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Www irs gov efile 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. Www irs gov efile S. Www irs gov efile 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. Www irs gov efile You must meet all seven rules to qualify for the earned income credit. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile Adjusted gross income (AGI). Www irs gov efile   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Www irs gov efile   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Www irs gov efile You do not need to read the rest of this publication. Www irs gov efile Example—AGI is more than limit. Www irs gov efile Your AGI is $38,550, you are single, and you have one qualifying child. Www irs gov efile You cannot claim the EIC because your AGI is not less than $37,870. Www irs gov efile 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. Www irs gov efile Community property. Www irs gov efile   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. Www irs gov efile This is different from the community property rules that apply under Rule 7. Www irs gov efile 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). Www irs gov efile Any qualifying child listed on Schedule EIC also must have a valid SSN. Www irs gov efile (See Rule 8 if you have a qualifying child. Www irs gov efile ) 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. Www irs gov efile An example of a federally funded benefit is Medicaid. Www irs gov efile 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. Www irs gov efile S. Www irs gov efile citizen or permanent resident, ask the SSA for a new social security card without the legend. Www irs gov efile If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Www irs gov efile S. Www irs gov efile Individual Income Tax Return, to claim the EIC. Www irs gov efile U. Www irs gov efile S. Www irs gov efile citizen. Www irs gov efile   If you were a U. Www irs gov efile S. Www irs gov efile citizen when you received your SSN, you have a valid SSN. Www irs gov efile Valid for work only with INS authorization or DHS authorization. Www irs gov efile   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. Www irs gov efile SSN missing or incorrect. Www irs gov efile   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Www irs gov efile Other taxpayer identification number. Www irs gov efile   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). Www irs gov efile ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Www irs gov efile No SSN. Www irs gov efile   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). Www irs gov efile You cannot claim the EIC. Www irs gov efile Getting an SSN. Www irs gov efile   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. Www irs gov efile You can get Form SS-5 online at www. Www irs gov efile socialsecurity. Www irs gov efile gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Www irs gov efile Filing deadline approaching and still no SSN. Www irs gov efile   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Www irs gov efile Request an automatic 6-month extension of time to file your return. Www irs gov efile You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Www irs gov efile S. Www irs gov efile Individual Income Tax Return. Www irs gov efile For more information, see the instructions for Form 4868. Www irs gov efile File the return on time without claiming the EIC. Www irs gov efile After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Www irs gov efile Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Www irs gov efile 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. Www irs gov efile Your filing status cannot be “Married filing separately. Www irs gov efile ” Spouse did not live with you. Www irs gov efile   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. Www irs gov efile In that case, you may be able to claim the EIC. Www irs gov efile For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Www irs gov efile Rule 4—You Must Be a U. Www irs gov efile S. Www irs gov efile 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. Www irs gov efile You can use that filing status only if one spouse is a U. Www irs gov efile S. Www irs gov efile citizen or resident alien and you choose to treat the nonresident spouse as a U. Www irs gov efile S. Www irs gov efile resident. Www irs gov efile If you make this choice, you and your spouse are taxed on your worldwide income. Www irs gov efile If you need more information on making this choice, get Publication 519, U. Www irs gov efile S. Www irs gov efile Tax Guide for Aliens. Www irs gov efile 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). Www irs gov efile 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. Www irs gov efile You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Www irs gov efile U. Www irs gov efile S. Www irs gov efile possessions are not foreign countries. Www irs gov efile See Publication 54, Tax Guide for U. Www irs gov efile S. Www irs gov efile Citizens and Resident Aliens Abroad, for more detailed information. Www irs gov efile 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. Www irs gov efile If your investment income is more than $3,300, you cannot claim the credit. Www irs gov efile Form 1040EZ. Www irs gov efile   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. Www irs gov efile Form 1040A. Www irs gov efile   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. Www irs gov efile Form 1040. Www irs gov efile   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Www irs gov efile    Worksheet 1. Www irs gov efile 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. Www irs gov efile Interest and Dividends         1. Www irs gov efile Enter any amount from Form 1040, line 8a 1. Www irs gov efile   2. Www irs gov efile Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Www irs gov efile   3. Www irs gov efile Enter any amount from Form 1040, line 9a 3. Www irs gov efile   4. Www irs gov efile 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. Www irs gov efile (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Www irs gov efile ) 4. Www irs gov efile   Capital Gain Net Income         5. Www irs gov efile Enter the amount from Form 1040, line 13. Www irs gov efile If the amount on that line is a loss, enter -0- 5. Www irs gov efile       6. Www irs gov efile Enter any gain from Form 4797, Sales of Business Property, line 7. Www irs gov efile If the amount on that line is a loss, enter -0-. Www irs gov efile (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Www irs gov efile ) 6. Www irs gov efile       7. Www irs gov efile Substract line 6 of this worksheet from line 5 of this worksheet. Www irs gov efile (If the result is less than zero, enter -0-. Www irs gov efile ) 7. Www irs gov efile   Royalties and Rental Income From Personal Property         8. Www irs gov efile 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. Www irs gov efile       9. Www irs gov efile 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. Www irs gov efile       10. Www irs gov efile Subtract the amount on line 9 of this worksheet from the amount on line 8. Www irs gov efile (If the result is less than zero, enter -0-. Www irs gov efile ) 10. Www irs gov efile   Passive Activities         11. Www irs gov efile Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Www irs gov efile (g)), 34a (col. Www irs gov efile (d)), or 40). Www irs gov efile (See instructions below for lines 11 and 12. Www irs gov efile ) 11. Www irs gov efile       12. Www irs gov efile Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Www irs gov efile (f)), 34b (col. Www irs gov efile (c)), or 40). Www irs gov efile (See instructions below for lines 11 and 12. Www irs gov efile ) 12. Www irs gov efile       13. Www irs gov efile Combine the amounts on lines 11 and 12 of this worksheet. Www irs gov efile (If the result is less than zero, enter -0-. Www irs gov efile ) 13. Www irs gov efile   14. Www irs gov efile Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Www irs gov efile Enter the total. Www irs gov efile This is your investment income 14. Www irs gov efile   15. Www irs gov efile Is the amount on line 14 more than $3,300? ❑ Yes. Www irs gov efile You cannot take the credit. Www irs gov efile  ❑ No. Www irs gov efile 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). Www irs gov efile       Instructions for lines 11 and 12. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile Worksheet 2. Www irs gov efile Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Www irs gov efile Note. Www irs gov efile Fill out a separate Worksheet 2 for each Form 8814. Www irs gov efile     1. Www irs gov efile Enter the amount from Form 8814, line 2a 1. Www irs gov efile   2. Www irs gov efile Enter the amount from Form 8814, line 2b 2. Www irs gov efile   3. Www irs gov efile Subtract line 2 from line 1 3. Www irs gov efile   4. Www irs gov efile Enter the amount from Form 8814, line 1a 4. Www irs gov efile   5. Www irs gov efile Add lines 3 and 4 5. Www irs gov efile   6. Www irs gov efile Enter the amount of the child's Alaska Permanent Fund dividend 6. Www irs gov efile   7. Www irs gov efile Divide line 6 by line 5. Www irs gov efile Enter the result as a decimal (rounded to at least three places) 7. Www irs gov efile   8. Www irs gov efile Enter the amount from Form 8814, line 12 8. Www irs gov efile   9. Www irs gov efile Multiply line 7 by line 8 9. Www irs gov efile   10. Www irs gov efile Subtract line 9 from line 8. Www irs gov efile Enter the result on line 4 of Worksheet 1 10. Www irs gov efile     (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. Www irs gov efile )     Example—completing Worksheet 2. Www irs gov efile 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. Www irs gov efile You choose to report this income on your return. Www irs gov efile You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Www irs gov efile After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Www irs gov efile 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. Www irs gov efile 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Www irs gov efile You then enter $200 on line 4 of Worksheet 1. Www irs gov efile 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. Www irs gov efile If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Www irs gov efile If you are an employee, earned income includes all the taxable income you get from your employer. Www irs gov efile Rule 15 has information that will help you figure the amount of your earned income. Www irs gov efile If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Www irs gov efile Earned Income Earned income includes all of the following types of income. Www irs gov efile Wages, salaries, tips, and other taxable employee pay. Www irs gov efile Employee pay is earned income only if it is taxable. Www irs gov efile Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Www irs gov efile But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Www irs gov efile Net earnings from self-employment. Www irs gov efile Gross income received as a statutory employee. Www irs gov efile Wages, salaries, and tips. Www irs gov efile    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Www irs gov efile You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Www irs gov efile Nontaxable combat pay election. Www irs gov efile   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Www irs gov efile The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Www irs gov efile Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Www irs gov efile For details, see Nontaxable combat pay in chapter 4. Www irs gov efile Net earnings from self-employment. Www irs gov efile   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. Www irs gov efile Minister's housing. Www irs gov efile   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. Www irs gov efile 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). Www irs gov efile Statutory employee. Www irs gov efile   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Www irs gov efile You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Www irs gov efile Strike benefits. Www irs gov efile   Strike benefits paid by a union to its members are earned income. Www irs gov efile 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. Www irs gov efile Each approved form exempts certain income from social security taxes. Www irs gov efile Each form is discussed here in terms of what is or is not earned income for the EIC. Www irs gov efile Form 4361. Www irs gov efile   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Www irs gov efile This includes wages, salaries, tips, and other taxable employee compensation. Www irs gov efile A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Www irs gov efile Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Www irs gov efile Examples include fees for performing marriages and honoraria for delivering speeches. Www irs gov efile Form 4029. Www irs gov efile   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Www irs gov efile However, amounts you received as a self-employed individual do not count as earned income. Www irs gov efile Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Www irs gov efile 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. Www irs gov efile Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Www irs gov efile You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Www irs gov efile Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Www irs gov efile Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Www irs gov efile Disability insurance payments. Www irs gov efile   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Www irs gov efile It does not matter whether you have reached minimum retirement age. Www irs gov efile If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Www irs gov efile ” 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. Www irs gov efile Do not include any of these items in your earned income. Www irs gov efile Earnings while an inmate. Www irs gov efile   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Www irs gov efile This includes amounts for work performed while in a work release program or while in a halfway house. Www irs gov efile Workfare payments. Www irs gov efile   Nontaxable workfare payments are not earned income for the EIC. Www irs gov efile 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. Www irs gov efile Community property. Www irs gov efile   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. Www irs gov efile That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Www irs gov efile 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. Www irs gov efile Nevada, Washington, and California domestic partners. Www irs gov efile   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Www irs gov efile Your earned income for the EIC does not include any amount earned by your partner. Www irs gov efile Your earned income includes the entire amount you earned. Www irs gov efile For details, see Publication 555. Www irs gov efile Conservation Reserve Program (CRP) payments. Www irs gov efile   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. Www irs gov efile Nontaxable military pay. Www irs gov efile   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Www irs gov efile Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Www irs gov efile See Publication 3, Armed Forces' Tax Guide, for more information. Www irs gov efile    Combat pay. Www irs gov efile You can elect to include your nontaxable combat pay in earned income for the EIC. Www irs gov efile See Nontaxable combat pay in chapter 4. Www irs gov efile 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. Www irs gov efile This chapter discusses Rules 8 through 10. Www irs gov efile 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. Www irs gov efile You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Www irs gov efile (You cannot file Form 1040EZ. Www irs gov efile ) You also must complete Schedule EIC and attach it to your return. Www irs gov efile If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Www irs gov efile No qualifying child. Www irs gov efile   If you do not meet Rule 8, you do not have a qualifying child. Www irs gov efile Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Www irs gov efile 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. Www irs gov efile The fours tests are: Relationship, Age, Residency, and Joint return. Www irs gov efile The four tests are illustrated in Figure 1. Www irs gov efile The paragraphs that follow contain more information about each test. Www irs gov efile 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). Www irs gov efile The following definitions clarify the relationship test. Www irs gov efile Adopted child. Www irs gov efile   An adopted child is always treated as your own child. Www irs gov efile The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Www irs gov efile Foster child. Www irs gov efile   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. Www irs gov efile (An authorized placement agency includes a state or local government agency. Www irs gov efile It also includes a tax-exempt organization licensed by a state. Www irs gov efile In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Www irs gov efile ) Example. Www irs gov efile 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. Www irs gov efile Debbie is your foster child. Www irs gov efile Figure 1. Www irs gov efile Tests for Qualifying Child Please click here for the text description of the image. Www irs gov efile 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. Www irs gov efile The following examples and definitions clarify the age test. Www irs gov efile Example 1—child not under age 19. Www irs gov efile Your son turned 19 on December 10. Www irs gov efile 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. Www irs gov efile Example 2—child not younger than you or your spouse. Www irs gov efile Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Www irs gov efile He is not disabled. Www irs gov efile Both you and your spouse are 21 years old, and you file a joint return. Www irs gov efile Your brother is not your qualifying child because he is not younger than you or your spouse. Www irs gov efile Example 3—child younger than your spouse but not younger than you. Www irs gov efile The facts are the same as in Example 2 except that your spouse is 25 years old. Www irs gov efile Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Www irs gov efile Student defined. Www irs gov efile   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. Www irs gov efile   The 5 calendar months need not be consecutive. Www irs gov efile   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. Www irs gov efile School defined. Www irs gov efile   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Www irs gov efile However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Www irs gov efile Vocational high school students. Www irs gov efile   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. Www irs gov efile Permanently and totally disabled. Www irs gov efile   Your child is permanently and totally disabled if both of the following apply. Www irs gov efile He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Www irs gov efile A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Www irs gov efile Residency Test Your child must have lived with you in the United States for more than half of 2013. Www irs gov efile The following definitions clarify the residency test. Www irs gov efile United States. Www irs gov efile   This means the 50 states and the District of Columbia. Www irs gov efile It does not include Puerto Rico or U. Www irs gov efile S. Www irs gov efile possessions such as Guam. Www irs gov efile Homeless shelter. Www irs gov efile   Your home can be any location where you regularly live. Www irs gov efile You do not need a traditional home. Www irs gov efile 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. Www irs gov efile Military personnel stationed outside the United States. Www irs gov efile   U. Www irs gov efile S. Www irs gov efile 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. Www irs gov efile Extended active duty. Www irs gov efile   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Www irs gov efile 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. Www irs gov efile Birth or death of child. Www irs gov efile    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. Www irs gov efile Temporary absences. Www irs gov efile   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. Www irs gov efile Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Www irs gov efile Kidnapped child. Www irs gov efile   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. Www irs gov efile 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. Www irs gov efile This treatment applies for all years until the child is returned. Www irs gov efile 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. Www irs gov efile   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Www irs gov efile Joint Return Test To meet this test, the child cannot file a joint return for the year. Www irs gov efile Exception. Www irs gov efile   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. Www irs gov efile Example 1—child files joint return. Www irs gov efile You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Www irs gov efile He earned $25,000 for the year. Www irs gov efile The couple files a joint return. Www irs gov efile Because your daughter and her husband file a joint return, she is not your qualifying child. Www irs gov efile Example 2—child files joint return to get refund of tax withheld. Www irs gov efile Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Www irs gov efile They do not have a child. Www irs gov efile Neither is required to file a tax return. Www irs gov efile Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Www irs gov efile The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Www irs gov efile Example 3—child files joint return to claim American opportunity credit. Www irs gov efile The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile The exception to the joint return test does not apply, so your son is not your qualifying child. Www irs gov efile Married child. Www irs gov efile   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. Www irs gov efile    Social security number. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile   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. Www irs gov efile For more information about SSNs, see Rule 2. Www irs gov efile 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. Www irs gov efile However, only one of these persons can actually treat the child as a qualifying child. Www irs gov efile 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). Www irs gov efile The exemption for the child. Www irs gov efile The child tax credit. Www irs gov efile Head of household filing status. Www irs gov efile The credit for child and dependent care expenses. Www irs gov efile The exclusion for dependent care benefits. Www irs gov efile The EIC. Www irs gov efile The other person cannot take any of these benefits based on this qualifying child. Www irs gov efile In other words, you and the other person cannot agree to divide these tax benefits between you. Www irs gov efile The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Www irs gov efile The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Www irs gov efile However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Www irs gov efile Tiebreaker rules. Www irs gov efile   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. Www irs gov efile If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile See Example 8. Www irs gov efile   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. Www irs gov efile See Examples 1 through 13. Www irs gov efile   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. Www irs gov efile If the other person cannot claim the EIC. Www irs gov efile   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. Www irs gov efile See Examples 6 and 7. Www irs gov efile 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. Www irs gov efile Examples. Www irs gov efile    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Www irs gov efile Example 1—child lived with parent and grandparent. Www irs gov efile You and your 2-year-old son Jimmy lived with your mother all year. Www irs gov efile You are 25 years old, unmarried, and your AGI is $9,000. Www irs gov efile Your only income was $9,000 from a part-time job. Www irs gov efile Your mother's only income was $20,000 from her job, and her AGI is $20,000. Www irs gov efile Jimmy's father did not live with you or Jimmy. Www irs gov efile The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Www irs gov efile 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. Www irs gov efile 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). Www irs gov efile He is not a qualifying child of anyone else, including his father. Www irs gov efile 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). Www irs gov efile Example 2—parent has higher AGI than grandparent. Www irs gov efile The facts are the same as in Example 1 except your AGI is $25,000. Www irs gov efile Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Www irs gov efile Only you can claim him. Www irs gov efile Example 3—two persons claim same child. Www irs gov efile The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile Example 4—qualifying children split between two persons. Www irs gov efile 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. Www irs gov efile Only one of you can claim each child. Www irs gov efile However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Www irs gov efile For example, if you claim one child, your mother can claim the other two. Www irs gov efile Example 5—taxpayer who is a qualifying child. Www irs gov efile The facts are the same as in Example 1 except that you are only 18 years old. Www irs gov efile This means you are a qualifying child of your mother. Www irs gov efile Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Www irs gov efile Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Www irs gov efile 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. Www irs gov efile Example 6—grandparent with too much earned income to claim EIC. Www irs gov efile The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Www irs gov efile Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Www irs gov efile Example 7—parent with too much earned income to claim EIC. Www irs gov efile The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Www irs gov efile Your earned income is too high for you to claim the EIC. Www irs gov efile But your mother cannot claim the EIC either, because her AGI is not higher than yours. Www irs gov efile Example 8—child lived with both parents and grandparent. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile In other words, each parent's AGI can be treated as $15,000. Www irs gov efile Example 9—separated parents. Www irs gov efile You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Www irs gov efile In August and September, Joey lived with you. Www irs gov efile For the rest of the year, Joey lived with your husband, who is Joey's father. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile You and your husband will file separate returns. Www irs gov efile Your husband agrees to let you treat Joey as a qualifying child. Www irs gov efile 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. Www irs gov efile However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Www irs gov efile See Rule 3. Www irs gov efile Example 10—separated parents claim same child. Www irs gov efile The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Www irs gov efile In this case, only your husband will be allowed to treat Joey as a qualifying child. Www irs gov efile This is because, during 2013, the boy lived with him longer than with you. Www irs gov efile You cannot claim the EIC (either with or without a qualifying child). Www irs gov efile 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. Www irs gov efile See Rule 3. Www irs gov efile Example 11—unmarried parents. Www irs gov efile You, your 5-year-old son, and your son's father lived together all year. Www irs gov efile You and your son's father are not married. Www irs gov efile 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. Www irs gov efile Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Www irs gov efile Neither of you had any other income. Www irs gov efile Your son's father agrees to let you treat the child as a qualifying child. Www irs gov efile 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. Www irs gov efile Example 12—unmarried parents claim same child. Www irs gov efile 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. Www irs gov efile In this case, only your son's father will be allowed to treat your son as a qualifying child. Www irs gov efile This is because his AGI, $14,000, is more than your AGI, $12,000. Www irs gov efile You cannot claim the EIC (either with or without a qualifying child). Www irs gov efile Example 13—child did not live with a parent. Www irs gov efile You and your 7-year-old niece, your sister's child, lived with your mother all year. Www irs gov efile You are 25 years old, and your AGI is $9,300. Www irs gov efile Your only income was from a part-time job. Www irs gov efile Your mother's AGI is $15,000. Www irs gov efile Her only income was from her job. Www irs gov efile Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Www irs gov efile 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. Www irs gov efile However, only your mother can treat her as a qualifying child. Www irs gov efile This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Www irs gov efile Special rule for divorced or separated parents (or parents who live apart). Www irs gov efile   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. Www irs gov efile 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. Www irs gov efile The child received over half of his or her support for the year from the parents. Www irs gov efile The child is in the custody of one or both parents for more than half of 2013. Www irs gov efile Either of the following statements is true. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile For details, see Publication 501. Www irs gov efile Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Www irs gov efile Applying Rule 9 to divorced or separated parents (or parents who live apart). Www irs gov efile   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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile Example 1. Www irs gov efile You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Www irs gov efile Your AGI is $10,000. Www irs gov efile Your mother’s AGI is $25,000. Www irs gov efile Your son's father did not live with you or your son. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile You and your mother did not have any child care expenses or dependent care benefits. Www irs gov efile 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. Www irs gov efile Example 2. Www irs gov efile The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Www irs gov efile Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Www irs gov efile Example 3. Www irs gov efile 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. Www irs gov efile Your mother also claims him as a qualifying child for head of household filing status. Www irs gov efile You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Www irs gov efile The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Www irs gov efile 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. Www irs gov efile ) if all of the following statements are true. Www irs gov efile You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Www irs gov efile Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Www irs gov efile 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. Www irs gov efile You lived with that person in the United States for more than half of the year. Www irs gov efile 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). Www irs gov efile For more details about the tests to be a qualifying child, see Rule 8. Www irs gov efile If you are a qualifying child of another taxpayer, you cannot claim the EIC. Www irs gov efile 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. Www irs gov efile Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Www irs gov efile Example. Www irs gov efile You and your daughter lived with your mother all year. Www irs gov efile You are 22 years old, unmarried, and attended a trade school full time. Www irs gov efile You had a part-time job and earned $5,700. Www irs gov efile You had no other income. Www irs gov efile Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Www irs gov efile She can claim the EIC if she meets all the other requirements. Www irs gov efile Because you are your mother's qualifying child, you cannot claim the EIC. Www irs gov efile This is so even if your mother cannot or does not claim the EIC. Www irs gov efile Child of person not required to file a return. Www irs gov efile   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. Www irs gov efile Example 1—return not required. Www irs gov efile 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. Www irs gov efile As a result, you are not your mother's qualifying child. Www irs gov efile You can claim the EIC if you meet all the other requirements to do so. Www irs gov efile Example 2—return filed to get refund of tax withheld. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile As a result, you are not your mother's qualifying child. Www irs gov efile You can claim the EIC if you meet all the other requirements to do so. Www irs gov efile Example 3—return filed to get EIC. Www irs gov efile The facts are the same as in Example 2 except your mother claimed the EIC on her return. Www irs gov efile Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Www irs gov efile As a result, you are your mother's qualifying child. Www irs gov efile You cannot claim the EIC. Www irs gov efile 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. Www irs gov efile This chapter discusses Rules 11 through 14. Www irs gov efile 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. Www irs gov efile You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Www irs gov efile If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Www irs gov efile If you have a qualifying child. Www irs gov efile   If you meet Rule 8, you have a qualifying child. Www irs gov efile If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile It does not matter which spouse meets the age test, as long as one of the spouses does. Www irs gov efile You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Www irs gov efile 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. Www irs gov efile If neither you nor your spouse meets the age test, you cannot claim the EIC. Www irs gov efile Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www irs gov efile Death of spouse. Www irs gov efile   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. Www irs gov efile Example 1. Www irs gov efile You are age 28 and unmarried. Www irs gov efile You meet the age test. Www irs gov efile Example 2—spouse meets age test. Www irs gov efile You are married and filing a joint return. Www irs gov efile You are age 23 and your spouse is age 27. Www irs gov efile You meet the age test because your spouse is at least age 25 but under age 65. Www irs gov efile Example 3—spouse dies in 2013. Www irs gov efile You are married and filing a joint return with your spouse who died in August 2013. Www irs gov efile You are age 67. Www irs gov efile Your spouse would have become age 65 in November 2013. Www irs gov efile Because your spouse was under age 65 when she died, you meet the age test. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Www irs gov efile Example 1. Www irs gov efile In 2013, you were age 25, single, and living at home with your parents. Www irs gov efile You worked and were not a student. Www irs gov efile You earned $7,500. Www irs gov efile Your parents cannot claim you as a dependent. Www irs gov efile 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. Www irs gov efile You meet this rule. Www irs gov efile You can claim the EIC if you meet all the other requirements. Www irs gov efile Example 2. Www irs gov efile The facts are the same as in Example 1, except that you earned $2,000. Www irs gov efile Your parents can claim you as a dependent but decide not to. Www irs gov efile You do not meet this rule. Www irs gov efile You cannot claim the credit because your parents could have claimed you as a dependent. Www irs gov efile Joint returns. Www irs gov efile   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Www irs gov efile   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. Www irs gov efile But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Www irs gov efile Example 1—return filed to get refund of tax withheld. Www irs gov efile You are 26 years old. Www irs gov efile You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Www irs gov efile Neither you nor your wife is required to file a tax return. Www irs gov efile You do not have a child. Www irs gov efile Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Www irs gov efile Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Www irs gov efile They can claim exemptions for you and your wife if all the other tests to do so are met. Www irs gov efile Example 2—return filed to get EIC. Www irs gov efile The facts are the same as in Example 1except no taxes were taken out of your pay. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile Your parents cannot claim an exemption for either you or your wife. Www irs gov efile 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. Www irs gov efile ) if all of the following statements are true. Www irs gov efile You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Www irs gov efile Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Www irs gov efile 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. Www irs gov efile You lived with that person in the United States for more than half of the year. Www irs gov efile 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). Www irs gov efile For more details about the tests to be a qualifying child, see Rule 8. Www irs gov efile If you are a qualifying child of another taxpayer, you cannot claim the EIC. Www irs gov efile 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. Www irs gov efile Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www irs gov efile Example. Www irs gov efile You lived with your mother all year. Www irs gov efile You are age 26, unmarried, and permanently and totally disabled. Www irs gov efile Your only income was from a community center where you went three days a week to answer telephones. Www irs gov efile You earned $5,000 for the year and provided more than half of your own support. Www irs gov efile Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Www irs gov efile She can claim the EIC if she meets all the other requirements. Www irs gov efile Because you are a qualifying child of your mother, you cannot claim the EIC. Www irs gov efile This is so even if your mother cannot or does not claim the EIC. Www irs gov efile Joint returns. Www irs gov efile   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Www irs gov efile   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. Www irs gov efile But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Www irs gov efile Child of person not required to file a return. Www irs gov efile   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. Www irs gov efile Example 1—return not required. Www irs gov efile You lived all year with your father. Www irs gov efile You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Www irs gov efile You have no other income, no children, and provided more than half of your own support. Www irs gov efile Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Www irs gov efile As a result, you are not your father's qualifying child. Www irs gov efile You can claim the EIC if you meet all the other requirements to do so. Www irs gov efile Example 2—return filed to get refund of tax withheld. Www irs gov efile 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. Www irs gov efile 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. Www irs gov efile As a result, you are not your father's qualifying child. Www irs gov efile You can claim the EIC if you meet all the other requirements to do so. Www irs gov efile Example 3—return filed to get EIC. Www irs gov efile The facts are the same as in Example 2 except your father claimed the EIC on his return. Www irs gov efile Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Www irs gov efile As a result, you are your father's qualifying child. Www irs gov efile You cannot claim the EIC. Www irs gov efile 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. Www irs gov efile If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Www irs gov efile United States. Www irs gov efile   This means the 50 states and the District of Columbia. Www irs gov efile It does not include Puerto Rico or U. Www irs gov efile S. Www irs gov efile possessions such as Guam. Www irs gov efile Homeless shelter. Www irs gov efile   Your home can be any location where you regularly live. Www irs gov efile You do not need a traditional home. Www irs gov efile If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Www irs gov efile Military personnel stationed outside the United States. Www irs gov efile   U. Www irs gov efile S. Www irs gov efile 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. Www irs gov efile Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Www irs gov efile You need to know the amount of your earned income to see if you meet the rule in this chapter. Www irs gov efile You also need to know that amount to figure your EIC. Www irs gov efile 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. Www irs gov efile Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Www irs gov efile Employee pay is earned income only if it is taxable. Www irs gov efile Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Www irs gov efile But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Www irs gov efile Earned income is explained in detail in Rule 7 in chapter 1. Www irs gov efile Figuring earned income. Www irs gov efile   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. Www irs gov efile   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. Www irs gov efile   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). Www irs gov efile You will then reduce that amount by any amount included on that line and described in the following list. Www irs gov efile Scholarship or fellowship grants not reported on a Form W-2. Www irs gov efile 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. Www irs gov efile Inmate's income. Www irs gov efile Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Www irs gov efile This includes amounts received for work performed while in a work release program or while in a halfway house. Www irs gov efile 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). Www irs gov efile Pension or annuity from deferred compensation plans. Www irs gov efile 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. Www irs gov efile 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). Www irs gov efile This amount may be reported in box 11 of your Form W-2. Www irs gov efile If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Www irs gov efile Clergy. Www irs gov efile   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 CP01S Notice

We received your Form 14039 or similar statement for your identity theft claim. We'll contact you when we finish processing your case or if we need additional information.


What you need to do

  • Continue to file your federal income tax returns as required by law.

You may want to


Answers to Common Questions

Q. Who should I contact if I have more questions about my account related to identity theft?

A. The Identity Protection Specialized Unit can assist you with questions regarding identity theft related to your account. You can call them at 1-800-908-4490. The number can also be found on your notice. For all other tax account related questions, contact the IRS help desk at 1-800-829-1040.

Where can I find more information on preventing identity theft?


Tips for next year

File your return as you normally would. If we find that someone is attempting to use your SSN for filing a tax return we will notify you and provide you with a PIN to use when filing your return.

 

 

 

Page Last Reviewed or Updated: 21-Jan-2014

Printable samples of this notice (PDF)

 

 

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Www Irs Gov Efile

Www irs gov efile Publication 595 - Main Contents Table of Contents Capital Construction FundCCF Accounts Types of Accounts You Must Maintain Within a CCF Tax Treatment of CCF Deposits Tax Treatment of CCF Earnings Tax Treatment of CCF Withdrawals More Information How To Get Tax Help Capital Construction Fund The following sections discuss CCF accounts and the types of bookkeeping accounts you must maintain when you invest in a CCF account. Www irs gov efile They also discuss the income tax treatment of CCF deposits, earnings, and withdrawals. Www irs gov efile CCF Accounts This section explains who can open a CCF account and how to use the account to defer income tax. Www irs gov efile Opening a CCF account. Www irs gov efile   If you are a U. Www irs gov efile S. Www irs gov efile citizen and you own or lease one or more eligible vessels (defined later), you can open a CCF account. Www irs gov efile However, before you open your CCF account, you must enter into an agreement with the Secretary of Commerce through the NMFS. Www irs gov efile This agreement will establish the following. Www irs gov efile Agreement vessels. Www irs gov efile Eligible vessels named in the agreement that will be the basis for the deferral of income tax. Www irs gov efile Planned use of withdrawals. Www irs gov efile Use of CCF funds to acquire, build, or rebuild a vessel. Www irs gov efile CCF depository. Www irs gov efile Where your CCF funds will be held. Www irs gov efile    You can request an application kit or get additional information from NMFS at the following address. Www irs gov efile NOAA/NMFS, Financial Services Division, F/MB5 Capital Construction Fund Program 1315 East-West Highway Silver Spring, MD 20910-3282    You can obtain information on the Capital Construction Fund Program at the following website: www. Www irs gov efile nmfs. Www irs gov efile noaa. Www irs gov efile gov/mb/financial_services/ccf. Www irs gov efile htm. Www irs gov efile    You can call NMFS to request an application kit or get additional information at (301) 713-2393 (ext. Www irs gov efile 204). Www irs gov efile Their fax number is (301) 713-1939. Www irs gov efile Eligible vessels. Www irs gov efile   There are two types of vessels that may be considered eligible, those weighing 5 tons or more and those weighing less than 5 tons. Www irs gov efile For each type, certain requirements must be met. Www irs gov efile Vessel weighing 5 tons or more. Www irs gov efile   To be considered eligible, the vessel must meet all the following requirements. Www irs gov efile Be built or rebuilt in the United States. Www irs gov efile Be documented under the laws of the United States. Www irs gov efile Be used commercially in the fisheries of the United States. Www irs gov efile Be operated in the foreign or domestic commerce of the United States. Www irs gov efile Vessel weighing less than 5 tons. Www irs gov efile   A small vessel, weighing at least 2 net tons but less than 5 net tons, must meet all the following requirements to be considered eligible. Www irs gov efile Be built or rebuilt in the United States. Www irs gov efile Be owned by a U. Www irs gov efile S. Www irs gov efile citizen. Www irs gov efile Have a home port in the United States. Www irs gov efile Be used commercially in the fisheries of the United States. Www irs gov efile Deferring tax on CCF deposits and earnings. Www irs gov efile   You can use a CCF account to defer income tax by taking the following actions. Www irs gov efile Making deposits to your CCF account from taxable income. Www irs gov efile Excluding from income deposits assigned to certain accounts (discussed later). Www irs gov efile Making withdrawals from your CCF account when you acquire, build, or rebuild fishing vessels. Www irs gov efile Reducing the basis of fishing vessels you acquire, build, or rebuild to recapture amounts previously excluded from tax. Www irs gov efile    Reporting requirements. Www irs gov efile Beginning with the tax year in which you establish your agreement, you must report annual deposit and withdrawal activity to the NMFS on NOAA Form 34-82. Www irs gov efile This form is due within 30 days after you file your federal income tax return even if no deposits or withdrawals are made. Www irs gov efile For more information, contact the NMFS at the address or phone number given earlier. Www irs gov efile Types of Accounts You Must Maintain Within a CCF This section discusses the three types of bookkeeping accounts you must maintain when you invest in a CCF account. Www irs gov efile Your total CCF deposits and earnings for any given year are limited to the amount attributed to these three accounts for that year. Www irs gov efile Capital account. Www irs gov efile   The capital account consists primarily of amounts attributable to the following items. Www irs gov efile Allowable depreciation deductions for agreement vessels. Www irs gov efile Any nontaxable return of capital from either (a) or (b), below. Www irs gov efile The sale or other disposition of agreement vessels. Www irs gov efile Insurance or indemnity proceeds attributable to agreement vessels. Www irs gov efile Any tax-exempt interest earned on state or local bonds in your CCF account. Www irs gov efile Capital gain account. Www irs gov efile   The capital gain account consists of amounts attributable to the following items reduced by any capital losses from assets held in your CCF account for more than 6 months. Www irs gov efile Any capital gain from either of the following sources. Www irs gov efile The sale or other disposition of agreement vessels held for more than 6 months. Www irs gov efile Insurance or indemnity proceeds attributable to agreement vessels held for more than 6 months. Www irs gov efile Any capital gain from assets held in your CCF account for more than 6 months. Www irs gov efile Ordinary income account. Www irs gov efile   The ordinary income account consists of amounts attributable to the following items. Www irs gov efile Any earnings (without regard to the carryback of any net operating or net capital loss) from the operation of agreement vessels in the fisheries of the United States or in the foreign or domestic commerce of the United States. Www irs gov efile Any capital gain from the following sources reduced by any capital losses from assets held in your CCF account for 6 months or less. Www irs gov efile The sale or other disposition of agreement vessels held for 6 months or less. Www irs gov efile Insurance or indemnity proceeds attributable to agreement vessels held for 6 months or less. Www irs gov efile Any capital gain from assets held in your CCF account for 6 months or less. Www irs gov efile Any ordinary income (such as depreciation recapture) from either of the following sources. Www irs gov efile The sale or other disposition of agreement vessels. Www irs gov efile Insurance or indemnity proceeds attributable to agreement vessels. Www irs gov efile Any interest (not including tax-exempt interest from state and local bonds), most dividends, and other ordinary income earned on the assets in your CCF account. Www irs gov efile Tax Treatment of CCF Deposits This section explains the tax treatment of income used as the basis for CCF deposits. Www irs gov efile Capital gains. Www irs gov efile   Do not report any transaction that produces a capital gain if you deposit the net proceeds into your CCF account. Www irs gov efile This treatment applies to either of the following transactions. Www irs gov efile The sale or other disposition of an agreement vessel. Www irs gov efile The receipt of insurance or indemnity proceeds attributable to an agreement vessel. Www irs gov efile Depreciation recapture. Www irs gov efile   Do not report any transaction that produces depreciation recapture if you deposit the net proceeds into your CCF account. Www irs gov efile This treatment applies to either of the following transactions. Www irs gov efile The sale or other disposition of an agreement vessel. Www irs gov efile The receipt of insurance or indemnity proceeds attributable to an agreement vessel. Www irs gov efile Earnings from operations. Www irs gov efile   Report earnings from the operation of agreement vessels on your Schedule C or C-EZ (Form 1040) even if you deposit part of these earnings into your CCF account. Www irs gov efile You subtract any part of the earnings you deposited into your CCF account from the amount you would otherwise enter as taxable income on Form 1040, line 43 (for 2005). Www irs gov efile Next to line 43, write “CCF” and the amount of the deposits. Www irs gov efile Do not deduct these CCF deposits on Schedule C or C-EZ (Form 1040). Www irs gov efile If you deposit earnings from operations into your CCF account and you must complete other forms such as Form 6251, Alternative Minimum Tax (Individuals), or a worksheet for Schedule D (Form 1040), you will need to make an extra computation. Www irs gov efile When the other form instructs you to use the amount from Form 1040, line 41 (for 2005), do not use that amount. Www irs gov efile Instead, add Form 1040, lines 42 and 43 (for 2005), and use that amount. Www irs gov efile Self-employment tax. Www irs gov efile   You must use your net profit or loss from your fishing business to figure your self-employment tax. Www irs gov efile Do not reduce your net profit or loss by any earnings from operations you deposit into your CCF account. Www irs gov efile    Partnerships and S corporations. Www irs gov efile The deduction for partnership earnings from operations deposited into a CCF account is separately stated on Schedule K (Form 1065), line 13d, and allocated to the partners on Schedule K-1 (Form 1065), box 13 (for 2005). Www irs gov efile   The deduction for S corporation earnings deposited into a CCF account is separately stated on Schedule K (Form 1120S), line 12d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 12 (for 2005). Www irs gov efile Tax Treatment of CCF Earnings This section explains the tax treatment of the earnings from the assets in your CCF account when the earnings are redeposited or left in your account. Www irs gov efile However, if you choose to withdraw the earnings in the year earned, you must generally pay income tax on them. Www irs gov efile Capital gains. Www irs gov efile   Do not report any capital gains from the sale of capital assets held in your CCF account. Www irs gov efile This includes capital gain distributions reported to you on Form 1099-DIV or a substitute statement. Www irs gov efile However, you should attach a statement to your tax return to list the payers and the amounts and to identify the capital gains as “CCF account earnings. Www irs gov efile ” Interest and dividends. Www irs gov efile   Do not report any ordinary income (such as interest and dividends) you earn on the assets in your CCF account. Www irs gov efile However, you should attach a statement to your return to list the payers and the amounts and to identify them as “CCF account earnings. Www irs gov efile ”   If you are required to file Schedule B (Form 1040), you can add these earnings to the list of payers and amounts on line 1 or line 5 and identify them as “CCF earnings. Www irs gov efile ” Then, subtract the same amounts from the list and identify them as “CCF deposits. Www irs gov efile ” Tax-exempt interest. Www irs gov efile   Do not report tax-exempt interest from state or local bonds you held in your CCF account. Www irs gov efile You are not required to report this interest on Form 1040, line 8b. Www irs gov efile Tax Treatment of CCF Withdrawals This section discusses the tax treatment of amounts you withdraw from your CCF account during the year. Www irs gov efile Qualified Withdrawals A qualified withdrawal from a CCF account is one that is approved by NMFS for either of the following uses. Www irs gov efile Acquiring, building, or rebuilding qualified vessels (defined next). Www irs gov efile Making principal payments on the mortgage of a qualified vessel. Www irs gov efile NMFS will not approve amounts withdrawn to purchase nets not continuously attached to the vessel, such as seine nets, gill set-nets, and gill drift-nets. Www irs gov efile NMFS will approve amounts withdrawn to purchase trawl nets. Www irs gov efile Qualified vessel. Www irs gov efile   This is any vessel that meets all of the following requirements. Www irs gov efile The vessel was built or rebuilt in the United States. Www irs gov efile The vessel is documented under the laws of the United States. Www irs gov efile The person maintaining the CCF account agrees with the Secretary of Commerce that the vessel will be operated in United States foreign trade, Great Lakes trade, noncontiguous domestic trade, or the fisheries of the United States. Www irs gov efile How to determine the source of qualified withdrawals. Www irs gov efile   When you make a qualified withdrawal, the amount is treated as being withdrawn in the following order from the accounts listed below. Www irs gov efile The capital account. Www irs gov efile The capital gain account. Www irs gov efile The ordinary income account. Www irs gov efile Excluding qualified withdrawals from tax. Www irs gov efile   Do not report on your income tax return any qualified withdrawals from your CCF account. Www irs gov efile Reduce the depreciable basis of fishing vessels you acquire, build, or rebuild when you make a qualified withdrawal from either the capital gain or the ordinary income account. Www irs gov efile Nonqualified Withdrawals A nonqualified withdrawal from a CCF account is generally any withdrawal that is not a qualified withdrawal. Www irs gov efile Qualified withdrawals are defined under Qualified Withdrawals, earlier. Www irs gov efile Examples. Www irs gov efile   Examples of nonqualified withdrawals include the following amounts from either the ordinary income account or the capital gain account. Www irs gov efile Amounts remaining in a CCF account upon termination of your agreement with NMFS. Www irs gov efile Amounts you withdraw and use to make principal payments on the mortgage of a vessel if the basis of that vessel and the bases of other vessels you own have already been reduced to zero. Www irs gov efile Amounts determined by the IRS to cause your CCF account balance to exceed the amount appropriate to meet your planned use of withdrawals. Www irs gov efile You will generally be given 3 years to revise your plans to cover this excess balance. Www irs gov efile Amounts you leave in your account for more than 25 years. Www irs gov efile There is a graduated schedule under which the percentage applied to determine the amount of the nonqualified withdrawal increases from 20% in the 26th year to 100% in the 30th year. Www irs gov efile How to determine the source of nonqualified withdrawals. Www irs gov efile    When you make a nonqualified withdrawal from your CCF account, the amount is treated as being withdrawn in the following order from the accounts listed below. Www irs gov efile The ordinary income account. Www irs gov efile The capital gain account. Www irs gov efile The capital account. Www irs gov efile Paying tax on nonqualified withdrawals. Www irs gov efile   In general, nonqualified withdrawals are taxed separately from your other gross income and at the highest marginal tax rate in effect for the year of withdrawal. Www irs gov efile However, nonqualified withdrawals treated as made from the capital gain account are taxed at a rate that cannot exceed 15% for individuals and 34% for corporations. Www irs gov efile    Partnerships and S corporations. Www irs gov efile Taxable nonqualified partnership withdrawals are separately stated on Schedule K (Form 1065), line 20c, and allocated to the partners on Schedule K-1 (Form 1065), box 20 (for 2005). Www irs gov efile Taxable nonqualified withdrawals by an S corporation are separately stated on Schedule K (Form 1120S), line 17d, and allocated to the shareholders on Schedule K-1 (Form 1120S), box 17. Www irs gov efile Interest. Www irs gov efile   You must pay interest on the additional tax due to nonqualified withdrawals that are treated as made from either the ordinary income or the capital gain account. Www irs gov efile The interest period begins on the last date for paying tax for the year for which you deposited the amount you withdrew from your CCF account. Www irs gov efile The period ends on the last date for paying tax for the year in which you make the nonqualified withdrawal. Www irs gov efile The interest rate on the nonqualified withdrawal is simple interest. Www irs gov efile The rate is subject to change annually and is published in the Federal Register. Www irs gov efile    You also can call NMFS at (301) 713-2393 (ext. Www irs gov efile 204) to get the current interest rate. Www irs gov efile Interest deduction. Www irs gov efile   You can deduct the interest you pay on a nonqualified withdrawal as a trade or business expense. Www irs gov efile Reporting the additional tax and interest. Www irs gov efile   Attach a statement to your income tax return showing your computation of the tax and the interest on a nonqualified withdrawal. Www irs gov efile Include the tax and interest on Form 1040, line 63 (for 2005). Www irs gov efile To the left of line 63, write in the amount of tax and interest and “CCF. Www irs gov efile ” Tax benefit rule. Www irs gov efile   If any portion of your nonqualified withdrawal is properly attributable to contributions (not earnings on the contributions) you made to the CCF account that did not reduce your tax liability for any tax year prior to the withdrawal year, the following tax treatment applies. Www irs gov efile The part that did not reduce your tax liability for any year prior to the withdrawal year is not taxed. Www irs gov efile That part is allowed as a net operating loss deduction. Www irs gov efile More Information This section briefly discussed the CCF program. Www irs gov efile For more detailed information, see the following legislative authorities. Www irs gov efile Section 607 of the Merchant Marine Act of 1936, as amended (46 U. Www irs gov efile S. Www irs gov efile C. Www irs gov efile 1177). Www irs gov efile Chapter 2, Part 259 of title 50 of the Code of Federal Regulations (50 C. Www irs gov efile F. Www irs gov efile R. Www irs gov efile , Part 259). Www irs gov efile Subchapter A, Part 3 of title 26 of the Code of Federal Regulations (26 C. Www irs gov efile F. Www irs gov efile R. Www irs gov efile , Part 3). Www irs gov efile Section 7518 of the Internal Revenue Code (IRC 7518). Www irs gov efile The application kit you can obtain from NMFS at the address or phone number given earlier may contain copies of some of these sources of additional information. Www irs gov efile Also, see their web page at www. Www irs gov efile nmfs. Www irs gov efile noaa. Www irs gov efile gov/mb/financial_services/ccf. Www irs gov efile htm. Www irs gov efile How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Www irs gov efile By selecting the method that is best for you, you will have quick and easy access to tax help. Www irs gov efile Contacting your Taxpayer Advocate. Www irs gov efile   If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate. Www irs gov efile   The Taxpayer Advocate independently represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been fixed through normal channels. Www irs gov efile While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. Www irs gov efile   To contact your Taxpayer Advocate: Call the Taxpayer Advocate toll free at 1-877-777-4778, Call, write, or fax the Taxpayer Advocate office in your area, Call 1-800-829-4059 if you are a TTY/TDD user, or Visit www. Www irs gov efile irs. Www irs gov efile gov/advocate. Www irs gov efile   For more information, see Publication 1546, How To Get Help With Unresolved Tax Problems (now available in Chinese, Korean, Russian, and Vietnamese, in addition to English and Spanish). Www irs gov efile Free tax services. Www irs gov efile   To find out what services are available, get Publication 910, IRS Guide to Free Tax Services. Www irs gov efile It contains a list of free tax publications and an index of tax topics. Www irs gov efile It also describes other free tax information services, including tax education and assistance programs and a list of TeleTax topics. Www irs gov efile Internet. Www irs gov efile You can access the IRS website 24 hours a day, 7 days a week, at www. Www irs gov efile irs. Www irs gov efile gov to: E-file your return. Www irs gov efile Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Www irs gov efile Check the status of your refund. Www irs gov efile Click on Where's My Refund. Www irs gov efile Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Www irs gov efile Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. Www irs gov efile Download forms, instructions, and publications. Www irs gov efile Order IRS products online. Www irs gov efile Research your tax questions online. Www irs gov efile Search publications online by topic or keyword. Www irs gov efile View Internal Revenue Bulletins (IRBs) published in the last few years. Www irs gov efile Figure your withholding allowances using our Form W-4 calculator. Www irs gov efile Sign up to receive local and national tax news by email. Www irs gov efile Get information on starting and operating a small business. Www irs gov efile Phone. Www irs gov efile Many services are available by phone. Www irs gov efile Ordering forms, instructions, and publications. Www irs gov efile Call 1-800-829-3676 to order current-year forms, instructions, and publications and prior-year forms and instructions. Www irs gov efile You should receive your order within 10 days. Www irs gov efile Asking tax questions. Www irs gov efile Call the IRS with your tax questions at 1-800-829-1040. Www irs gov efile Solving problems. Www irs gov efile You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Www irs gov efile An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Www irs gov efile Call your local Taxpayer Assistance Center for an appointment. Www irs gov efile To find the number, go to www. Www irs gov efile irs. Www irs gov efile gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Www irs gov efile TTY/TDD equipment. Www irs gov efile If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Www irs gov efile TeleTax topics. Www irs gov efile Call 1-800-829-4477 and press 2 to listen to pre-recorded messages covering various tax topics. Www irs gov efile Refund information. Www irs gov efile If you would like to check the status of your refund, call 1-800-829-4477 and press 1 for automated refund information and follow the recorded instructions or call 1-800-829-1954. Www irs gov efile Be sure to wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically). Www irs gov efile Have your tax return available because you will need to know your social security number, your filing status, and the exact whole dollar amount of your refund. Www irs gov efile Evaluating the quality of our telephone services. Www irs gov efile To ensure that IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Www irs gov efile One method is for a second IRS representative to sometimes listen in on or record telephone calls. Www irs gov efile Another is to ask some callers to complete a short survey at the end of the call. Www irs gov efile Walk-in. Www irs gov efile Many products and services are available on a walk-in basis. Www irs gov efile Products. Www irs gov efile You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Www irs gov efile Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Www irs gov efile Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Www irs gov efile Services. Www irs gov efile You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Www irs gov efile An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Www irs gov efile If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you're more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Www irs gov efile No appointment is necessary, but if you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Www irs gov efile A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Www irs gov efile To find the number, go to www. Www irs gov efile irs. Www irs gov efile gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Www irs gov efile Mail. Www irs gov efile You can send your order for forms, instructions, and publications to the address below and receive a response within 10 business days after your request is received. Www irs gov efile National Distribution Center P. Www irs gov efile O. Www irs gov efile Box 8903 Bloomington, IL 61702-8903 CD-ROM for tax products. Www irs gov efile You can order Publication 1796, IRS Tax Products on CD-ROM, and obtain: A CD that is released twice so you have the latest products. Www irs gov efile The first release ships in late December and the final release ships in late February. Www irs gov efile Current-year forms, instructions, and publications. Www irs gov efile Prior-year forms, instructions, and publications. Www irs gov efile Tax Map: an electronic research tool and finding aid. Www irs gov efile Tax law frequently asked questions (FAQs). Www irs gov efile Tax Topics from the IRS telephone response system. Www irs gov efile Fill-in, print, and save features for most tax forms. Www irs gov efile Internal Revenue Bulletins. Www irs gov efile Toll-free and email technical support. Www irs gov efile Buy the CD-ROM from National Technical Information Service (NTIS) at www. Www irs gov efile irs. Www irs gov efile gov/cdorders for $25 (no handling fee) or call 1-877-233-6767 toll free to buy the CD-ROM for $25 (plus a $5 handling fee). Www irs gov efile CD-ROM for small businesses. Www irs gov efile Publication 3207, Small Business Resource Guide CD-ROM, has a new look and enhanced navigation features. Www irs gov efile This CD includes: Helpful information, such as how to prepare a business plan, find financing for your business, and much more. Www irs gov efile All the business tax forms, instructions, and publications needed to successfully manage a business. Www irs gov efile Tax law changes. Www irs gov efile IRS Tax Map to help you find forms, instructions, and publications by searching on a keyword or topic. Www irs gov efile Web links to various government agencies, business associations, and IRS organizations. Www irs gov efile “Rate the Product” survey—your opportunity to suggest changes for future editions. Www irs gov efile An updated version of this CD is available each year in early April. Www irs gov efile You can get a free copy by calling 1-800-829-3676 or by visiting www. Www irs gov efile irs. Www irs gov efile gov/smallbiz. Www irs gov efile Prev  Up  Next   Home   More Online Publications