Publication 596 - Main Content


Chapter 1—Rules for Everyone

This chapter discusses Rules 1 through 7. You must meet all seven rules to qualify for the earned income credit. 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.

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.

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.

Adjusted gross income (AGI).   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040.

  If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. You do not need to read the rest of this publication.

Example—AGI is more than limit.

Your AGI is $38,550, you are single, and you have one qualifying child. You cannot claim the EIC because your AGI is not less than $37,870. 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.

Community property.   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. This is different from the community property rules that apply under Rule 7.

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). Any qualifying child listed on Schedule EIC also must have a valid SSN. (See Rule 8 if you have a qualifying child.)

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. An example of a federally funded benefit is Medicaid. 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.S. citizen or permanent resident, ask the SSA for a new social security card without the legend. If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return, to claim the EIC.

U.S. citizen.   If you were a U.S. citizen when you received your SSN, you have a valid SSN.

Valid for work only with INS authorization or DHS authorization.   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.

SSN missing or incorrect.   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC.

Other taxpayer identification number.   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). ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN.

No SSN.   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). You cannot claim the EIC.

Getting an SSN.   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. You can get Form SS-5 online at www.socialsecurity.gov, from your local SSA office, or by calling the SSA at 1-800-772-1213.

Filing deadline approaching and still no SSN.   If the filing deadline is approaching and you still do not have an SSN, you have two choices.
  1. Request an automatic 6-month extension of time to file your return. You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. For more information, see the instructions for Form 4868.

  2. File the return on time without claiming the EIC. After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child.

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. Your filing status cannot be “Married filing separately.

Spouse did not live with you.   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. In that case, you may be able to claim the EIC. For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information.

Rule 4—You Must Be a U.S. 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. You can use that filing status only if one spouse is a U.S. citizen or resident alien and you choose to treat the nonresident spouse as a U.S. resident. If you make this choice, you and your spouse are taxed on your worldwide income. If you need more information on making this choice, get Publication 519, U.S. Tax Guide for Aliens. 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).

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. You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. U.S. possessions are not foreign countries. See Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, for more detailed information.

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. If your investment income is more than $3,300, you cannot claim the credit.

Form 1040EZ.   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.

Form 1040A.   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.

Form 1040.   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income.

  

Worksheet 1. 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.

Interest and Dividends        
1. Enter any amount from Form 1040, line 8a 1.  
2. Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2.  
3. Enter any amount from Form 1040, line 9a 3.  
4. 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. (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line.) 4.  
Capital Gain Net Income        
5. Enter the amount from Form 1040, line 13. If the amount on that line is a loss, enter -0- 5.      
6. Enter any gain from Form 4797, Sales of Business Property, line 7. If the amount on that line is a loss, enter -0-. (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead.) 6.      
7. Substract line 6 of this worksheet from line 5 of this worksheet. (If the result is less than zero, enter -0-.) 7.  
Royalties and Rental Income From Personal Property        
8. 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.      
9. 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.      
10. Subtract the amount on line 9 of this worksheet from the amount on line 8. (If the result is less than zero, enter -0-.) 10.  
Passive Activities        
11. Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. (g)), 34a (col. (d)), or 40). (See instructions below for lines 11 and 12.) 11.      
12. Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. (f)), 34b (col. (c)), or 40). (See instructions below for lines 11 and 12.) 12.      
13. Combine the amounts on lines 11 and 12 of this worksheet. (If the result is less than zero, enter -0-.) 13.  
14. Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Enter the total. This is your investment income 14.  
15. Is the amount on line 14 more than $3,300
Yes. You cannot take the credit. 
No. 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).
   
 
Instructions for lines 11 and 12. 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. 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. 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.

Worksheet 2. Worksheet for Line 4 of Worksheet 1

Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend.

Note. Fill out a separate Worksheet 2 for each Form 8814.    
1. Enter the amount from Form 8814, line 2a 1.  
2. Enter the amount from Form 8814, line 2b 2.  
3. Subtract line 2 from line 1 3.  
4. Enter the amount from Form 8814, line 1a 4.  
5. Add lines 3 and 4 5.  
6. Enter the amount of the child's Alaska Permanent Fund dividend 6.  
7. Divide line 6 by line 5. Enter the result as a decimal (rounded to at least three places) 7.  
8. Enter the amount from Form 8814, line 12 8.  
9. Multiply line 7 by line 8 9.  
10. Subtract line 9 from line 8. Enter the result on line 4 of Worksheet 1 10.  
  (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.)    

Example—completing Worksheet 2.

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. You choose to report this income on your return. You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. 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, 0.500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. You then enter $200 on line 4 of Worksheet 1.

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. If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. If you are an employee, earned income includes all the taxable income you get from your employer.

Rule 15 has information that will help you figure the amount of your earned income. If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions.

Earned Income

Earned income includes all of the following types of income.

  1. Wages, salaries, tips, and other taxable employee pay. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter.

  2. Net earnings from self-employment.

  3. Gross income received as a statutory employee.

Wages, salaries, and tips.    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040).

Nontaxable combat pay election.   You can elect to include your nontaxable combat pay in earned income for the earned income credit. The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. For details, see Nontaxable combat pay in chapter 4.

Net earnings from self-employment.   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.

Minister's housing.   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. 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).

Statutory employee.   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040).

Strike benefits.   Strike benefits paid by a union to its members are earned income.

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.

Each approved form exempts certain income from social security taxes. Each form is discussed here in terms of what is or is not earned income for the EIC.

Form 4361.   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. This includes wages, salaries, tips, and other taxable employee compensation. A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Examples include fees for performing marriages and honoraria for delivering speeches.

Form 4029.   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. However, amounts you received as a self-employed individual do not count as earned income. Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040.

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. Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age.

Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b.

Disability insurance payments.   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. It does not matter whether you have reached minimum retirement age. If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J.

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. Do not include any of these items in your earned income.

Earnings while an inmate.   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. This includes amounts for work performed while in a work release program or while in a halfway house.

Workfare payments.   Nontaxable workfare payments are not earned income for the EIC. 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.

Community property.   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. That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. 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.

Nevada, Washington, and California domestic partners.   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Your earned income for the EIC does not include any amount earned by your partner. Your earned income includes the entire amount you earned. For details, see Publication 555.

Conservation Reserve Program (CRP) payments.   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.

Nontaxable military pay.   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). See Publication 3, Armed Forces' Tax Guide, for more information.

  
Combat pay. You can elect to include your nontaxable combat pay in earned income for the EIC. See Nontaxable combat pay in chapter 4.

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. This chapter discusses Rules 8 through 10. 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.

You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. (You cannot file Form 1040EZ.) You also must complete Schedule EIC and attach it to your return. If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next.

No qualifying child.   If you do not meet Rule 8, you do not have a qualifying child. Read chapter 3 to find out if you can get the earned income credit without a qualifying child.

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. The fours tests are:

  1. Relationship,

  2. Age,

  3. Residency, and

  4. Joint return.

The four tests are illustrated in Figure 1. The paragraphs that follow contain more information about each test.

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).

The following definitions clarify the relationship test.

Adopted child.   An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.

Foster child.   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. (An authorized placement agency includes a state or local government agency. It also includes a tax-exempt organization licensed by a state. In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children.)

Example.

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. Debbie is your foster child.

Figure 1. Tests for Qualifying Child

Age Test

Your child must be:

  1. Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly),

  2. Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly, or

  3. Permanently and totally disabled at any time during 2013, regardless of age.

The following examples and definitions clarify the age test.

Example 1—child not under age 19.

Your son turned 19 on December 10. 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.

Example 2—child not younger than you or your spouse.

Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. He is not disabled. Both you and your spouse are 21 years old, and you file a joint return. Your brother is not your qualifying child because he is not younger than you or your spouse.

Example 3—child younger than your spouse but not younger than you.

The facts are the same as in Example 2 except that your spouse is 25 years old. Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you.

Student defined.   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year:
  1. A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or

  2. A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government.

  The 5 calendar months need not be consecutive.

  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.

School defined.   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC.

Vocational high school students.   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.

Permanently and totally disabled.   Your child is permanently and totally disabled if both of the following apply.
  1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.

  2. A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

Residency Test

Your child must have lived with you in the United States for more than half of 2013. The following definitions clarify the residency test.

United States.   This means the 50 states and the District of Columbia. It does not include Puerto Rico or U.S. possessions such as Guam.

Homeless shelter.   Your home can be any location where you regularly live. You do not need a traditional home. 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.

Military personnel stationed outside the United States.   U.S. 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.

Extended active duty.   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. 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.

Birth or death of child.    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.

Temporary absences.   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. Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility.

Kidnapped child.   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. 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. This treatment applies for all years until the child is returned. However, the last year this treatment can apply is the earlier of:
  1. The year there is a determination that the child is dead, or

  2. The year the child would have reached age 18.

  If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC.

Joint Return Test

To meet this test, the child cannot file a joint return for the year.

Exception.   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.

Example 1—child files joint return.

You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $25,000 for the year. The couple files a joint return. Because your daughter and her husband file a joint return, she is not your qualifying child.

Example 2—child files joint return to get refund of tax withheld.

Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. They do not have a child. Neither is required to file a tax return. Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met.

Example 3—child files joint return to claim American opportunity credit.

The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 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. 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. The exception to the joint return test does not apply, so your son is not your qualifying child.

Married child.   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:
  1. You can claim an exemption for the child, or

  2. 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.

  
Social security number. 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. You cannot claim the EIC on the basis of a qualifying child if:
  1. The qualifying child's SSN is missing from your tax return or is incorrect,

  2. The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or

  3. Instead of an SSN, the qualifying child has:

    1. An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or

    2. 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.

  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. For more information about SSNs, see Rule 2.

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. However, only one of these persons can actually treat the child as a qualifying child. 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).

  1. The exemption for the child.

  2. The child tax credit.

  3. Head of household filing status.

  4. The credit for child and dependent care expenses.

  5. The exclusion for dependent care benefits.

  6. The EIC.

The other person cannot take any of these benefits based on this qualifying child. In other words, you and the other person cannot agree to divide these tax benefits between you. The other person cannot take any of these tax benefits unless he or she has a different qualifying child.

The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return.

Tiebreaker rules.   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.
  • If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.

  • 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.

  • 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. 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.

  • 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.

  • 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. 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. See Example 8.

  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. See Examples 1 through 13.

  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.

If the other person cannot claim the EIC.   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. See Examples 6 and 7. 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.

Examples.    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child.

Example 1—child lived with parent and grandparent.

You and your 2-year-old son Jimmy lived with your mother all year. You are 25 years old, unmarried, and your AGI is $9,000. Your only income was $9,000 from a part-time job. Your mother's only income was $20,000 from her job, and her AGI is $20,000. Jimmy's father did not live with you or Jimmy. The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. 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. 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). He is not a qualifying child of anyone else, including his father. 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).

Example 2—parent has higher AGI than grandparent.

The facts are the same as in Example 1 except your AGI is $25,000. Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Only you can claim him.

Example 3—two persons claim same child.

The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. 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. 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.

Example 4—qualifying children split between two persons.

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. Only one of you can claim each child. However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. For example, if you claim one child, your mother can claim the other two.

Example 5—taxpayer who is a qualifying child.

The facts are the same as in Example 1 except that you are only 18 years old. This means you are a qualifying child of your mother. Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. 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.

Example 6—grandparent with too much earned income to claim EIC.

The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son.

Example 7—parent with too much earned income to claim EIC.

The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Your earned income is too high for you to claim the EIC. But your mother cannot claim the EIC either, because her AGI is not higher than yours.

Example 8—child lived with both parents and grandparent.

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. 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. 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. In other words, each parent's AGI can be treated as $15,000.

Example 9—separated parents.

You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. In August and September, Joey lived with you. For the rest of the year, Joey lived with your husband, who is Joey's father. 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. 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.

You and your husband will file separate returns. Your husband agrees to let you treat Joey as a qualifying child. 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. However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. See Rule 3.

Example 10—separated parents claim same child.

The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. In this case, only your husband will be allowed to treat Joey as a qualifying child. This is because, during 2013, the boy lived with him longer than with you. You cannot claim the EIC (either with or without a qualifying child). 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. See Rule 3.

Example 11—unmarried parents.

You, your 5-year-old son, and your son's father lived together all year. You and your son's father are not married. 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. Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Neither of you had any other income. Your son's father agrees to let you treat the child as a qualifying child. 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.

Example 12—unmarried parents claim same child.

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. In this case, only your son's father will be allowed to treat your son as a qualifying child. This is because his AGI, $14,000, is more than your AGI, $12,000. You cannot claim the EIC (either with or without a qualifying child).

Example 13—child did not live with a parent.

You and your 7-year-old niece, your sister's child, lived with your mother all year. You are 25 years old, and your AGI is $9,300. Your only income was from a part-time job. Your mother's AGI is $15,000. Her only income was from her job. Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. 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. However, only your mother can treat her as a qualifying child. This is because your mother's AGI, $15,000, is more than your AGI, $9,300.

Special rule for divorced or separated parents (or parents who live apart).   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.
  1. The parents:

    1. Are divorced or legally separated under a decree of divorce or separate maintenance,

    2. Are separated under a written separation agreement, or

    3. Lived apart at all time during the last 6 months of 2013, whether or not they are or were married.

  2. The child received over half of his or her support for the year from the parents.

  3. The child is in the custody of one or both parents for more than half of 2013.

  4. Either of the following statements is true.

    1. 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. 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.

    2. 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.

For details, see Publication 501. Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next.

Applying Rule 9 to divorced or separated parents (or parents who live apart).   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. 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. 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.

Example 1.

You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Your AGI is $10,000. Your mother’s AGI is $25,000. Your son's father did not live with you or your son. 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. 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. You and your mother did not have any child care expenses or dependent care benefits. 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.

Example 2.

The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours.

Example 3.

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. Your mother also claims him as a qualifying child for head of household filing status. You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child.

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.) if all of the following statements are true.

  1. You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

  2. You were:

    1. Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly),

    2. 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

    3. Permanently and totally disabled, regardless of age.

  3. You lived with that person in the United States for more than half of the year.

  4. 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).

For more details about the tests to be a qualifying child, see Rule 8.

If you are a qualifying child of another taxpayer, you cannot claim the EIC. 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. Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A).

Example.

You and your daughter lived with your mother all year. You are 22 years old, unmarried, and attended a trade school full time. You had a part-time job and earned $5,700. You had no other income. Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. She can claim the EIC if she meets all the other requirements. Because you are your mother's qualifying child, you cannot claim the EIC. This is so even if your mother cannot or does not claim the EIC.

Child of person not required to file a return.   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.

Example 1—return not required.

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. As a result, you are not your mother's qualifying child. You can claim the EIC if you meet all the other requirements to do so.

Example 2—return filed to get refund of tax withheld.

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. 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. As a result, you are not your mother's qualifying child. You can claim the EIC if you meet all the other requirements to do so.

Example 3—return filed to get EIC.

The facts are the same as in Example 2 except your mother claimed the EIC on her return. Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. As a result, you are your mother's qualifying child. You cannot claim the EIC.

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. This chapter discusses Rules 11 through 14. 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.

You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next.

If you have a qualifying child.   If you meet Rule 8, you have a qualifying child. If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child.

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. 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. It does not matter which spouse meets the age test, as long as one of the spouses does.

You meet the age test if you were born after December 31, 1948, and before January 2, 1989. 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.

If neither you nor your spouse meets the age test, you cannot claim the EIC. Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ).

Death of spouse.   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.

Example 1.

You are age 28 and unmarried. You meet the age test.

Example 2—spouse meets age test.

You are married and filing a joint return. You are age 23 and your spouse is age 27. You meet the age test because your spouse is at least age 25 but under age 65.

Example 3—spouse dies in 2013.

You are married and filing a joint return with your spouse who died in August 2013. You are age 67. Your spouse would have become age 65 in November 2013. Because your spouse was under age 65 when she died, you meet the age test.

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.

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.

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.

If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit.

Example 1.

In 2013, you were age 25, single, and living at home with your parents. You worked and were not a student. You earned $7,500. Your parents cannot claim you as a dependent. 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. You meet this rule. You can claim the EIC if you meet all the other requirements.

Example 2.

The facts are the same as in Example 1, except that you earned $2,000. Your parents can claim you as a dependent but decide not to. You do not meet this rule. You cannot claim the credit because your parents could have claimed you as a dependent.

Joint returns.   You generally cannot be claimed as a dependent by another person if you are married and file a joint return.

  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. But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return.

Example 1—return filed to get refund of tax withheld.

You are 26 years old. You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Neither you nor your wife is required to file a tax return. You do not have a child. Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. They can claim exemptions for you and your wife if all the other tests to do so are met.

Example 2—return filed to get EIC.

The facts are the same as in Example 1except no taxes were taken out of your pay. 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. 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. Your parents cannot claim an exemption for either you or your wife.

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.) if all of the following statements are true.

  1. You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

  2. You were:

    1. Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly),

    2. 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

    3. Permanently and totally disabled, regardless of age.

  3. You lived with that person in the United States for more than half of the year.

  4. 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).

For more details about the tests to be a qualifying child, see Rule 8.

If you are a qualifying child of another taxpayer, you cannot claim the EIC. 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. Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ).

Example.

You lived with your mother all year. You are age 26, unmarried, and permanently and totally disabled. Your only income was from a community center where you went three days a week to answer telephones. You earned $5,000 for the year and provided more than half of your own support. Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. She can claim the EIC if she meets all the other requirements. Because you are a qualifying child of your mother, you cannot claim the EIC. This is so even if your mother cannot or does not claim the EIC.

Joint returns.   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return.

  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. But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return.

Child of person not required to file a return.   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.

Example 1—return not required.

You lived all year with your father. You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. You have no other income, no children, and provided more than half of your own support. Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. As a result, you are not your father's qualifying child. You can claim the EIC if you meet all the other requirements to do so.

Example 2—return filed to get refund of tax withheld.

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. 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. As a result, you are not your father's qualifying child. You can claim the EIC if you meet all the other requirements to do so.

Example 3—return filed to get EIC.

The facts are the same as in Example 2 except your father claimed the EIC on his return. Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. As a result, you are your father's qualifying child. You cannot claim the EIC.

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.

If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ).

United States.   This means the 50 states and the District of Columbia. It does not include Puerto Rico or U.S. possessions such as Guam.

Homeless shelter.   Your home can be any location where you regularly live. You do not need a traditional home. If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule.

Military personnel stationed outside the United States.   U.S. 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.

Chapter 4—Figuring and Claiming the EIC

You must meet one more rule to claim the EIC.

You need to know the amount of your earned income to see if you meet the rule in this chapter. You also need to know that amount to figure your EIC.

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.

Earned Income

Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Earned income is explained in detail in Rule 7 in chapter 1.

Figuring earned income.   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.

  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.

  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). You will then reduce that amount by any amount included on that line and described in the following list.
  • Scholarship or fellowship grants not reported on a Form W-2. 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.

  • Inmate's income. Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. This includes amounts received for work performed while in a work release program or while in a halfway house. 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).

  • Pension or annuity from deferred compensation plans. 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. 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). This amount may be reported in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity.

Clergy.   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported on line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b. Put “Clergy” on the dotted line next to line 64a (Form 1040).

Church employees.   A church employee means an employee (other than a minister or member of a religious order) of a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes. If you received wages as a church employee and included any amount on both line 5a of Schedule SE and line 7 (Form 1040), subtract that amount from the amount on line 7 (Form 1040) and enter the result in the first space of the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b.

Nontaxable combat pay.   You can elect to include your nontaxable combat pay in earned income for the earned income credit. If you make the election, you must include in earned income all nontaxable combat pay you received.

  If you are filing a joint return and both you and your spouse received nontaxable combat pay, you can each make your own election. In other words, if one of you makes the election, the other one can also make it but does not have to.

  The amount of your nontaxable combat pay should be shown on your Form W-2 in box 12 with code Q.

  Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Figure the credit with and without your nontaxable combat pay before making the election. Whether the election increases or decreases your EIC depends on your total earned income, filing status, and number of qualifying children. If your earned income without your combat pay is less than the amount shown below for your number of children, you may benefit from electing to include your nontaxable combat pay in earned income and you should figure the credit both ways. If your earned income without your combat pay is equal to or more than these amounts, you will not benefit from including your combat pay in your earned income.
  • $6,350 if you have no children.

  • $9,550 if you have one child.

  • $13,400 if you have two or more children.

  The following examples illustrate the effect of including nontaxable combat pay in earned income for the EIC.

Example 1—election increases the EIC.

George and Janice are married and will file a joint return. They have one qualifying child. George was in the military and earned $15,000 ($5,000 taxable wages + $10,000 nontaxable combat pay). Janice worked part of the year and earned $2,000. Their taxable earned income and AGI are $7,000. George and Janice qualify for the EIC and fill out the EIC Worksheet and Schedule EIC.

When they complete the EIC worksheet without adding the nontaxable combat pay to their earned income, they find their credit to be $2,389. When they complete the EIC worksheet with the nontaxable combat pay added to their earned income, they find their credit to be $3,250. Because making the election will increase their EIC, they elect to add the nontaxable combat pay to their earned income for the EIC. They enter $3,250 on line 38a of their Form 1040A and enter the amount of their nontaxable combat pay on line 38b.

Example 2—election does not increase the EIC.

The facts are the same as Example 1 except George had nontaxable combat pay of $22,000. When George and Janice add their nontaxable combat pay to their earned income, they find their credit to be $2,267. Because the credit they can get if they do not add the nontaxable combat pay to their earned income is $2,389, they decide not to make the election. They enter $2,389 on line 38a of their Form 1040A.

IRS Will Figure the EIC for You

The IRS will figure your EIC for you if you follow the instructions in Figure 2.

Please do not ask the IRS to figure your EIC unless you are eligible for it. To be eligible, you must meet Rule 15 in this chapter as well as the rules in chapter 1 and either chapter 2 or chapter 3, whichever applies to you. If your credit was reduced or disallowed for any year after 1996, the rules in chapter 5 may apply as well.

Figure 2. Steps To Follow To Have the IRS Figure Your EIC

Figure 2. Earned Income Credit On Your Tax Return
Please click here for the text description of the image.

Earned Income Credit On Figure 3. Steps To Follow To Have the IRS figure Your EIC.

If you want the IRS to figure your income tax, see chapter 30 of Publication 17, Your Federal Income Tax.

How To Figure the EIC Yourself

To figure the EIC yourself, use the EIC worksheet in the instructions for the form you are using (Form 1040, Form 1040A, or Form 1040EZ). If you have a qualifying child, complete Schedule EIC (discussed later in this chapter) and attach it to your tax return.

If you want the IRS to figure your EIC for you, see IRS Will Figure the EIC for You, earlier.

Special Instructions for Form 1040 Filers

If you file Form 1040, you will need to decide whether to use EIC Worksheet A or EIC Worksheet B to figure the amount of your EIC. This section explains how to use these worksheets and how to report the EIC on your return.

EIC Worksheet A.   Use EIC Worksheet A if you were not self-employed at any time in 2013 and are not a member of the clergy, a church employee who files Schedule SE, or a statutory employee filing Schedule C or C-EZ.

EIC Worksheet B.   Use EIC Worksheet B if you were self-employed at any time in 2013 or are a member of the clergy, a church employee who files Schedule SE, or a statutory employee filing Schedule C or C-EZ. If any of the following situations apply to you, read the paragraph and then complete EIC Worksheet B.

Net earnings from self-employment $400 or more.   If your net earnings from self-employment are $400 or more, be sure to correctly fill out Schedule SE (Form 1040) and pay the proper amount of self-employment tax. If you do not, you may not get all the EIC you are entitled to.

  
When figuring your net earnings from self-employment, you must claim all your allowable business expenses.

When to use the optional methods of figuring net earnings.   Using the optional methods on Schedule SE to figure your net earnings from self-employment may qualify you for the EIC or give you a larger credit. If your net earnings (without using the optional methods) are less than $4,640, see the instructions for Schedule SE for details about the optional methods.

When both spouses have self-employment income.   You must complete both Parts 1 and 2 of EIC Worksheet B if all of the following conditions apply to you.
  1. You are married filing a joint return.

  2. Both you and your spouse have income from self-employment.

  3. You or your spouse files a Schedule SE and the other spouse does not file Schedule SE.

Statutory employees.   Statutory employees report wages and expenses on Schedule C or C-EZ. They do not file Schedule SE. If you are a statutory employee, enter the amount from line 1 of Schedule C or C-EZ in Part 3 when you complete EIC Worksheet B.

Schedule EIC

You must complete Schedule EIC and attach it to your tax return if you have a qualifying child and are claiming the EIC. Schedule EIC provides the IRS with information about your qualifying children, including their names, ages, SSNs, relationship to you, and the amount of time they lived with you during the year. An example of a filled-in Schedule EIC is shown in chapter 6.

If you are required to complete and attach Schedule EIC but do not, it will take longer to process your return and issue your refund.

Chapter 5—Disallowance of the EIC

If your earned income credit (EIC) for any year after 1996 was denied (disallowed) or reduced by the IRS, you may need to complete an additional form to claim the credit for 2013.

This chapter is for people whose earned income credit (EIC) for any year after 1996 was denied or reduced by the IRS. If this applies to you, you may need to complete Form 8862, Information To Claim Earned Income Credit After Disallowance, and attach it to your 2013 return to claim the credit for 2013. This chapter explains when you need to attach Form 8862. For more information, see Form 8862 and its instructions.

This chapter also explains the rules for certain people who cannot claim the EIC for a period of years after their EIC was denied or reduced.

Form 8862

If your EIC for any year after 1996 was denied or reduced for any reason other than a math or clerical error, you must attach a completed Form 8862 to your next tax return to claim the EIC. You must also qualify to claim the EIC by meeting all the rules described in this publication.

Exception 1.   Do not file Form 8862 if either (1) or (2) below is true.
  1. After your EIC was reduced or disallowed in the earlier year:

    1. You filed Form 8862 in a later year and your EIC for that later year was allowed, and

    2. Your EIC has not been reduced or disallowed again for any reason other than a math or clerical error.

  2. You are taking the EIC without a qualifying child for 2013 and the only reason your EIC was reduced or disallowed in the earlier year was because the IRS determined that a child listed on Schedule EIC was not your qualifying child.

In either of these cases, you can take the EIC without filing Form 8862 if you meet all the EIC eligibility requirements.

Exception 2.   Do not file Form 8862 or take the EIC for:
  • 2 years after there was a final determination that your EIC claim was due to reckless or intentional disregard of the EIC rules, or

  • 10 years after there was a final determination that your EIC claim was due to fraud.

More information.   For details, see Are You Prohibited From Claiming the EIC for a Period of Years? in this chapter.

  The date on which your EIC was denied and the date on which you file your 2013 return affect whether you need to attach Form 8862 to your 2013 return or to a later return. The following examples demonstrate whether Form 8862 is required for 2013 or 2014.

Example 1—Form 8862 required for 2013.

You filed your 2012 tax return in March 2013 and claimed the EIC with a qualifying child. The IRS questioned the EIC, and you were unable to prove the child was a qualifying child. In September 2013, you received a statutory notice of deficiency telling you that an adjustment would be made and tax assessed unless you filed a petition with the Tax Court within 90 days. You did not act on this notice within 90 days. Therefore, your EIC was denied in December 2013. To claim the EIC with a qualifying child on your 2013 return, you must complete and attach Form 8862 to that return. However, to claim the EIC without a qualifying child on your 2013 return, you do not need to file Form 8862.

Example 2—Form 8862 required for 2014.

The facts are the same as in the previous example except that you received the statutory notice of deficiency in February 2014. Because the 90-day period referred to in the statutory notice is not over when you are ready to file your return for 2013, you should not attach Form 8862 to your 2013 return. However, to claim the EIC with a qualifying child for 2014, you must complete and attach Form 8862 to your return for that year. To claim the EIC without a qualifying child for 2014, you do not need to file Form 8862.

Exception for math or clerical errors.   If your EIC was denied or reduced as a result of a math or clerical error, do not attach Form 8862 to your next tax return. For example, if your arithmetic is incorrect, the IRS can correct it. If you do not provide a correct social security number, the IRS can deny the EIC. These kinds of errors are called math or clerical errors.

Omission of Form 8862.   If you are required to attach Form 8862 to your 2013 tax return, and you claim the EIC without attaching a completed Form 8862, your claim will be automatically denied. This is considered a math or clerical error. You will not be permitted to claim the EIC without a completed Form 8862.

Additional documents may be required.   You may have to provide the IRS with additional documents or information before a refund relating to the EIC you claim is released to you, even if you attach a properly completed Form 8862 to your return.

Are You Prohibited From Claiming the EIC for a Period of Years?

If your EIC for any year after 1996 was denied and it was determined that your error was due to reckless or intentional disregard of the EIC rules, then you cannot claim the EIC for the next 2 years. If your error was due to fraud, then you cannot claim the EIC for the next 10 years. The date on which your EIC was denied and the date on which you file your 2013 return affect the years for which you are prohibited from claiming the EIC. The following examples demonstrate which years you are prohibited from claiming the EIC.

Example 3—cannot claim EIC for 2 years.

You claimed the EIC on your 2012 tax return, which you filed in March 2013. The IRS determined you were not entitled to the EIC and that your error was due to reckless or intentional disregard of the EIC rules. In September 2013, you received a statutory notice of deficiency telling you an adjustment would be made and tax assessed unless you filed a petition with the Tax Court within 90 days. You did not act on this notice within 90 days. Therefore, your EIC was denied in December 2013. You cannot claim the EIC for tax year 2013 or 2014. To claim the EIC on your return for 2015, you must complete and attach Form 8862 to your return for that year.

Example 4.

The facts are the same as in Example 3, except that your 2012 EIC was not denied until after you filed your 2013 return. You cannot claim the EIC for tax year 2014 or 2015. To claim the EIC on your return for 2016, you must complete and attach Form 8862 to your return for that year.

Example 5—cannot claim EIC for 10 years.

You claimed the EIC on your 2012 tax return, which you filed in February 2013. The IRS determined you were not entitled to the EIC and that your error was due to fraud. In September 2013, you received a statutory notice of deficiency telling you an adjustment would be made and tax assessed unless you filed a petition with the Tax Court within 90 days. You did not act on this notice within 90 days. Therefore, your EIC was denied in December 2013. You cannot claim the EIC for tax years 2013 through 2022. To claim the EIC on your return for 2023, you must complete and attach Form 8862 to your return for that year.

Chapter 6—Detailed Examples

The next few pages contain two detailed examples (with a filled-in Schedule EIC and EIC Worksheet) that may be helpful if you have questions about claiming the EIC.

Example 1—Sharon Rose

Sharon Rose is age 63 and retired. She received $7,000 in social security benefits during the year and $8,000 from a part-time job. She also received a taxable pension of $6,400. Sharon had no other income. Her AGI on line 22 of Form 1040A is $14,400 ($8,000 + $6,400).

Sharon is not married and lived alone in the United States for the entire year. She cannot be claimed as a dependent on anyone else's return. She does not have any investment income and does not have a qualifying child.

Sharon reads the steps for eligibility in her Form 1040A instructions. In Step 1 she discovers that, because her AGI ($14,400) is not less than $14,340, she cannot take the EIC. She completes the rest of her Form 1040A and files it with the IRS.

Example 2—Cynthia and Jerry Grey

Cynthia and Jerry Grey have two children, Kirk, age 8, and Susanne, age 6. The children lived with Cynthia and Jerry for all of 2013. Cynthia earned wages of $15,000 and Jerry had wages of $10,000. The Greys received $525 in interest on their savings account. They had no other income in 2013.

Cynthia and Jerry have the 2013 Form 1040A and instructions. They want to see if they qualify for the EIC, so they follow the steps in the instructions for lines 38a and 38b.

Step 1.   The amount Cynthia and Jerry entered on Form 1040A, line 22, was $25,525. They both have valid social security numbers (SSNs). They will file a joint return. Neither Cynthia nor Jerry is a nonresident alien. Therefore, the answers they give to the questions in Step 1 allow them to proceed to Step 2.

Step 2.   The only investment income the Greys have is their $525 interest income. That amount is not more than $3,300, so they answer “No” to the second question in Step 2 and go to Step 3.

Step 3.   Their children, Kirk and Susanne, meet the relationship, age, residency, and joint return tests to be Cynthia and Jerry's qualifying children, so Cynthia and Jerry answer “Yes” to the first question in Step 3. Kirk and Susanne are not qualifying children of anyone else. Both children have valid SSNs. Cynthia and Jerry are filing a joint return, so they answer “No” to the second question in Step 3. This means they can skip question 3 and Step 4 and go to Step 5.

Step 5.   Cynthia and Jerry figure their earned income to be $25,000, the amount of their combined wages. This is less than $48,378, so they go to Step 6 to figure their credit.

Step 6.   Cynthia and Jerry want to figure their EIC themselves, so they complete the EIC Worksheet in the Form 1040A instructions (shown later).

Completing the EIC Worksheet.   Cynthia and Jerry complete their worksheet as follows.
  1. Cynthia and Jerry enter their total earned income ($25,000) on line 1.

  2. To find their credit, they go to the EIC Table (shown later in this publication). The part of the EIC Table they use is included as part of this example. They find their earned income of $25,000 in the range of $25,000 to $25,050. They follow this line across to the column Two children under Married filing jointly and find $4,918. They enter $4,918 on line 2.

  3. They enter on line 3 their AGI ($25,525) and see that it is different from the amount on line 1.

  4. They look up $25,525 in the EIC Table and enter the amount of $4,813 on line 5.

  5. They enter $4,813 on line 6. This is the smaller of the line 2 amount ($4,918) and the line 5 amount ($4,813).

  6. The Greys enter $4,813 on line 38a of their Form 1040A. They will now complete Schedule EIC (shown later) and attach it to their return. They will keep the EIC Worksheet for their records.

Excerpt from EIC Table for Example 2

This image is too large to be displayed in the current screen. Please click the link to view the image.

Excerpt from EIC table for Cynthia and Jerry Grey's example

Filled-in EIC Worksheet — Cynthia and Jerry Grey (Page references are to the Form 1040A instructions)

This image is too large to be displayed in the current screen. Please click the link to view the image.

Filled-in EIC Worksheet — Cynthia and Jerry Grey

Filled-in Schedule EIC—Cynthia and Jerry Grey

This image is too large to be displayed in the current screen. Please click the link to view the image.

Schedule EIC for Cynthia and Jerry's Example.


More Online Publications