to find a Social Security office near you. Free state federal tax filing Form SSA-131. Free state federal tax filing   Use Form SSA-131 to report special wage payments made to an employee. Free state federal tax filing Also use this form to report nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in box 11 of Form W-2. Free state federal tax filing    This image is too large to be displayed in the current screen. Free state federal tax filing Please click the link to view the image. Free state federal tax filing Publication 957 Reporting Back Pay to the Social Security Administration Instructions for Form SSA–131   EMPLOYER INSTRUCTIONS FOR COMPLETING SPECIAL WAGE PAYMENT FORM 1. Free state federal tax filing Provide the EIN that was used or will be used to report the employee's wages on the Form W-2. Free state federal tax filing 2. Free state federal tax filing Enter the date the employee retired. Free state federal tax filing Enter “Not Retired” if the employee has not retired. Free state federal tax filing 3. Free state federal tax filing Enter the date that the employee last performed services; was not expected to return to work; and was not subject to recall to render additional services. Free state federal tax filing This date should be the same as or earlier than the date in item “2”. Free state federal tax filing Enter “Not Retired” if the employee has not retired. Free state federal tax filing 4. Free state federal tax filing Enter the wages that were paid to the employee in the tax year that were for services that were performed in years prior to the tax year or that were paid on account of retirement. Free state federal tax filing  Examples (not all inclusive) of payments to be included: Payments in lieu of vacation that were earned in a year prior to the tax year. Free state federal tax filing Accumulated sick payments which were paid in a lump sum based on “retirement” as the sole condition of payment. Free state federal tax filing Accumulated sick payments paid at or after the date in item 3, which were earned in a year prior to the tax year. Free state federal tax filing Payments “on account of retirement”–dismissal, severance or termination pay paid because of retirement. Free state federal tax filing Bonuses which are paid pursuant to a prior contract, agreement or promise causing the employee to expect such payments regularly; or announced to induce the employee to work more steadily, rapidly or efficiently or to remain with the employer. Free state federal tax filing Stock Options. Free state federal tax filing   Do not include in item “4” payments: For annual, sick, holiday, or vacation pay if used (absence from work) prior to the date of retirement (earlier of items “2” or “3”). Free state federal tax filing That were reported or will be reported under “Nonqualified Plans” on the Form W-2. Free state federal tax filing That were deducted from the employee's wages and paid to a deferred compensation plan (e. Free state federal tax filing g. Free state federal tax filing , 401k). Free state federal tax filing Employees health and dental plan benefits (non-covered/non-taxable for Social Security Wages). Free state federal tax filing Bonuses earned and paid in the tax year. Free state federal tax filing 5. Free state federal tax filing Check whether payments listed in item 4 will be made for years after the tax year. Free state federal tax filing If yes, please show the amounts and years in which these will be paid, if known. Free state federal tax filing 6. Free state federal tax filing Nonqualified deferred compensation and section 457 plans only. Free state federal tax filing If you were unable to report nonqualified deferred compensation or section 457 plan payments and deferrals (contributions) on Form W-2 because both payments and deferrals occurred during the year, show the amount of wages earned by the employee during the tax year. Free state federal tax filing Generally, the wages earned will be the compensation reported in block 1 of Form W-2 less payments from a nonqualified deferred compensation (or 457) plan, but including any amounts deferred under the plan during the tax year (See IRS Publication 957). Free state federal tax filing Paperwork/Privacy Act Notice: This report is authorized by regulation 20 CFR 404. Free state federal tax filing 702. Free state federal tax filing The information that you provide will be used in making a determination regarding the amount of Social Security benefits payable to the above named individual. Free state federal tax filing While your response is voluntary, if you do not respond we may not be able to make a correct determination regarding the amount of Social Security benefits payable to the above named individual for the year in question. Free state federal tax filing We may also use the information you give us when we match records by computer. Free state federal tax filing Matching programs compare our records with those of other Federal, State, or local government agencies. Free state federal tax filing Many agencies may use matching programs to find or prove that a person qualifies for benefits paid by the Federal Government. Free state federal tax filing The law allows us to do this even if you do not agree to it. Free state federal tax filing Explanations about these and other reasons why information you provide us may be used or given out are available in Social Security Offices. Free state federal tax filing If you want to learn more about this, contact any Social Security Office. Free state federal tax filing The Paperwork Reduction Act: This information collection meets the clearance requirements of 44 U. Free state federal tax filing S. Free state federal tax filing C. Free state federal tax filing §3507, as amended by Section 2 of the Paperwork Reduction Act of 1995. Free state federal tax filing You are not required to answer these questions unless we display a valid Office of Management and Budget control number. Free state federal tax filing We estimate that it will take you about 20 minutes to read the instructions, gather the necessary facts, and answer the questions. Free state federal tax filing Form SSA-131 (8-2001) EF (06-2002)   Submit Form SSA-131 to the SSA office nearest your place of business. Free state federal tax filing Or, the employee can submit it to the SSA office handling the claim. Free state federal tax filing You or the employee must submit this form before the SSA can exclude the special wage payments for purposes of the earnings test. Free state federal tax filing If reporting on more than one employee, complete a separate Form SSA-131 for each employee or use the paper listing format (except for reporting nonqualified and section 457 plan deferrals and payments) in Table 3. Free state federal tax filing Do not report payments from nonqualified deferred compensation or section 457 plans that were reported in box 11 of Form W-2. Free state federal tax filing Use Form SSA-131 if deferrals to and payments from nonqualified or section 457 plans occurred during the tax year. Free state federal tax filing Reporting Nonstatutory (Nonqualified) Stock Options as Special Wage Payments A nonstatutory (nonqualified) option to purchase stock which is exercised in a year after the year in which the option was earned is a special wage payment. Free state federal tax filing It should not count for the social security earnings test. Free state federal tax filing Nonstatutory (nonqualified) options exercised as special wage payments by retired employees or employees who continue to work while receiving social security benefits should be reported by employers using the above reporting methods. Free state federal tax filing Nonqualified Deferred Compensation and Section 457 Plans A nonqualified deferred compensation plan is a plan or arrangement established and maintained by an employer for one or more of its employees that provides for the deferral of compensation, but does not meet the requirements for a tax-qualified deferred compensation plan. Free state federal tax filing For social security and Medicare purposes, deferred compensation plans for employees of state and local governments (section 457 plans) are treated the same as nonqualified plans. Free state federal tax filing Nonqualified and section 457 plans are reported differently than other special wage payments. Free state federal tax filing See Reporting Amounts Deferred to Nonqualified and Section 457 Plans below for specific instructions. Free state federal tax filing Reporting Amounts Deferred to Nonqualified and Section 457 Plans Generally, when the related services are performed, nonqualified deferred compensation is subject to social security and Medicare tax when deferred. Free state federal tax filing However, if nonqualified and section 457 plans contain provisions that delay the employee's right to receive payments from the plan, a period of substantial risk of forfeiture exists. Free state federal tax filing The plans' deferrals, or contributions, are not subject to social security and Medicare taxes until the period of substantial risk of forfeiture ends. Free state federal tax filing No risk of forfeiture. Free state federal tax filing   If there is no risk of forfeiture, report wage amounts deferred to a nonqualified deferred compensation or section 457 plan in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Free state federal tax filing Example. Free state federal tax filing Company X's nonqualified deferred compensation plan allows the deferral of up to $20,000 of employee salaries each year. Free state federal tax filing The plan has no risk of forfeiture. Free state federal tax filing In 2012, Employee A defers $20,000 to the plan from a total salary of $200,000. Free state federal tax filing Form W-2 Completion Amount Box 1 $200,000 Box 3* 110,100 Box 5 200,000 *Wage base maximum for tax year 2012 Risk of forfeiture lapses before retirement. Free state federal tax filing   If the substantial risk of forfeiture lapses before the employee retires, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Free state federal tax filing The accumulated deferrals are reported along with any other social security and Medicare wages earned during the year. Free state federal tax filing   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. Free state federal tax filing If the employee continues working, future deferrals are social security and Medicare wages when they are earned. Free state federal tax filing    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Free state federal tax filing Risk of forfeiture lapses at retirement. Free state federal tax filing   When an employee's right to a payment is contingent upon working until retirement, report all past contributions to the plan (or the value of the plan), including accumulated earned interest, as social security and/or Medicare wages in the year of retirement. Free state federal tax filing Add the amount to other wages paid in that year, and enter in box 3 (up to the wage base maximum) and/or box 5 of Form W-2. Free state federal tax filing   Report in box 11 of Form W-2 the amount of deferrals, including any accumulated interest, that became taxable for social security and Medicare taxes during the year (but were for prior year services) because the deferred amounts were no longer subject to a substantial risk of forfeiture. Free state federal tax filing    Do not include in box 11 deferrals that are included in boxes 3 and/or 5 and that are for current year services. Free state federal tax filing Example—risk of forfeiture. Free state federal tax filing At the end of the risk-of-forfeiture period for Company Y's nonqualified deferred compensation plan, Employee B's accumulated deferrals, plus interest earned by the plan, are $120,000, not including B's $20,000 deferral for this year. Free state federal tax filing B's wages, including this year's deferred amount, are $80,000. Free state federal tax filing Form W-2 Completion Amount Box 1 $60,000 Box 3* 110,100 Box 5 200,000 Box 11 120,000 *Wage base maximum for tax year 2012 Reporting Payments From Nonqualified and Nongovernmental Section 457 Plans When an employee or former employee retires and begins receiving payments (distributions) from a nonqualified or nongovernmental section 457 plan, report the payments in boxes 1 and 11 of Form W-2. Free state federal tax filing Report payments (distributions) from a governmental section 457 plan on Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free state federal tax filing Example. Free state federal tax filing Employee D retired from the XYZ company and began receiving social security benefits. Free state federal tax filing XYZ paid D a $12,000 bonus upon retirement for sales made in a prior year, and D received $25,000 in payments from XYZ's nonqualified deferred compensation plan. Free state federal tax filing In addition, D agreed to continue performing services for XYZ, but on a part-time basis for wages of $15,000 per year. Free state federal tax filing D made no deferrals to the nonqualified plan this year. Free state federal tax filing Form W-2 Completion Amount Box 1 $52,000 Box 3 27,000 Box 5 27,000 Box 11 25,000 Report the $12,000 bonus to the SSA using electronic reporting, a paper listing, or Form SSA-131. Free state federal tax filing For more information, see Reporting Special Wage Payments , earlier. Free state federal tax filing Reporting Payments and Deferrals in the Same Year Do not complete box 11 when payments (distributions) are made from a nonqualified plan and deferrals are reported in boxes 3 and/or 5 of Form W-2 (including current year deferrals). Free state federal tax filing Report to the SSA on Form SSA-131 the total amount the employee earned during the tax year. Free state federal tax filing Normally, the amount earned is the amount reported in box 1 of Form W-2 less payments from a nonqualified or section 457 plan, but including any amounts deferred under the plan during the tax year. Free state federal tax filing See Form SSA-131 and its instructions, earlier. Free state federal tax filing Example. Free state federal tax filing Employee K retired this year from Company XYZ and began receiving social security benefits. Free state federal tax filing During the year he earned wages of $50,000 and deferred $35,000 of the wages into the company's nonqualified deferred compensation plan. Free state federal tax filing K also received $75,000 in payments from the company's nonqualified plan. Free state federal tax filing Form W-2 Completion Amount Special Wage Payment $75,000 Wages 50,000 Minus: deferral 35,000 Total reported in Box 1 $90,000     Wages including deferral reported in  Boxes 3 and 5 $50,000     Leave Box 11 blank. Free state federal tax filing File Form SSA-131 -0-     Form SSA-131 Completion Amount from Box 1 of Form W-2 $90,000 Minus: payments from a nonqualified plan 75,000 Plus: amounts deferred into the plan during the year 35,000 Total wages earned for purposes of Form SSA-131 (item 6) $50,000 Additional Reporting Examples for Nonqualified Deferred Compensation (NQDC) Plans It is not necessary to show amounts deferred during the year under an NQDC plan subject to section 409A. Free state federal tax filing If you report section 409A deferrals, show the amount in box 12 of Form W-2 using code Y. Free state federal tax filing For more information, see Notice 2008-115, 2008-52 I. Free state federal tax filing R. Free state federal tax filing B. Free state federal tax filing 1367, available at www. Free state federal tax filing irs. Free state federal tax filing gov/irb/2008-52_IRB/ar10. Free state federal tax filing html. Free state federal tax filing Special reporting rules apply when an NQDC plan is not compliant with section 409A (when there has been a “plan failure”). Free state federal tax filing Income included under section 409A from an NQDC plan is reported in box 1 and box 12 of Form W-2 using code Z. Free state federal tax filing See Notice 2008-115. Free state federal tax filing The following examples use small dollar amounts for illustrative purposes. Free state federal tax filing However, the amount reported in box 3 of Form W-2 is always limited by the social security earnings wage base (for example, $110,100 for 2012). Free state federal tax filing The term “vested” in the following examples means that the amount deferred is not subject to a substantial risk of forfeiture. Free state federal tax filing Conversely, the term “not vested” means that the amount deferred is subject to a substantial risk of forfeiture. Free state federal tax filing The examples assume that the NQDC plan is in compliance with section 409A, and that amounts deferred under the plan are not includible in gross income as they are deferred. Free state federal tax filing For purposes of the examples, it is assumed that the regular pay of the employee is remuneration for employment and wages for employment tax purposes except to the extent the deferral of a portion of the regular pay results in a reduction in wages. Free state federal tax filing Example 1: Deferral that is immediately vested (no substantial risk of forfeiture) with no distributions and no vesting of prior-year deferrals. Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into her employer’s NQDC plan. Free state federal tax filing The deferral of $20 was vested upon deferral and there was an employer match of $10 under the plan, which was also vested. Free state federal tax filing Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10. Free state federal tax filing Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 vested deferral) $180 Box 3 ($200 Regular pay plus $10 Employer match, vested) 210 Box 5 ($200 Regular pay plus $10 Employer match, vested) 210 Box 11 -0- Example 2: Deferral with delayed vesting (substantial risk of forfeiture) of employee and employer portions (no distributions and no vesting of prior-year deferrals). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. Free state federal tax filing The deferral of $20 was not vested upon deferral, and there was an employer match of $10 under the plan, which was also not vested. Free state federal tax filing Regular pay = $200; Deferral, not vested = $20; Employer match, not vested = $10. Free state federal tax filing Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, not vested) $180 Box 3 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 5 ($200 Regular pay minus $20 Deferral, not vested) 180 Box 11 -0- Example 3: Deferral that is immediately vested with prior-year deferrals and investment earnings on the prior-year deferrals that are now vesting (no distributions). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s nonqualified deferred compensation plan. Free state federal tax filing The deferral of $20 was vested upon deferral. Free state federal tax filing During the year, $100 of prior-year deferrals and $15 of investment earnings on the $100 of prior-year deferrals became vested. Free state federal tax filing Regular pay = $200; Deferral, vested = $20; Vesting of prior-year deferrals = $100; Vesting of investment earnings on $100 of prior-year deferral = $15. Free state federal tax filing Form W-2 Completion Amount Box 1 ($200 Regular pay minus $20 Deferral, vested) $180 Box 3 ($200 Regular pay plus $100 vested prior-year deferral plus $15 earnings on deferral) 315 Box 5 ($200 Regular pay plus $100 vested prior-year deferral plus $15 vested investment earnings on prior year deferral) 315 Box 11 ($100 vested prior-year deferral plus $15 earnings) 115 Example 4: No deferrals but there are distributions (no vesting of prior-year deferrals). Free state federal tax filing For the year, the employee’s regular pay was $100, and the employee deferred no pay into the employer’s NQDC plan. Free state federal tax filing There was no vesting of prior-year deferrals under the plan. Free state federal tax filing During the year, there were total distributions of $50 from the plan to the employee. Free state federal tax filing Regular pay = $100; Distribution = $50. Free state federal tax filing Form W-2 Completion Amount Box 1 ($100 Regular pay plus $50 Distribution) $150 Box 3 ($100 Regular pay ) 100 Box 5 ($100 Regular pay) 100 Box 11 ($50 Distribution) 50 Special rule for box 11 of Form W-2 (distributions and deferral in the same year). Free state federal tax filing   If, in the same year, there are NQDC distributions and there are deferrals that are reportable in boxes 3 and/or 5 (current or prior-year deferrals) of Form W-2, do not complete box 11. Free state federal tax filing Instead, report on Form SSA-131 the total amount the employee earned during the year. Free state federal tax filing * Submit the SSA-131 to the nearest SSA office or give it to the employee. Free state federal tax filing   *Generally, the amount earned by the employee during the tax year for purposes of item 6 of Form SSA-131 is the amount reported in box 1 of Form W-2 plus current-year deferrals that are vested (employee and employer portions) less distributions. Free state federal tax filing Do not consider prior-year deferrals that are vesting in the current year. Free state federal tax filing If there was a plan failure, the box 1 amount in this calculation should be as if there were no plan failure. Free state federal tax filing Example 5: Deferral that is immediately vested and there are distributions (no vesting of prior-year deferrals). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Free state federal tax filing There was also an employer match of $10. Free state federal tax filing The deferral and employer match were vested upon deferral. Free state federal tax filing There was no vesting of prior-year deferrals under the plan. Free state federal tax filing During the year, there were total distributions of $50 from the plan to the employee. Free state federal tax filing Regular pay = $200; Deferral, vested = $20; Employer match, vested = $10; Distribution = $50. Free state federal tax filing Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, vested) $230 Boxes 3 and 5 ($200 Regular pay plus $10 vested employer match) 210 Leave Box 11 blank. Free state federal tax filing File Form SSA-131 -0-     Form SSA-131 Completion Item 6 - amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $30 vested current year employee deferral and employer match) $210 Example 6: Deferral with delayed vesting and there are distributions (no vesting of prior-year deferrals). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Free state federal tax filing The deferral was not vested upon deferral. Free state federal tax filing There was no vesting of prior-year deferrals under the plan. Free state federal tax filing During the year, there were total distributions of $50 from the plan to the employee. Free state federal tax filing Regular pay = $200; Deferral, not vested = $20; Distribution = $50. Free state federal tax filing Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay minus $20 deferral that is not vested) 180 Box 11 ($50 Distribution). Free state federal tax filing 50 Example 7: Deferral that is immediately vested and there are distributions (also vesting of prior-year deferrals and earnings on those prior-year deferrals). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Free state federal tax filing The deferral was vested upon deferral. Free state federal tax filing There was vesting of $100 of prior-year deferrals and $15 of earnings on the $100 prior-year deferral under the plan. Free state federal tax filing During the year, there were total distributions of $50 from the plan to the employee. Free state federal tax filing Regular pay = $200; Deferral, vested = $20; Distribution = $50; Vesting of prior-year deferrals ($100) and earnings on those prior-year deferrals ($15) = $115. Free state federal tax filing Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 Regular pay minus $20 vested deferral $230 Boxes 3 and 5 ($200 Regular pay Plus $115 vested prior deferral (with vested earnings on the deferral)) 315 Leave Box 11 blank. Free state federal tax filing File Form SSA-131 -0-     Form SSA-131 Completion Item 6, amount of wages earned by the employee during the tax year ($230 from Box 1 of Form W-2 minus $50 Distribution plus $20 vested current year deferral) $200 Example 8: Deferral with delayed vesting and there are distributions (vesting of prior-year deferrals, including employer matches, and earnings on those deferrals). Free state federal tax filing For the year, the employee’s regular pay was $200, and the employee deferred $20 of the pay into the employer’s NQDC plan. Free state federal tax filing The deferral was not vested upon deferral. Free state federal tax filing There was also vesting of prior-year deferrals and employer matches and earnings on these amounts under the plan ($115). Free state federal tax filing During the year, there were total distributions of $50 from the plan to the employee. Free state federal tax filing Regular pay = $200; Deferral, not vested = $20; Distribution = $50; Vesting of prior-year deferrals and employer match = $100 plus earnings on that $100 of $15. Free state federal tax filing Form W-2 Completion Amount Box 1 ($50 Special Wage Payment (Distribution) plus $200 regular pay minus $20 Deferral, not vested) $230 Boxes 3 and 5 ($200 Regular pay plus $115 vested prior-year deferral and prior year employer match and earning on the prior year amounts minus $20 deferral that is not vested) 295 Leave Box 11 blank. Free state federal tax filing File Form SSA-131 -0-     Form SSA-131 Completion Item 6 ($230 Amount from Box 1 of Form W-2 minus $50 Distribution) $180 Table 2. Free state federal tax filing Specifications for Electronic Reporting of Special Wage Payments Record Position  Field Size   Description Start End 1 3 3 Record Type—must include only the capital letters “SWP” 4 12 9 SSN—must be numeric and may not be all zeros 13 27 15 Last Name—all capitals and no punctuation; may have blanks on right only 28 38 11 First Name—all capitals and no punctuation; may have blanks on right only 39 39 1 Middle Initial—must be either a capital letter or blank 40 48 9 EIN—must be numeric and may not be all zeros 49 59 11 Payment—must be numeric; may not be all zeros; last two digits on right are assumed to be cents; no period or dollar sign 60 63 4 Payment Year—must be only a four-digit year 64 66 3 SSA Office Code—must be numeric and may be all zeros 67 67 1 Payment Type Code—must be the capital letter “T” 68 117 50 Filler  The record format is a fixed length of 117. Free state federal tax filing  The file format is ASCII. Free state federal tax filing  Submit only one file at a time. Free state federal tax filing   Table 3. Free state federal tax filing Sample—Paper Listing for Reporting Special Wage Payments to Several Employees Report of Special Wage PaymentsTax Year: Page of A. Free state federal tax filing Employer Name: EIN:   Address: Contact Name:     Phone: ( )   . Free state federal tax filing 1) B. Free state federal tax filing Employee Name: (Last) (First) (MI)   C. Free state federal tax filing SSN: D. Free state federal tax filing SWP:$ E. Free state federal tax filing Type: Other: 2) B. Free state federal tax filing Employee Name: (Last) (First) (MI)   C. Free state federal tax filing SSN: D. Free state federal tax filing SWP:$ E. Free state federal tax filing Type: Other: 3) B. Free state federal tax filing Employee Name: (Last) (First) (MI)   C. Free state federal tax filing SSN: D. Free state federal tax filing SWP:$ E. Free state federal tax filing Type: Other: 4) B. Free state federal tax filing Employee Name: (Last) (First) (MI)   C. Free state federal tax filing SSN: D. Free state federal tax filing SWP:$ E. Free state federal tax filing Type: Other: 5) B. Free state federal tax filing Employee Name: (Last) (First) (MI)   C. Free state federal tax filing SSN: D. Free state federal tax filing SWP:$ E. Free state federal tax filing Type: Other:     INSTRUCTIONS:   Enter tax year and page number. Free state federal tax filing   A. Free state federal tax filing Employer name, employer identification number (EIN), address, the name of a contact person, and a phone number where the contact person can be reached during normal business hours. Free state federal tax filing   B. Free state federal tax filing Employee's name. Free state federal tax filing   C. Free state federal tax filing Employee's social security number (SSN). Free state federal tax filing   D. Free state federal tax filing Total amount of special wage payments made to the employee. Free state federal tax filing   E. Free state federal tax filing Type of special wage payment from the following list: (1) Vacation Pay, (2) Sick Pay, (3) Severance Pay,  (4) Bonus, (5) Deferred Compensation, (6) Stock Options, and (7) Other—Please explain. Free state federal tax filing   Do not use a paper listing for nonqualified deferred compensation and section 457 plan deferrals and payments that could not be reported in block 11 of Form W-2. Free state federal tax filing (Get Form SSA-131. Free state federal tax filing )                 Prev  Up  Next   Home   More Online Publications
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The Free State Federal Tax Filing

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