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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 $9,000 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 $15,400 ($9,000 + $6,400).

Sharon isn't 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 doesn't have any investment income and doesn't have a qualifying child.

Sharon reads the steps for eligibility in her Form 1040A instructions. In Step 1 she discovers that, because her AGI ($15,400) isn't less than $14,880, 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 9, and Susanne, age 7. The children lived with Cynthia and Jerry for all of 2016. 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 2016.

Cynthia and Jerry have the 2016 Form 1040A and instructions. They want to see if they qualify for the EIC, so they follow the steps in the instructions for lines 42a and 42b.

Step 1.   The amount Cynthia and Jerry entered on Form 1040A, line 22, was $25,525. They both have valid social security numbers (SSNs), which they have had for many years. 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 isn't more than $3,400, 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 aren't qualifying children of anyone else. Both children have valid SSNs, which they got soon after birth. Cynthia and Jerry are filing a joint return, so they answer “Yes” 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 $50,198, 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 $5,301. They enter $5,301 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 $5,196 on line 5.

  5. They enter $5,196 on line 6. This is the smaller of the line 2 amount ($5,301) and the line 5 amount ($5,196).

  6. The Greys enter $5,196 on line 42a 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

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

Filled-in EIC Worksheet — Cynthia and Jerry Grey

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Filled-in EIC Worksheet — Cynthia and Jerry Grey

Filled-in Schedule EIC—Cynthia and Jerry Grey

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Schedule EIC for Cynthia and Jerry's Example.

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