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Income Tax Preparation

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Income Tax Preparation

Income tax preparation 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. Income tax preparation S. Income tax preparation 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. Income tax preparation You must meet all seven rules to qualify for the earned income credit. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation Adjusted gross income (AGI). Income tax preparation   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Income tax preparation   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Income tax preparation You do not need to read the rest of this publication. Income tax preparation Example—AGI is more than limit. Income tax preparation Your AGI is $38,550, you are single, and you have one qualifying child. Income tax preparation You cannot claim the EIC because your AGI is not less than $37,870. Income tax preparation 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. Income tax preparation Community property. Income tax preparation   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. Income tax preparation This is different from the community property rules that apply under Rule 7. Income tax preparation 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). Income tax preparation Any qualifying child listed on Schedule EIC also must have a valid SSN. Income tax preparation (See Rule 8 if you have a qualifying child. Income tax preparation ) 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. Income tax preparation An example of a federally funded benefit is Medicaid. Income tax preparation 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. Income tax preparation S. Income tax preparation citizen or permanent resident, ask the SSA for a new social security card without the legend. Income tax preparation If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Income tax preparation S. Income tax preparation Individual Income Tax Return, to claim the EIC. Income tax preparation U. Income tax preparation S. Income tax preparation citizen. Income tax preparation   If you were a U. Income tax preparation S. Income tax preparation citizen when you received your SSN, you have a valid SSN. Income tax preparation Valid for work only with INS authorization or DHS authorization. Income tax preparation   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. Income tax preparation SSN missing or incorrect. Income tax preparation   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Income tax preparation Other taxpayer identification number. Income tax preparation   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). Income tax preparation ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Income tax preparation No SSN. Income tax preparation   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). Income tax preparation You cannot claim the EIC. Income tax preparation Getting an SSN. Income tax preparation   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. Income tax preparation You can get Form SS-5 online at www. Income tax preparation socialsecurity. Income tax preparation gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Income tax preparation Filing deadline approaching and still no SSN. Income tax preparation   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Income tax preparation Request an automatic 6-month extension of time to file your return. Income tax preparation You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Income tax preparation S. Income tax preparation Individual Income Tax Return. Income tax preparation For more information, see the instructions for Form 4868. Income tax preparation File the return on time without claiming the EIC. Income tax preparation After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Income tax preparation Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Income tax preparation 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. Income tax preparation Your filing status cannot be “Married filing separately. Income tax preparation ” Spouse did not live with you. Income tax preparation   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. Income tax preparation In that case, you may be able to claim the EIC. Income tax preparation For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Income tax preparation Rule 4—You Must Be a U. Income tax preparation S. Income tax preparation 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. Income tax preparation You can use that filing status only if one spouse is a U. Income tax preparation S. Income tax preparation citizen or resident alien and you choose to treat the nonresident spouse as a U. Income tax preparation S. Income tax preparation resident. Income tax preparation If you make this choice, you and your spouse are taxed on your worldwide income. Income tax preparation If you need more information on making this choice, get Publication 519, U. Income tax preparation S. Income tax preparation Tax Guide for Aliens. Income tax preparation 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). Income tax preparation 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. Income tax preparation You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Income tax preparation U. Income tax preparation S. Income tax preparation possessions are not foreign countries. Income tax preparation See Publication 54, Tax Guide for U. Income tax preparation S. Income tax preparation Citizens and Resident Aliens Abroad, for more detailed information. Income tax preparation 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. Income tax preparation If your investment income is more than $3,300, you cannot claim the credit. Income tax preparation Form 1040EZ. Income tax preparation   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. Income tax preparation Form 1040A. Income tax preparation   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. Income tax preparation Form 1040. Income tax preparation   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Income tax preparation    Worksheet 1. Income tax preparation 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. Income tax preparation Interest and Dividends         1. Income tax preparation Enter any amount from Form 1040, line 8a 1. Income tax preparation   2. Income tax preparation Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Income tax preparation   3. Income tax preparation Enter any amount from Form 1040, line 9a 3. Income tax preparation   4. Income tax preparation 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. Income tax preparation (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Income tax preparation ) 4. Income tax preparation   Capital Gain Net Income         5. Income tax preparation Enter the amount from Form 1040, line 13. Income tax preparation If the amount on that line is a loss, enter -0- 5. Income tax preparation       6. Income tax preparation Enter any gain from Form 4797, Sales of Business Property, line 7. Income tax preparation If the amount on that line is a loss, enter -0-. Income tax preparation (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Income tax preparation ) 6. Income tax preparation       7. Income tax preparation Substract line 6 of this worksheet from line 5 of this worksheet. Income tax preparation (If the result is less than zero, enter -0-. Income tax preparation ) 7. Income tax preparation   Royalties and Rental Income From Personal Property         8. Income tax preparation 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. Income tax preparation       9. Income tax preparation 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. Income tax preparation       10. Income tax preparation Subtract the amount on line 9 of this worksheet from the amount on line 8. Income tax preparation (If the result is less than zero, enter -0-. Income tax preparation ) 10. Income tax preparation   Passive Activities         11. Income tax preparation Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Income tax preparation (g)), 34a (col. Income tax preparation (d)), or 40). Income tax preparation (See instructions below for lines 11 and 12. Income tax preparation ) 11. Income tax preparation       12. Income tax preparation Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Income tax preparation (f)), 34b (col. Income tax preparation (c)), or 40). Income tax preparation (See instructions below for lines 11 and 12. Income tax preparation ) 12. Income tax preparation       13. Income tax preparation Combine the amounts on lines 11 and 12 of this worksheet. Income tax preparation (If the result is less than zero, enter -0-. Income tax preparation ) 13. Income tax preparation   14. Income tax preparation Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Income tax preparation Enter the total. Income tax preparation This is your investment income 14. Income tax preparation   15. Income tax preparation Is the amount on line 14 more than $3,300? ❑ Yes. Income tax preparation You cannot take the credit. Income tax preparation  ❑ No. Income tax preparation 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). Income tax preparation       Instructions for lines 11 and 12. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation Worksheet 2. Income tax preparation Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Income tax preparation Note. Income tax preparation Fill out a separate Worksheet 2 for each Form 8814. Income tax preparation     1. Income tax preparation Enter the amount from Form 8814, line 2a 1. Income tax preparation   2. Income tax preparation Enter the amount from Form 8814, line 2b 2. Income tax preparation   3. Income tax preparation Subtract line 2 from line 1 3. Income tax preparation   4. Income tax preparation Enter the amount from Form 8814, line 1a 4. Income tax preparation   5. Income tax preparation Add lines 3 and 4 5. Income tax preparation   6. Income tax preparation Enter the amount of the child's Alaska Permanent Fund dividend 6. Income tax preparation   7. Income tax preparation Divide line 6 by line 5. Income tax preparation Enter the result as a decimal (rounded to at least three places) 7. Income tax preparation   8. Income tax preparation Enter the amount from Form 8814, line 12 8. Income tax preparation   9. Income tax preparation Multiply line 7 by line 8 9. Income tax preparation   10. Income tax preparation Subtract line 9 from line 8. Income tax preparation Enter the result on line 4 of Worksheet 1 10. Income tax preparation     (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. Income tax preparation )     Example—completing Worksheet 2. Income tax preparation 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. Income tax preparation You choose to report this income on your return. Income tax preparation You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Income tax preparation After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Income tax preparation 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. Income tax preparation 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Income tax preparation You then enter $200 on line 4 of Worksheet 1. Income tax preparation 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. Income tax preparation If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Income tax preparation If you are an employee, earned income includes all the taxable income you get from your employer. Income tax preparation Rule 15 has information that will help you figure the amount of your earned income. Income tax preparation If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Income tax preparation Earned Income Earned income includes all of the following types of income. Income tax preparation Wages, salaries, tips, and other taxable employee pay. Income tax preparation Employee pay is earned income only if it is taxable. Income tax preparation Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Income tax preparation But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Income tax preparation Net earnings from self-employment. Income tax preparation Gross income received as a statutory employee. Income tax preparation Wages, salaries, and tips. Income tax preparation    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Income tax preparation You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Income tax preparation Nontaxable combat pay election. Income tax preparation   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Income tax preparation The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Income tax preparation Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Income tax preparation For details, see Nontaxable combat pay in chapter 4. Income tax preparation Net earnings from self-employment. Income tax preparation   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. Income tax preparation Minister's housing. Income tax preparation   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. Income tax preparation 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). Income tax preparation Statutory employee. Income tax preparation   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Income tax preparation You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Income tax preparation Strike benefits. Income tax preparation   Strike benefits paid by a union to its members are earned income. Income tax preparation 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. Income tax preparation Each approved form exempts certain income from social security taxes. Income tax preparation Each form is discussed here in terms of what is or is not earned income for the EIC. Income tax preparation Form 4361. Income tax preparation   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Income tax preparation This includes wages, salaries, tips, and other taxable employee compensation. Income tax preparation A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Income tax preparation Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Income tax preparation Examples include fees for performing marriages and honoraria for delivering speeches. Income tax preparation Form 4029. Income tax preparation   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Income tax preparation However, amounts you received as a self-employed individual do not count as earned income. Income tax preparation Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Income tax preparation 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. Income tax preparation Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Income tax preparation You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Income tax preparation Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Income tax preparation Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Income tax preparation Disability insurance payments. Income tax preparation   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Income tax preparation It does not matter whether you have reached minimum retirement age. Income tax preparation If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Income tax preparation ” 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. Income tax preparation Do not include any of these items in your earned income. Income tax preparation Earnings while an inmate. Income tax preparation   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Income tax preparation This includes amounts for work performed while in a work release program or while in a halfway house. Income tax preparation Workfare payments. Income tax preparation   Nontaxable workfare payments are not earned income for the EIC. Income tax preparation 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. Income tax preparation Community property. Income tax preparation   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. Income tax preparation That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Income tax preparation 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. Income tax preparation Nevada, Washington, and California domestic partners. Income tax preparation   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Income tax preparation Your earned income for the EIC does not include any amount earned by your partner. Income tax preparation Your earned income includes the entire amount you earned. Income tax preparation For details, see Publication 555. Income tax preparation Conservation Reserve Program (CRP) payments. Income tax preparation   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. Income tax preparation Nontaxable military pay. Income tax preparation   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Income tax preparation Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Income tax preparation See Publication 3, Armed Forces' Tax Guide, for more information. Income tax preparation    Combat pay. Income tax preparation You can elect to include your nontaxable combat pay in earned income for the EIC. Income tax preparation See Nontaxable combat pay in chapter 4. Income tax preparation 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. Income tax preparation This chapter discusses Rules 8 through 10. Income tax preparation 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. Income tax preparation You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Income tax preparation (You cannot file Form 1040EZ. Income tax preparation ) You also must complete Schedule EIC and attach it to your return. Income tax preparation If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Income tax preparation No qualifying child. Income tax preparation   If you do not meet Rule 8, you do not have a qualifying child. Income tax preparation Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Income tax preparation 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. Income tax preparation The fours tests are: Relationship, Age, Residency, and Joint return. Income tax preparation The four tests are illustrated in Figure 1. Income tax preparation The paragraphs that follow contain more information about each test. Income tax preparation 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). Income tax preparation The following definitions clarify the relationship test. Income tax preparation Adopted child. Income tax preparation   An adopted child is always treated as your own child. Income tax preparation The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Income tax preparation Foster child. Income tax preparation   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. Income tax preparation (An authorized placement agency includes a state or local government agency. Income tax preparation It also includes a tax-exempt organization licensed by a state. Income tax preparation In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Income tax preparation ) Example. Income tax preparation 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. Income tax preparation Debbie is your foster child. Income tax preparation Figure 1. Income tax preparation Tests for Qualifying Child Please click here for the text description of the image. Income tax preparation 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. Income tax preparation The following examples and definitions clarify the age test. Income tax preparation Example 1—child not under age 19. Income tax preparation Your son turned 19 on December 10. Income tax preparation 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. Income tax preparation Example 2—child not younger than you or your spouse. Income tax preparation Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Income tax preparation He is not disabled. Income tax preparation Both you and your spouse are 21 years old, and you file a joint return. Income tax preparation Your brother is not your qualifying child because he is not younger than you or your spouse. Income tax preparation Example 3—child younger than your spouse but not younger than you. Income tax preparation The facts are the same as in Example 2 except that your spouse is 25 years old. Income tax preparation Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Income tax preparation Student defined. Income tax preparation   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. Income tax preparation   The 5 calendar months need not be consecutive. Income tax preparation   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. Income tax preparation School defined. Income tax preparation   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Income tax preparation However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Income tax preparation Vocational high school students. Income tax preparation   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. Income tax preparation Permanently and totally disabled. Income tax preparation   Your child is permanently and totally disabled if both of the following apply. Income tax preparation He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Income tax preparation A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Income tax preparation Residency Test Your child must have lived with you in the United States for more than half of 2013. Income tax preparation The following definitions clarify the residency test. Income tax preparation United States. Income tax preparation   This means the 50 states and the District of Columbia. Income tax preparation It does not include Puerto Rico or U. Income tax preparation S. Income tax preparation possessions such as Guam. Income tax preparation Homeless shelter. Income tax preparation   Your home can be any location where you regularly live. Income tax preparation You do not need a traditional home. Income tax preparation 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. Income tax preparation Military personnel stationed outside the United States. Income tax preparation   U. Income tax preparation S. Income tax preparation 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. Income tax preparation Extended active duty. Income tax preparation   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Income tax preparation 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. Income tax preparation Birth or death of child. Income tax preparation    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. Income tax preparation Temporary absences. Income tax preparation   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. Income tax preparation Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Income tax preparation Kidnapped child. Income tax preparation   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. Income tax preparation 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. Income tax preparation This treatment applies for all years until the child is returned. Income tax preparation 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. Income tax preparation   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Income tax preparation Joint Return Test To meet this test, the child cannot file a joint return for the year. Income tax preparation Exception. Income tax preparation   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. Income tax preparation Example 1—child files joint return. Income tax preparation You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Income tax preparation He earned $25,000 for the year. Income tax preparation The couple files a joint return. Income tax preparation Because your daughter and her husband file a joint return, she is not your qualifying child. Income tax preparation Example 2—child files joint return to get refund of tax withheld. Income tax preparation Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Income tax preparation They do not have a child. Income tax preparation Neither is required to file a tax return. Income tax preparation Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Income tax preparation The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Income tax preparation Example 3—child files joint return to claim American opportunity credit. Income tax preparation The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Income tax preparation 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. Income tax preparation 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. Income tax preparation The exception to the joint return test does not apply, so your son is not your qualifying child. Income tax preparation Married child. Income tax preparation   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. Income tax preparation    Social security number. Income tax preparation 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. Income tax preparation 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. Income tax preparation   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. Income tax preparation For more information about SSNs, see Rule 2. Income tax preparation 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. Income tax preparation However, only one of these persons can actually treat the child as a qualifying child. Income tax preparation 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). Income tax preparation The exemption for the child. Income tax preparation The child tax credit. Income tax preparation Head of household filing status. Income tax preparation The credit for child and dependent care expenses. Income tax preparation The exclusion for dependent care benefits. Income tax preparation The EIC. Income tax preparation The other person cannot take any of these benefits based on this qualifying child. Income tax preparation In other words, you and the other person cannot agree to divide these tax benefits between you. Income tax preparation The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Income tax preparation The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Income tax preparation However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Income tax preparation Tiebreaker rules. Income tax preparation   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. Income tax preparation If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation See Example 8. Income tax preparation   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. Income tax preparation See Examples 1 through 13. Income tax preparation   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. Income tax preparation If the other person cannot claim the EIC. Income tax preparation   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. Income tax preparation See Examples 6 and 7. Income tax preparation 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. Income tax preparation Examples. Income tax preparation    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Income tax preparation Example 1—child lived with parent and grandparent. Income tax preparation You and your 2-year-old son Jimmy lived with your mother all year. Income tax preparation You are 25 years old, unmarried, and your AGI is $9,000. Income tax preparation Your only income was $9,000 from a part-time job. Income tax preparation Your mother's only income was $20,000 from her job, and her AGI is $20,000. Income tax preparation Jimmy's father did not live with you or Jimmy. Income tax preparation The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Income tax preparation 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. Income tax preparation 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). Income tax preparation He is not a qualifying child of anyone else, including his father. Income tax preparation 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). Income tax preparation Example 2—parent has higher AGI than grandparent. Income tax preparation The facts are the same as in Example 1 except your AGI is $25,000. Income tax preparation Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Income tax preparation Only you can claim him. Income tax preparation Example 3—two persons claim same child. Income tax preparation The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Income tax preparation 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. Income tax preparation 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. Income tax preparation Example 4—qualifying children split between two persons. Income tax preparation 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. Income tax preparation Only one of you can claim each child. Income tax preparation However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Income tax preparation For example, if you claim one child, your mother can claim the other two. Income tax preparation Example 5—taxpayer who is a qualifying child. Income tax preparation The facts are the same as in Example 1 except that you are only 18 years old. Income tax preparation This means you are a qualifying child of your mother. Income tax preparation Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Income tax preparation Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Income tax preparation 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. Income tax preparation Example 6—grandparent with too much earned income to claim EIC. Income tax preparation The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Income tax preparation Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Income tax preparation Example 7—parent with too much earned income to claim EIC. Income tax preparation The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Income tax preparation Your earned income is too high for you to claim the EIC. Income tax preparation But your mother cannot claim the EIC either, because her AGI is not higher than yours. Income tax preparation Example 8—child lived with both parents and grandparent. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation In other words, each parent's AGI can be treated as $15,000. Income tax preparation Example 9—separated parents. Income tax preparation You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Income tax preparation In August and September, Joey lived with you. Income tax preparation For the rest of the year, Joey lived with your husband, who is Joey's father. Income tax preparation 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. Income tax preparation 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. Income tax preparation You and your husband will file separate returns. Income tax preparation Your husband agrees to let you treat Joey as a qualifying child. Income tax preparation 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. Income tax preparation However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Income tax preparation See Rule 3. Income tax preparation Example 10—separated parents claim same child. Income tax preparation The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Income tax preparation In this case, only your husband will be allowed to treat Joey as a qualifying child. Income tax preparation This is because, during 2013, the boy lived with him longer than with you. Income tax preparation You cannot claim the EIC (either with or without a qualifying child). Income tax preparation 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. Income tax preparation See Rule 3. Income tax preparation Example 11—unmarried parents. Income tax preparation You, your 5-year-old son, and your son's father lived together all year. Income tax preparation You and your son's father are not married. Income tax preparation 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. Income tax preparation Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Income tax preparation Neither of you had any other income. Income tax preparation Your son's father agrees to let you treat the child as a qualifying child. Income tax preparation 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. Income tax preparation Example 12—unmarried parents claim same child. Income tax preparation 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. Income tax preparation In this case, only your son's father will be allowed to treat your son as a qualifying child. Income tax preparation This is because his AGI, $14,000, is more than your AGI, $12,000. Income tax preparation You cannot claim the EIC (either with or without a qualifying child). Income tax preparation Example 13—child did not live with a parent. Income tax preparation You and your 7-year-old niece, your sister's child, lived with your mother all year. Income tax preparation You are 25 years old, and your AGI is $9,300. Income tax preparation Your only income was from a part-time job. Income tax preparation Your mother's AGI is $15,000. Income tax preparation Her only income was from her job. Income tax preparation Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Income tax preparation 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. Income tax preparation However, only your mother can treat her as a qualifying child. Income tax preparation This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Income tax preparation Special rule for divorced or separated parents (or parents who live apart). Income tax preparation   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. Income tax preparation 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. Income tax preparation The child received over half of his or her support for the year from the parents. Income tax preparation The child is in the custody of one or both parents for more than half of 2013. Income tax preparation Either of the following statements is true. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation For details, see Publication 501. Income tax preparation Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Income tax preparation Applying Rule 9 to divorced or separated parents (or parents who live apart). Income tax preparation   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. Income tax preparation 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. Income tax preparation 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. Income tax preparation Example 1. Income tax preparation You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Income tax preparation Your AGI is $10,000. Income tax preparation Your mother’s AGI is $25,000. Income tax preparation Your son's father did not live with you or your son. Income tax preparation 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. Income tax preparation 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. Income tax preparation You and your mother did not have any child care expenses or dependent care benefits. Income tax preparation 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. Income tax preparation Example 2. Income tax preparation The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Income tax preparation Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Income tax preparation Example 3. Income tax preparation 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. Income tax preparation Your mother also claims him as a qualifying child for head of household filing status. Income tax preparation You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Income tax preparation The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Income tax preparation 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. Income tax preparation ) if all of the following statements are true. Income tax preparation You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Income tax preparation Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Income tax preparation 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. Income tax preparation You lived with that person in the United States for more than half of the year. Income tax preparation 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). Income tax preparation For more details about the tests to be a qualifying child, see Rule 8. Income tax preparation If you are a qualifying child of another taxpayer, you cannot claim the EIC. Income tax preparation 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. Income tax preparation Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Income tax preparation Example. Income tax preparation You and your daughter lived with your mother all year. Income tax preparation You are 22 years old, unmarried, and attended a trade school full time. Income tax preparation You had a part-time job and earned $5,700. Income tax preparation You had no other income. Income tax preparation Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Income tax preparation She can claim the EIC if she meets all the other requirements. Income tax preparation Because you are your mother's qualifying child, you cannot claim the EIC. Income tax preparation This is so even if your mother cannot or does not claim the EIC. Income tax preparation Child of person not required to file a return. Income tax preparation   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. Income tax preparation Example 1—return not required. Income tax preparation 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. Income tax preparation As a result, you are not your mother's qualifying child. Income tax preparation You can claim the EIC if you meet all the other requirements to do so. Income tax preparation Example 2—return filed to get refund of tax withheld. Income tax preparation 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. Income tax preparation 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. Income tax preparation As a result, you are not your mother's qualifying child. Income tax preparation You can claim the EIC if you meet all the other requirements to do so. Income tax preparation Example 3—return filed to get EIC. Income tax preparation The facts are the same as in Example 2 except your mother claimed the EIC on her return. Income tax preparation Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Income tax preparation As a result, you are your mother's qualifying child. Income tax preparation You cannot claim the EIC. Income tax preparation 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. Income tax preparation This chapter discusses Rules 11 through 14. Income tax preparation 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. Income tax preparation You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Income tax preparation If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Income tax preparation If you have a qualifying child. Income tax preparation   If you meet Rule 8, you have a qualifying child. Income tax preparation If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Income tax preparation 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. Income tax preparation 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. Income tax preparation It does not matter which spouse meets the age test, as long as one of the spouses does. Income tax preparation You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Income tax preparation 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. Income tax preparation If neither you nor your spouse meets the age test, you cannot claim the EIC. Income tax preparation Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Income tax preparation Death of spouse. Income tax preparation   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. Income tax preparation Example 1. Income tax preparation You are age 28 and unmarried. Income tax preparation You meet the age test. Income tax preparation Example 2—spouse meets age test. Income tax preparation You are married and filing a joint return. Income tax preparation You are age 23 and your spouse is age 27. Income tax preparation You meet the age test because your spouse is at least age 25 but under age 65. Income tax preparation Example 3—spouse dies in 2013. Income tax preparation You are married and filing a joint return with your spouse who died in August 2013. Income tax preparation You are age 67. Income tax preparation Your spouse would have become age 65 in November 2013. Income tax preparation Because your spouse was under age 65 when she died, you meet the age test. Income tax preparation 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. Income tax preparation 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. Income tax preparation 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. Income tax preparation If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Income tax preparation Example 1. Income tax preparation In 2013, you were age 25, single, and living at home with your parents. Income tax preparation You worked and were not a student. Income tax preparation You earned $7,500. Income tax preparation Your parents cannot claim you as a dependent. Income tax preparation 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. Income tax preparation You meet this rule. Income tax preparation You can claim the EIC if you meet all the other requirements. Income tax preparation Example 2. Income tax preparation The facts are the same as in Example 1, except that you earned $2,000. Income tax preparation Your parents can claim you as a dependent but decide not to. Income tax preparation You do not meet this rule. Income tax preparation You cannot claim the credit because your parents could have claimed you as a dependent. Income tax preparation Joint returns. Income tax preparation   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Income tax preparation   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. Income tax preparation But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Income tax preparation Example 1—return filed to get refund of tax withheld. Income tax preparation You are 26 years old. Income tax preparation You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Income tax preparation Neither you nor your wife is required to file a tax return. Income tax preparation You do not have a child. Income tax preparation Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Income tax preparation Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Income tax preparation They can claim exemptions for you and your wife if all the other tests to do so are met. Income tax preparation Example 2—return filed to get EIC. Income tax preparation The facts are the same as in Example 1except no taxes were taken out of your pay. Income tax preparation 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. Income tax preparation 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. Income tax preparation Your parents cannot claim an exemption for either you or your wife. Income tax preparation 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. Income tax preparation ) if all of the following statements are true. Income tax preparation You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Income tax preparation Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Income tax preparation 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. Income tax preparation You lived with that person in the United States for more than half of the year. Income tax preparation 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). Income tax preparation For more details about the tests to be a qualifying child, see Rule 8. Income tax preparation If you are a qualifying child of another taxpayer, you cannot claim the EIC. Income tax preparation 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. Income tax preparation Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Income tax preparation Example. Income tax preparation You lived with your mother all year. Income tax preparation You are age 26, unmarried, and permanently and totally disabled. Income tax preparation Your only income was from a community center where you went three days a week to answer telephones. Income tax preparation You earned $5,000 for the year and provided more than half of your own support. Income tax preparation Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Income tax preparation She can claim the EIC if she meets all the other requirements. Income tax preparation Because you are a qualifying child of your mother, you cannot claim the EIC. Income tax preparation This is so even if your mother cannot or does not claim the EIC. Income tax preparation Joint returns. Income tax preparation   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Income tax preparation   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. Income tax preparation But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Income tax preparation Child of person not required to file a return. Income tax preparation   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. Income tax preparation Example 1—return not required. Income tax preparation You lived all year with your father. Income tax preparation You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Income tax preparation You have no other income, no children, and provided more than half of your own support. Income tax preparation Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Income tax preparation As a result, you are not your father's qualifying child. Income tax preparation You can claim the EIC if you meet all the other requirements to do so. Income tax preparation Example 2—return filed to get refund of tax withheld. Income tax preparation 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. Income tax preparation 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. Income tax preparation As a result, you are not your father's qualifying child. Income tax preparation You can claim the EIC if you meet all the other requirements to do so. Income tax preparation Example 3—return filed to get EIC. Income tax preparation The facts are the same as in Example 2 except your father claimed the EIC on his return. Income tax preparation Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Income tax preparation As a result, you are your father's qualifying child. Income tax preparation You cannot claim the EIC. Income tax preparation 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. Income tax preparation If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Income tax preparation United States. Income tax preparation   This means the 50 states and the District of Columbia. Income tax preparation It does not include Puerto Rico or U. Income tax preparation S. Income tax preparation possessions such as Guam. Income tax preparation Homeless shelter. Income tax preparation   Your home can be any location where you regularly live. Income tax preparation You do not need a traditional home. Income tax preparation If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Income tax preparation Military personnel stationed outside the United States. Income tax preparation   U. Income tax preparation S. Income tax preparation 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. Income tax preparation Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Income tax preparation You need to know the amount of your earned income to see if you meet the rule in this chapter. Income tax preparation You also need to know that amount to figure your EIC. Income tax preparation 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. Income tax preparation Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Income tax preparation Employee pay is earned income only if it is taxable. Income tax preparation Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Income tax preparation But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Income tax preparation Earned income is explained in detail in Rule 7 in chapter 1. Income tax preparation Figuring earned income. Income tax preparation   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. Income tax preparation   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. Income tax preparation   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). Income tax preparation You will then reduce that amount by any amount included on that line and described in the following list. Income tax preparation Scholarship or fellowship grants not reported on a Form W-2. Income tax preparation 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. Income tax preparation Inmate's income. Income tax preparation Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Income tax preparation This includes amounts received for work performed while in a work release program or while in a halfway house. Income tax preparation 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). Income tax preparation Pension or annuity from deferred compensation plans. Income tax preparation 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. Income tax preparation 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). Income tax preparation This amount may be reported in box 11 of your Form W-2. Income tax preparation If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Income tax preparation Clergy. Income tax preparation   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
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Understanding your CP259G Notice

We sent you this notice because our records indicate you did not file a required Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).
 


What you need to do

  • Disregard this notice if you have filed the return within the last four weeks using the same name and EIN listed on the notice.
  • Otherwise, file your required Form 1120-POL immediately according to the instructions on the notice.
    • If you don't think you need to file, complete the Response form enclosed with your notice and mail it to us using the envelope provided.
    • If you filed more than four weeks ago or used a different name or EIN, complete the Response form enclosed with your notice and mail it to us in the envelope provided along with a signed and dated copy of the return.

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Answers to Common Questions

Which organizations must file a Form 1120-POL?
A political organization, whether or not it is tax-exempt, must file Form 1120-POL if it has taxable income for any year in excess of the $100 specific deduction allowed under section 527. An exempt organization that is not a political organization must file Form 1120-POL if it is treated as having political organization taxable income under section 527(f)(1).

When is Form 1120-POL due?
Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. If any due date falls on a Saturday, Sunday or legal holiday, the organization can file the return on the next business day.

More information can be found at Political Organizations - Annual Income Tax Returns.

Can I get help over the phone?
If you have questions and/or need help completing the form, please call 1-877-829-5500. Personal assistance is available Monday through Friday, 7:00 a.m. to 7:00 p.m. CT.

Where can I go for more information about tax-exempt organizations?
For more information on tax-exempt organizations see Tax Information for Charities & Other Non-Profits.


Tips for next year

Review the political organization resources at Tax Information for Political Organizations.


Understanding your notice

Reading your notice
Your notice may look different from the sample because the information contained in your notice is tailored to your situation.

Notice CP259G, Page 1

Notice CP259G, Page 2

Notice CP259G, Page 3

Notice CP259G, Page 4

Page Last Reviewed or Updated: 29-Mar-2014

The Income Tax Preparation

Income tax preparation 1. Income tax preparation   2013 Filing Requirements Table of Contents General RequirementsSelf-employed persons. Income tax preparation Decedents If income tax was withheld from your pay, or if you qualify for the earned income credit, the additional child tax credit, the health coverage tax credit, or the American opportunity credit, you should file a return to get a refund even if you are not otherwise required to file a return. Income tax preparation Do not file a federal income tax return if you do not meet the filing requirements and are not due a refund. Income tax preparation If you need assistance to determine if you need to file a federal income tax return for 2013, go to IRS. Income tax preparation gov and use the Interactive Tax Assistant (ITA). Income tax preparation You can find the ITA by going to IRS. Income tax preparation gov and entering “interactive tax assistant” in the search box. Income tax preparation Open the ITA and click on Do I Need to File a Tax Return under Topics by Category. Income tax preparation General Requirements If you are a U. Income tax preparation S. Income tax preparation citizen or resident alien, you must file a return if your gross income for the year was at least the amount shown on the appropriate line in Table 1-1. Income tax preparation For other filing requirements, see your tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. Income tax preparation If you were a nonresident alien at any time during the year, the filing requirements that apply to you may be different from those that apply to U. Income tax preparation S. Income tax preparation citizens. Income tax preparation See Publication 519, U. Income tax preparation S. Income tax preparation Tax Guide for Aliens. Income tax preparation Table 1-1. Income tax preparation 2013 Filing Requirements Chart for Most Taxpayers Note. Income tax preparation You must file a return if your gross income was at least the amount shown in the last column. Income tax preparation IF your filing status is. Income tax preparation . Income tax preparation . Income tax preparation AND at the end of 2013 you were*. Income tax preparation . Income tax preparation . Income tax preparation THEN file a return if your gross income** was at least. Income tax preparation . Income tax preparation . Income tax preparation Single under 65 $10,000 65 or older $11,500 Head of household under 65 $12,850 65 or older $14,350 Married filing jointly*** under 65 (both spouses) $20,000 65 or older (one spouse) $21,200 65 or older (both spouses) $22,400 Married filing separately any age $3,900 Qualifying widow(er)  with dependent child under 65 $16,100 65 or older $17,300 * If you were born before January 2, 1949, you are considered to be 65 or older at the end of 2013. Income tax preparation ** Gross income means all income you receive in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Income tax preparation It also includes gains, but not losses, reported on Form 8949 or Schedule D. Income tax preparation Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. Income tax preparation But in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. Income tax preparation Do not include any social security benefits unless (a) you are married filing separately and you lived with your spouse at any time in 2013 or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Income tax preparation If (a) or (b) applies, see the Instructions for Form 1040 or Publication 915, Social Security and Equivalent Railroad Retirement Benefits, to figure the taxable part of social security benefits you must include in gross income. Income tax preparation *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Income tax preparation Gross income. Income tax preparation   Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. Income tax preparation If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. Income tax preparation The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Income tax preparation A registered domestic partner in Nevada, Washington, or California generally must report half the combined community income of the individual and his or her domestic partner. Income tax preparation For more information about community property, see Publication 555, Community Property. Income tax preparation   For more information on what to include in gross income, see chapter 2. Income tax preparation Self-employed persons. Income tax preparation    If you are self-employed in a business that provides services (where the production, purchase, or sale of merchandise is not an income-producing factor), gross income from that business is the gross receipts. Income tax preparation   If you are self-employed in a business involving manufacturing, merchandising, or mining, gross income from that business is the total sales minus the cost of goods sold. Income tax preparation Then, to this figure, you add any income from investments and from incidental or outside operations or sources. Income tax preparation See Publication 334, Tax Guide for Small Business, for more information. Income tax preparation Dependents. Income tax preparation   If you could be claimed as a dependent by another taxpayer (that is, you meet the dependency tests in Publication 501), special filing requirements apply. Income tax preparation See Publication 501. Income tax preparation Decedents A personal representative of a decedent's estate can be an executor, administrator, or anyone who is in charge of the decedent's property. Income tax preparation If you are acting as the personal representative of a person who died during the year, you may have to file a final return for that decedent. Income tax preparation You also have other duties, such as notifying the IRS that you are acting as the personal representative. Income tax preparation Form 56, Notice Concerning Fiduciary Relationship, is available for this purpose. Income tax preparation When you file a return for the decedent, either as the personal representative or as the surviving spouse, you should write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Income tax preparation If no personal representative has been appointed by the due date for filing the return, the surviving spouse (on a joint return) should sign the return and write in the signature area “Filing as surviving spouse. Income tax preparation ” For more information, see Publication 559, Survivors, Executors, and Administrators. Income tax preparation Surviving spouse. Income tax preparation   If you are the surviving spouse, the year your spouse died is the last year for which you can file a joint return with that spouse. Income tax preparation After that, if you do not remarry, you must file as a qualifying widow(er) with dependent child, head of household, or single. Income tax preparation For more information about each of these filing statuses, see Publication 501. Income tax preparation   If you remarry before the end of the year in which your spouse died, a final joint return with the deceased spouse cannot be filed. Income tax preparation You can, however, file a joint return with your new spouse. Income tax preparation In that case, the filing status of your deceased spouse for his or her final return is married filing separately. Income tax preparation The level of income that requires you to file an income tax return changes when your filing status changes (see Table 1-1). Income tax preparation Even if you and your deceased spouse were not required to file a return for several years, you may have to file a return for tax years after the year of death. Income tax preparation For example, if your filing status changes from filing jointly in 2012 to single in 2013 because of the death of your spouse, and your gross income is $17,500 for both years, you must file a return for 2013 even though you did not have to file a return for 2012. Income tax preparation Prev  Up  Next   Home   More Online Publications