Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Tax Software 2005 2006

H&r Block Free Tax ReturnFree Online Tax PreparationFile 1040nr OnlineFile State Tax Returns FreeTurbotax 2011 Free1040x Online SoftwareFree Tax Preparation OrganizerAmending Tax ReturnsIrs.gov Forms 1040xFederal Income Tax 1040ez Online2010 EfileFree Tax Filing H&r Block1040 Ez Electronic FilingFree State Income Tax E FileCan I E File A 2012 Tax ReturnFree State And Federal Tax Filing For Low IncomeFile 1040nr Ez OnlineIncome Tax PreparationH&r Block Free State Filing1040ez 2011 FormH & R Block Advantage Free FileFile Taxes For 2010E File 2012 Tax Return2011 1040 Form DownloadHow Do You File An Amended Tax ReturnCan I Efile 1040xTax AmendedFreetaxCan You File 2012 And 2013 Taxes TogetherWww.myfreetax.comAmended FormsComplete 1040x OnlineHr Block Online TaxesFile Free TaxesIrs Forms 2009 Form 10401040nr Free FileTax Calculator 2012File Taxes Online For FreeFree File Tax ExtensionFree Online Tax Filing State And Federal

Tax Software 2005 2006

Tax software 2005 2006 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. Tax software 2005 2006 S. Tax software 2005 2006 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. Tax software 2005 2006 You must meet all seven rules to qualify for the earned income credit. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 Adjusted gross income (AGI). Tax software 2005 2006   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Tax software 2005 2006   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Tax software 2005 2006 You do not need to read the rest of this publication. Tax software 2005 2006 Example—AGI is more than limit. Tax software 2005 2006 Your AGI is $38,550, you are single, and you have one qualifying child. Tax software 2005 2006 You cannot claim the EIC because your AGI is not less than $37,870. Tax software 2005 2006 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. Tax software 2005 2006 Community property. Tax software 2005 2006   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. Tax software 2005 2006 This is different from the community property rules that apply under Rule 7. Tax software 2005 2006 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). Tax software 2005 2006 Any qualifying child listed on Schedule EIC also must have a valid SSN. Tax software 2005 2006 (See Rule 8 if you have a qualifying child. Tax software 2005 2006 ) 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. Tax software 2005 2006 An example of a federally funded benefit is Medicaid. Tax software 2005 2006 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. Tax software 2005 2006 S. Tax software 2005 2006 citizen or permanent resident, ask the SSA for a new social security card without the legend. Tax software 2005 2006 If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Tax software 2005 2006 S. Tax software 2005 2006 Individual Income Tax Return, to claim the EIC. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 citizen. Tax software 2005 2006   If you were a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen when you received your SSN, you have a valid SSN. Tax software 2005 2006 Valid for work only with INS authorization or DHS authorization. Tax software 2005 2006   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. Tax software 2005 2006 SSN missing or incorrect. Tax software 2005 2006   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Tax software 2005 2006 Other taxpayer identification number. Tax software 2005 2006   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). Tax software 2005 2006 ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Tax software 2005 2006 No SSN. Tax software 2005 2006   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). Tax software 2005 2006 You cannot claim the EIC. Tax software 2005 2006 Getting an SSN. Tax software 2005 2006   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. Tax software 2005 2006 You can get Form SS-5 online at www. Tax software 2005 2006 socialsecurity. Tax software 2005 2006 gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Tax software 2005 2006 Filing deadline approaching and still no SSN. Tax software 2005 2006   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Tax software 2005 2006 Request an automatic 6-month extension of time to file your return. Tax software 2005 2006 You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Tax software 2005 2006 S. Tax software 2005 2006 Individual Income Tax Return. Tax software 2005 2006 For more information, see the instructions for Form 4868. Tax software 2005 2006 File the return on time without claiming the EIC. Tax software 2005 2006 After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Tax software 2005 2006 Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 Your filing status cannot be “Married filing separately. Tax software 2005 2006 ” Spouse did not live with you. Tax software 2005 2006   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. Tax software 2005 2006 In that case, you may be able to claim the EIC. Tax software 2005 2006 For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Tax software 2005 2006 Rule 4—You Must Be a U. Tax software 2005 2006 S. Tax software 2005 2006 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. Tax software 2005 2006 You can use that filing status only if one spouse is a U. Tax software 2005 2006 S. Tax software 2005 2006 citizen or resident alien and you choose to treat the nonresident spouse as a U. Tax software 2005 2006 S. Tax software 2005 2006 resident. Tax software 2005 2006 If you make this choice, you and your spouse are taxed on your worldwide income. Tax software 2005 2006 If you need more information on making this choice, get Publication 519, U. Tax software 2005 2006 S. Tax software 2005 2006 Tax Guide for Aliens. Tax software 2005 2006 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). Tax software 2005 2006 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. Tax software 2005 2006 You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Tax software 2005 2006 U. Tax software 2005 2006 S. Tax software 2005 2006 possessions are not foreign countries. Tax software 2005 2006 See Publication 54, Tax Guide for U. Tax software 2005 2006 S. Tax software 2005 2006 Citizens and Resident Aliens Abroad, for more detailed information. Tax software 2005 2006 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. Tax software 2005 2006 If your investment income is more than $3,300, you cannot claim the credit. Tax software 2005 2006 Form 1040EZ. Tax software 2005 2006   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. Tax software 2005 2006 Form 1040A. Tax software 2005 2006   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. Tax software 2005 2006 Form 1040. Tax software 2005 2006   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Tax software 2005 2006    Worksheet 1. Tax software 2005 2006 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. Tax software 2005 2006 Interest and Dividends         1. Tax software 2005 2006 Enter any amount from Form 1040, line 8a 1. Tax software 2005 2006   2. Tax software 2005 2006 Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Tax software 2005 2006   3. Tax software 2005 2006 Enter any amount from Form 1040, line 9a 3. Tax software 2005 2006   4. Tax software 2005 2006 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. Tax software 2005 2006 (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Tax software 2005 2006 ) 4. Tax software 2005 2006   Capital Gain Net Income         5. Tax software 2005 2006 Enter the amount from Form 1040, line 13. Tax software 2005 2006 If the amount on that line is a loss, enter -0- 5. Tax software 2005 2006       6. Tax software 2005 2006 Enter any gain from Form 4797, Sales of Business Property, line 7. Tax software 2005 2006 If the amount on that line is a loss, enter -0-. Tax software 2005 2006 (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Tax software 2005 2006 ) 6. Tax software 2005 2006       7. Tax software 2005 2006 Substract line 6 of this worksheet from line 5 of this worksheet. Tax software 2005 2006 (If the result is less than zero, enter -0-. Tax software 2005 2006 ) 7. Tax software 2005 2006   Royalties and Rental Income From Personal Property         8. Tax software 2005 2006 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. Tax software 2005 2006       9. Tax software 2005 2006 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. Tax software 2005 2006       10. Tax software 2005 2006 Subtract the amount on line 9 of this worksheet from the amount on line 8. Tax software 2005 2006 (If the result is less than zero, enter -0-. Tax software 2005 2006 ) 10. Tax software 2005 2006   Passive Activities         11. Tax software 2005 2006 Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Tax software 2005 2006 (g)), 34a (col. Tax software 2005 2006 (d)), or 40). Tax software 2005 2006 (See instructions below for lines 11 and 12. Tax software 2005 2006 ) 11. Tax software 2005 2006       12. Tax software 2005 2006 Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Tax software 2005 2006 (f)), 34b (col. Tax software 2005 2006 (c)), or 40). Tax software 2005 2006 (See instructions below for lines 11 and 12. Tax software 2005 2006 ) 12. Tax software 2005 2006       13. Tax software 2005 2006 Combine the amounts on lines 11 and 12 of this worksheet. Tax software 2005 2006 (If the result is less than zero, enter -0-. Tax software 2005 2006 ) 13. Tax software 2005 2006   14. Tax software 2005 2006 Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Tax software 2005 2006 Enter the total. Tax software 2005 2006 This is your investment income 14. Tax software 2005 2006   15. Tax software 2005 2006 Is the amount on line 14 more than $3,300? ❑ Yes. Tax software 2005 2006 You cannot take the credit. Tax software 2005 2006  ❑ No. Tax software 2005 2006 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). Tax software 2005 2006       Instructions for lines 11 and 12. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 Worksheet 2. Tax software 2005 2006 Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Tax software 2005 2006 Note. Tax software 2005 2006 Fill out a separate Worksheet 2 for each Form 8814. Tax software 2005 2006     1. Tax software 2005 2006 Enter the amount from Form 8814, line 2a 1. Tax software 2005 2006   2. Tax software 2005 2006 Enter the amount from Form 8814, line 2b 2. Tax software 2005 2006   3. Tax software 2005 2006 Subtract line 2 from line 1 3. Tax software 2005 2006   4. Tax software 2005 2006 Enter the amount from Form 8814, line 1a 4. Tax software 2005 2006   5. Tax software 2005 2006 Add lines 3 and 4 5. Tax software 2005 2006   6. Tax software 2005 2006 Enter the amount of the child's Alaska Permanent Fund dividend 6. Tax software 2005 2006   7. Tax software 2005 2006 Divide line 6 by line 5. Tax software 2005 2006 Enter the result as a decimal (rounded to at least three places) 7. Tax software 2005 2006   8. Tax software 2005 2006 Enter the amount from Form 8814, line 12 8. Tax software 2005 2006   9. Tax software 2005 2006 Multiply line 7 by line 8 9. Tax software 2005 2006   10. Tax software 2005 2006 Subtract line 9 from line 8. Tax software 2005 2006 Enter the result on line 4 of Worksheet 1 10. Tax software 2005 2006     (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. Tax software 2005 2006 )     Example—completing Worksheet 2. Tax software 2005 2006 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. Tax software 2005 2006 You choose to report this income on your return. Tax software 2005 2006 You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Tax software 2005 2006 After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Tax software 2005 2006 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. Tax software 2005 2006 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Tax software 2005 2006 You then enter $200 on line 4 of Worksheet 1. Tax software 2005 2006 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. Tax software 2005 2006 If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Tax software 2005 2006 If you are an employee, earned income includes all the taxable income you get from your employer. Tax software 2005 2006 Rule 15 has information that will help you figure the amount of your earned income. Tax software 2005 2006 If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Tax software 2005 2006 Earned Income Earned income includes all of the following types of income. Tax software 2005 2006 Wages, salaries, tips, and other taxable employee pay. Tax software 2005 2006 Employee pay is earned income only if it is taxable. Tax software 2005 2006 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Tax software 2005 2006 But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Tax software 2005 2006 Net earnings from self-employment. Tax software 2005 2006 Gross income received as a statutory employee. Tax software 2005 2006 Wages, salaries, and tips. Tax software 2005 2006    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Tax software 2005 2006 You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Tax software 2005 2006 Nontaxable combat pay election. Tax software 2005 2006   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Tax software 2005 2006 The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Tax software 2005 2006 Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Tax software 2005 2006 For details, see Nontaxable combat pay in chapter 4. Tax software 2005 2006 Net earnings from self-employment. Tax software 2005 2006   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. Tax software 2005 2006 Minister's housing. Tax software 2005 2006   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. Tax software 2005 2006 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). Tax software 2005 2006 Statutory employee. Tax software 2005 2006   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Tax software 2005 2006 You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Tax software 2005 2006 Strike benefits. Tax software 2005 2006   Strike benefits paid by a union to its members are earned income. Tax software 2005 2006 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. Tax software 2005 2006 Each approved form exempts certain income from social security taxes. Tax software 2005 2006 Each form is discussed here in terms of what is or is not earned income for the EIC. Tax software 2005 2006 Form 4361. Tax software 2005 2006   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Tax software 2005 2006 This includes wages, salaries, tips, and other taxable employee compensation. Tax software 2005 2006 A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Tax software 2005 2006 Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Tax software 2005 2006 Examples include fees for performing marriages and honoraria for delivering speeches. Tax software 2005 2006 Form 4029. Tax software 2005 2006   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Tax software 2005 2006 However, amounts you received as a self-employed individual do not count as earned income. Tax software 2005 2006 Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Tax software 2005 2006 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. Tax software 2005 2006 Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Tax software 2005 2006 You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Tax software 2005 2006 Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Tax software 2005 2006 Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Tax software 2005 2006 Disability insurance payments. Tax software 2005 2006   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Tax software 2005 2006 It does not matter whether you have reached minimum retirement age. Tax software 2005 2006 If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Tax software 2005 2006 ” 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. Tax software 2005 2006 Do not include any of these items in your earned income. Tax software 2005 2006 Earnings while an inmate. Tax software 2005 2006   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Tax software 2005 2006 This includes amounts for work performed while in a work release program or while in a halfway house. Tax software 2005 2006 Workfare payments. Tax software 2005 2006   Nontaxable workfare payments are not earned income for the EIC. Tax software 2005 2006 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. Tax software 2005 2006 Community property. Tax software 2005 2006   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. Tax software 2005 2006 That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Tax software 2005 2006 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. Tax software 2005 2006 Nevada, Washington, and California domestic partners. Tax software 2005 2006   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Tax software 2005 2006 Your earned income for the EIC does not include any amount earned by your partner. Tax software 2005 2006 Your earned income includes the entire amount you earned. Tax software 2005 2006 For details, see Publication 555. Tax software 2005 2006 Conservation Reserve Program (CRP) payments. Tax software 2005 2006   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. Tax software 2005 2006 Nontaxable military pay. Tax software 2005 2006   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Tax software 2005 2006 Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Tax software 2005 2006 See Publication 3, Armed Forces' Tax Guide, for more information. Tax software 2005 2006    Combat pay. Tax software 2005 2006 You can elect to include your nontaxable combat pay in earned income for the EIC. Tax software 2005 2006 See Nontaxable combat pay in chapter 4. Tax software 2005 2006 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. Tax software 2005 2006 This chapter discusses Rules 8 through 10. Tax software 2005 2006 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. Tax software 2005 2006 You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Tax software 2005 2006 (You cannot file Form 1040EZ. Tax software 2005 2006 ) You also must complete Schedule EIC and attach it to your return. Tax software 2005 2006 If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Tax software 2005 2006 No qualifying child. Tax software 2005 2006   If you do not meet Rule 8, you do not have a qualifying child. Tax software 2005 2006 Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 The fours tests are: Relationship, Age, Residency, and Joint return. Tax software 2005 2006 The four tests are illustrated in Figure 1. Tax software 2005 2006 The paragraphs that follow contain more information about each test. Tax software 2005 2006 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). Tax software 2005 2006 The following definitions clarify the relationship test. Tax software 2005 2006 Adopted child. Tax software 2005 2006   An adopted child is always treated as your own child. Tax software 2005 2006 The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Tax software 2005 2006 Foster child. Tax software 2005 2006   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. Tax software 2005 2006 (An authorized placement agency includes a state or local government agency. Tax software 2005 2006 It also includes a tax-exempt organization licensed by a state. Tax software 2005 2006 In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Tax software 2005 2006 ) Example. Tax software 2005 2006 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. Tax software 2005 2006 Debbie is your foster child. Tax software 2005 2006 Figure 1. Tax software 2005 2006 Tests for Qualifying Child Please click here for the text description of the image. Tax software 2005 2006 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. Tax software 2005 2006 The following examples and definitions clarify the age test. Tax software 2005 2006 Example 1—child not under age 19. Tax software 2005 2006 Your son turned 19 on December 10. Tax software 2005 2006 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. Tax software 2005 2006 Example 2—child not younger than you or your spouse. Tax software 2005 2006 Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Tax software 2005 2006 He is not disabled. Tax software 2005 2006 Both you and your spouse are 21 years old, and you file a joint return. Tax software 2005 2006 Your brother is not your qualifying child because he is not younger than you or your spouse. Tax software 2005 2006 Example 3—child younger than your spouse but not younger than you. Tax software 2005 2006 The facts are the same as in Example 2 except that your spouse is 25 years old. Tax software 2005 2006 Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Tax software 2005 2006 Student defined. Tax software 2005 2006   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. Tax software 2005 2006   The 5 calendar months need not be consecutive. Tax software 2005 2006   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. Tax software 2005 2006 School defined. Tax software 2005 2006   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Tax software 2005 2006 However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Tax software 2005 2006 Vocational high school students. Tax software 2005 2006   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. Tax software 2005 2006 Permanently and totally disabled. Tax software 2005 2006   Your child is permanently and totally disabled if both of the following apply. Tax software 2005 2006 He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Tax software 2005 2006 A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Tax software 2005 2006 Residency Test Your child must have lived with you in the United States for more than half of 2013. Tax software 2005 2006 The following definitions clarify the residency test. Tax software 2005 2006 United States. Tax software 2005 2006   This means the 50 states and the District of Columbia. Tax software 2005 2006 It does not include Puerto Rico or U. Tax software 2005 2006 S. Tax software 2005 2006 possessions such as Guam. Tax software 2005 2006 Homeless shelter. Tax software 2005 2006   Your home can be any location where you regularly live. Tax software 2005 2006 You do not need a traditional home. Tax software 2005 2006 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. Tax software 2005 2006 Military personnel stationed outside the United States. Tax software 2005 2006   U. Tax software 2005 2006 S. Tax software 2005 2006 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. Tax software 2005 2006 Extended active duty. Tax software 2005 2006   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Tax software 2005 2006 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. Tax software 2005 2006 Birth or death of child. Tax software 2005 2006    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. Tax software 2005 2006 Temporary absences. Tax software 2005 2006   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. Tax software 2005 2006 Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Tax software 2005 2006 Kidnapped child. Tax software 2005 2006   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. Tax software 2005 2006 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. Tax software 2005 2006 This treatment applies for all years until the child is returned. Tax software 2005 2006 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. Tax software 2005 2006   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Tax software 2005 2006 Joint Return Test To meet this test, the child cannot file a joint return for the year. Tax software 2005 2006 Exception. Tax software 2005 2006   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. Tax software 2005 2006 Example 1—child files joint return. Tax software 2005 2006 You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Tax software 2005 2006 He earned $25,000 for the year. Tax software 2005 2006 The couple files a joint return. Tax software 2005 2006 Because your daughter and her husband file a joint return, she is not your qualifying child. Tax software 2005 2006 Example 2—child files joint return to get refund of tax withheld. Tax software 2005 2006 Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Tax software 2005 2006 They do not have a child. Tax software 2005 2006 Neither is required to file a tax return. Tax software 2005 2006 Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Tax software 2005 2006 The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Tax software 2005 2006 Example 3—child files joint return to claim American opportunity credit. Tax software 2005 2006 The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 The exception to the joint return test does not apply, so your son is not your qualifying child. Tax software 2005 2006 Married child. Tax software 2005 2006   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. Tax software 2005 2006    Social security number. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006   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. Tax software 2005 2006 For more information about SSNs, see Rule 2. Tax software 2005 2006 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. Tax software 2005 2006 However, only one of these persons can actually treat the child as a qualifying child. Tax software 2005 2006 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). Tax software 2005 2006 The exemption for the child. Tax software 2005 2006 The child tax credit. Tax software 2005 2006 Head of household filing status. Tax software 2005 2006 The credit for child and dependent care expenses. Tax software 2005 2006 The exclusion for dependent care benefits. Tax software 2005 2006 The EIC. Tax software 2005 2006 The other person cannot take any of these benefits based on this qualifying child. Tax software 2005 2006 In other words, you and the other person cannot agree to divide these tax benefits between you. Tax software 2005 2006 The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Tax software 2005 2006 The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Tax software 2005 2006 However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Tax software 2005 2006 Tiebreaker rules. Tax software 2005 2006   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. Tax software 2005 2006 If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 See Example 8. Tax software 2005 2006   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. Tax software 2005 2006 See Examples 1 through 13. Tax software 2005 2006   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. Tax software 2005 2006 If the other person cannot claim the EIC. Tax software 2005 2006   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. Tax software 2005 2006 See Examples 6 and 7. Tax software 2005 2006 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. Tax software 2005 2006 Examples. Tax software 2005 2006    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Tax software 2005 2006 Example 1—child lived with parent and grandparent. Tax software 2005 2006 You and your 2-year-old son Jimmy lived with your mother all year. Tax software 2005 2006 You are 25 years old, unmarried, and your AGI is $9,000. Tax software 2005 2006 Your only income was $9,000 from a part-time job. Tax software 2005 2006 Your mother's only income was $20,000 from her job, and her AGI is $20,000. Tax software 2005 2006 Jimmy's father did not live with you or Jimmy. Tax software 2005 2006 The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Tax software 2005 2006 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. Tax software 2005 2006 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). Tax software 2005 2006 He is not a qualifying child of anyone else, including his father. Tax software 2005 2006 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). Tax software 2005 2006 Example 2—parent has higher AGI than grandparent. Tax software 2005 2006 The facts are the same as in Example 1 except your AGI is $25,000. Tax software 2005 2006 Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Tax software 2005 2006 Only you can claim him. Tax software 2005 2006 Example 3—two persons claim same child. Tax software 2005 2006 The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 Example 4—qualifying children split between two persons. Tax software 2005 2006 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. Tax software 2005 2006 Only one of you can claim each child. Tax software 2005 2006 However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Tax software 2005 2006 For example, if you claim one child, your mother can claim the other two. Tax software 2005 2006 Example 5—taxpayer who is a qualifying child. Tax software 2005 2006 The facts are the same as in Example 1 except that you are only 18 years old. Tax software 2005 2006 This means you are a qualifying child of your mother. Tax software 2005 2006 Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Tax software 2005 2006 Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Tax software 2005 2006 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. Tax software 2005 2006 Example 6—grandparent with too much earned income to claim EIC. Tax software 2005 2006 The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Tax software 2005 2006 Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Tax software 2005 2006 Example 7—parent with too much earned income to claim EIC. Tax software 2005 2006 The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Tax software 2005 2006 Your earned income is too high for you to claim the EIC. Tax software 2005 2006 But your mother cannot claim the EIC either, because her AGI is not higher than yours. Tax software 2005 2006 Example 8—child lived with both parents and grandparent. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 In other words, each parent's AGI can be treated as $15,000. Tax software 2005 2006 Example 9—separated parents. Tax software 2005 2006 You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Tax software 2005 2006 In August and September, Joey lived with you. Tax software 2005 2006 For the rest of the year, Joey lived with your husband, who is Joey's father. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 You and your husband will file separate returns. Tax software 2005 2006 Your husband agrees to let you treat Joey as a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Tax software 2005 2006 See Rule 3. Tax software 2005 2006 Example 10—separated parents claim same child. Tax software 2005 2006 The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Tax software 2005 2006 In this case, only your husband will be allowed to treat Joey as a qualifying child. Tax software 2005 2006 This is because, during 2013, the boy lived with him longer than with you. Tax software 2005 2006 You cannot claim the EIC (either with or without a qualifying child). Tax software 2005 2006 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. Tax software 2005 2006 See Rule 3. Tax software 2005 2006 Example 11—unmarried parents. Tax software 2005 2006 You, your 5-year-old son, and your son's father lived together all year. Tax software 2005 2006 You and your son's father are not married. Tax software 2005 2006 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. Tax software 2005 2006 Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Tax software 2005 2006 Neither of you had any other income. Tax software 2005 2006 Your son's father agrees to let you treat the child as a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 Example 12—unmarried parents claim same child. Tax software 2005 2006 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. Tax software 2005 2006 In this case, only your son's father will be allowed to treat your son as a qualifying child. Tax software 2005 2006 This is because his AGI, $14,000, is more than your AGI, $12,000. Tax software 2005 2006 You cannot claim the EIC (either with or without a qualifying child). Tax software 2005 2006 Example 13—child did not live with a parent. Tax software 2005 2006 You and your 7-year-old niece, your sister's child, lived with your mother all year. Tax software 2005 2006 You are 25 years old, and your AGI is $9,300. Tax software 2005 2006 Your only income was from a part-time job. Tax software 2005 2006 Your mother's AGI is $15,000. Tax software 2005 2006 Her only income was from her job. Tax software 2005 2006 Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Tax software 2005 2006 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. Tax software 2005 2006 However, only your mother can treat her as a qualifying child. Tax software 2005 2006 This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Tax software 2005 2006 Special rule for divorced or separated parents (or parents who live apart). Tax software 2005 2006   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. Tax software 2005 2006 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. Tax software 2005 2006 The child received over half of his or her support for the year from the parents. Tax software 2005 2006 The child is in the custody of one or both parents for more than half of 2013. Tax software 2005 2006 Either of the following statements is true. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 For details, see Publication 501. Tax software 2005 2006 Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Tax software 2005 2006 Applying Rule 9 to divorced or separated parents (or parents who live apart). Tax software 2005 2006   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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 Example 1. Tax software 2005 2006 You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Tax software 2005 2006 Your AGI is $10,000. Tax software 2005 2006 Your mother’s AGI is $25,000. Tax software 2005 2006 Your son's father did not live with you or your son. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 You and your mother did not have any child care expenses or dependent care benefits. Tax software 2005 2006 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. Tax software 2005 2006 Example 2. Tax software 2005 2006 The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Tax software 2005 2006 Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Tax software 2005 2006 Example 3. Tax software 2005 2006 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. Tax software 2005 2006 Your mother also claims him as a qualifying child for head of household filing status. Tax software 2005 2006 You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Tax software 2005 2006 The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 ) if all of the following statements are true. Tax software 2005 2006 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Tax software 2005 2006 Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Tax software 2005 2006 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. Tax software 2005 2006 You lived with that person in the United States for more than half of the year. Tax software 2005 2006 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). Tax software 2005 2006 For more details about the tests to be a qualifying child, see Rule 8. Tax software 2005 2006 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Tax software 2005 2006 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. Tax software 2005 2006 Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Tax software 2005 2006 Example. Tax software 2005 2006 You and your daughter lived with your mother all year. Tax software 2005 2006 You are 22 years old, unmarried, and attended a trade school full time. Tax software 2005 2006 You had a part-time job and earned $5,700. Tax software 2005 2006 You had no other income. Tax software 2005 2006 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Tax software 2005 2006 She can claim the EIC if she meets all the other requirements. Tax software 2005 2006 Because you are your mother's qualifying child, you cannot claim the EIC. Tax software 2005 2006 This is so even if your mother cannot or does not claim the EIC. Tax software 2005 2006 Child of person not required to file a return. Tax software 2005 2006   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. Tax software 2005 2006 Example 1—return not required. Tax software 2005 2006 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. Tax software 2005 2006 As a result, you are not your mother's qualifying child. Tax software 2005 2006 You can claim the EIC if you meet all the other requirements to do so. Tax software 2005 2006 Example 2—return filed to get refund of tax withheld. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 As a result, you are not your mother's qualifying child. Tax software 2005 2006 You can claim the EIC if you meet all the other requirements to do so. Tax software 2005 2006 Example 3—return filed to get EIC. Tax software 2005 2006 The facts are the same as in Example 2 except your mother claimed the EIC on her return. Tax software 2005 2006 Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Tax software 2005 2006 As a result, you are your mother's qualifying child. Tax software 2005 2006 You cannot claim the EIC. Tax software 2005 2006 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. Tax software 2005 2006 This chapter discusses Rules 11 through 14. Tax software 2005 2006 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. Tax software 2005 2006 You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Tax software 2005 2006 If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Tax software 2005 2006 If you have a qualifying child. Tax software 2005 2006   If you meet Rule 8, you have a qualifying child. Tax software 2005 2006 If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 It does not matter which spouse meets the age test, as long as one of the spouses does. Tax software 2005 2006 You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Tax software 2005 2006 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. Tax software 2005 2006 If neither you nor your spouse meets the age test, you cannot claim the EIC. Tax software 2005 2006 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Tax software 2005 2006 Death of spouse. Tax software 2005 2006   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. Tax software 2005 2006 Example 1. Tax software 2005 2006 You are age 28 and unmarried. Tax software 2005 2006 You meet the age test. Tax software 2005 2006 Example 2—spouse meets age test. Tax software 2005 2006 You are married and filing a joint return. Tax software 2005 2006 You are age 23 and your spouse is age 27. Tax software 2005 2006 You meet the age test because your spouse is at least age 25 but under age 65. Tax software 2005 2006 Example 3—spouse dies in 2013. Tax software 2005 2006 You are married and filing a joint return with your spouse who died in August 2013. Tax software 2005 2006 You are age 67. Tax software 2005 2006 Your spouse would have become age 65 in November 2013. Tax software 2005 2006 Because your spouse was under age 65 when she died, you meet the age test. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Tax software 2005 2006 Example 1. Tax software 2005 2006 In 2013, you were age 25, single, and living at home with your parents. Tax software 2005 2006 You worked and were not a student. Tax software 2005 2006 You earned $7,500. Tax software 2005 2006 Your parents cannot claim you as a dependent. Tax software 2005 2006 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. Tax software 2005 2006 You meet this rule. Tax software 2005 2006 You can claim the EIC if you meet all the other requirements. Tax software 2005 2006 Example 2. Tax software 2005 2006 The facts are the same as in Example 1, except that you earned $2,000. Tax software 2005 2006 Your parents can claim you as a dependent but decide not to. Tax software 2005 2006 You do not meet this rule. Tax software 2005 2006 You cannot claim the credit because your parents could have claimed you as a dependent. Tax software 2005 2006 Joint returns. Tax software 2005 2006   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Tax software 2005 2006   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. Tax software 2005 2006 But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Tax software 2005 2006 Example 1—return filed to get refund of tax withheld. Tax software 2005 2006 You are 26 years old. Tax software 2005 2006 You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Tax software 2005 2006 Neither you nor your wife is required to file a tax return. Tax software 2005 2006 You do not have a child. Tax software 2005 2006 Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Tax software 2005 2006 Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Tax software 2005 2006 They can claim exemptions for you and your wife if all the other tests to do so are met. Tax software 2005 2006 Example 2—return filed to get EIC. Tax software 2005 2006 The facts are the same as in Example 1except no taxes were taken out of your pay. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 Your parents cannot claim an exemption for either you or your wife. Tax software 2005 2006 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. Tax software 2005 2006 ) if all of the following statements are true. Tax software 2005 2006 You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Tax software 2005 2006 Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Tax software 2005 2006 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. Tax software 2005 2006 You lived with that person in the United States for more than half of the year. Tax software 2005 2006 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). Tax software 2005 2006 For more details about the tests to be a qualifying child, see Rule 8. Tax software 2005 2006 If you are a qualifying child of another taxpayer, you cannot claim the EIC. Tax software 2005 2006 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. Tax software 2005 2006 Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Tax software 2005 2006 Example. Tax software 2005 2006 You lived with your mother all year. Tax software 2005 2006 You are age 26, unmarried, and permanently and totally disabled. Tax software 2005 2006 Your only income was from a community center where you went three days a week to answer telephones. Tax software 2005 2006 You earned $5,000 for the year and provided more than half of your own support. Tax software 2005 2006 Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Tax software 2005 2006 She can claim the EIC if she meets all the other requirements. Tax software 2005 2006 Because you are a qualifying child of your mother, you cannot claim the EIC. Tax software 2005 2006 This is so even if your mother cannot or does not claim the EIC. Tax software 2005 2006 Joint returns. Tax software 2005 2006   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Tax software 2005 2006   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. Tax software 2005 2006 But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Tax software 2005 2006 Child of person not required to file a return. Tax software 2005 2006   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. Tax software 2005 2006 Example 1—return not required. Tax software 2005 2006 You lived all year with your father. Tax software 2005 2006 You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Tax software 2005 2006 You have no other income, no children, and provided more than half of your own support. Tax software 2005 2006 Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Tax software 2005 2006 As a result, you are not your father's qualifying child. Tax software 2005 2006 You can claim the EIC if you meet all the other requirements to do so. Tax software 2005 2006 Example 2—return filed to get refund of tax withheld. Tax software 2005 2006 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. Tax software 2005 2006 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. Tax software 2005 2006 As a result, you are not your father's qualifying child. Tax software 2005 2006 You can claim the EIC if you meet all the other requirements to do so. Tax software 2005 2006 Example 3—return filed to get EIC. Tax software 2005 2006 The facts are the same as in Example 2 except your father claimed the EIC on his return. Tax software 2005 2006 Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Tax software 2005 2006 As a result, you are your father's qualifying child. Tax software 2005 2006 You cannot claim the EIC. Tax software 2005 2006 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. Tax software 2005 2006 If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Tax software 2005 2006 United States. Tax software 2005 2006   This means the 50 states and the District of Columbia. Tax software 2005 2006 It does not include Puerto Rico or U. Tax software 2005 2006 S. Tax software 2005 2006 possessions such as Guam. Tax software 2005 2006 Homeless shelter. Tax software 2005 2006   Your home can be any location where you regularly live. Tax software 2005 2006 You do not need a traditional home. Tax software 2005 2006 If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Tax software 2005 2006 Military personnel stationed outside the United States. Tax software 2005 2006   U. Tax software 2005 2006 S. Tax software 2005 2006 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. Tax software 2005 2006 Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Tax software 2005 2006 You need to know the amount of your earned income to see if you meet the rule in this chapter. Tax software 2005 2006 You also need to know that amount to figure your EIC. Tax software 2005 2006 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. Tax software 2005 2006 Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Tax software 2005 2006 Employee pay is earned income only if it is taxable. Tax software 2005 2006 Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Tax software 2005 2006 But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Tax software 2005 2006 Earned income is explained in detail in Rule 7 in chapter 1. Tax software 2005 2006 Figuring earned income. Tax software 2005 2006   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. Tax software 2005 2006   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. Tax software 2005 2006   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). Tax software 2005 2006 You will then reduce that amount by any amount included on that line and described in the following list. Tax software 2005 2006 Scholarship or fellowship grants not reported on a Form W-2. Tax software 2005 2006 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. Tax software 2005 2006 Inmate's income. Tax software 2005 2006 Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Tax software 2005 2006 This includes amounts received for work performed while in a work release program or while in a halfway house. Tax software 2005 2006 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). Tax software 2005 2006 Pension or annuity from deferred compensation plans. Tax software 2005 2006 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. Tax software 2005 2006 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). Tax software 2005 2006 This amount may be reported in box 11 of your Form W-2. Tax software 2005 2006 If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Tax software 2005 2006 Clergy. Tax software 2005 2006   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
Español

Popular New Year's Resolutions

Happy New Year! These New Year's resolutions are popular every year. Here’s information that can help you achieve your goals in 2014.


The Tax Software 2005 2006

Tax software 2005 2006 4. Tax software 2005 2006   Retirement Savings Contributions Credit (Saver's Credit) Table of Contents What's New Introduction Full-time student. Tax software 2005 2006 Adjusted gross income. Tax software 2005 2006 Distributions received by spouse. Tax software 2005 2006 Testing period. Tax software 2005 2006 What's New Modified AGI limit for retirement savings contributions credit increased. Tax software 2005 2006  For 2013, you may be able to claim the retirement savings contributions credit if your modified AGI is not more than: $59,000 if your filing status is married filing jointly, $44,250 if your filing status is head of household, or $29,500 if your filing status is single, married filing separately, or qualifying widow(er). Tax software 2005 2006 Introduction You may be able to take a tax credit if you make eligible contributions (defined later) to a qualified retirement plan, an eligible deferred compensation plan, or an individual retirement arrangement (IRA). Tax software 2005 2006 You may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). Tax software 2005 2006 This credit could reduce the federal income tax you pay dollar for dollar. Tax software 2005 2006    Can you claim the credit?   If you make eligible contributions to a qualified retirement plan, an eligible deferred compensation plan, or an IRA, you can claim the credit if all of the following apply. Tax software 2005 2006 You were born before January 2, 1996. Tax software 2005 2006 You are not a full-time student (explained next). Tax software 2005 2006 No one else, such as your parent(s), claims an exemption for you on their tax return. Tax software 2005 2006 Your adjusted gross income (defined below) is not more than: $59,000 if your filing status is married filing jointly, $44,250 if your filing status is head of household, or $29,500 if your filing status is single, married filing separately, or qualifying widow(er). Tax software 2005 2006 Full-time student. Tax software 2005 2006   You are a full-time student if, during some part of each of 5 calendar months (not necessarily consecutive) during the calendar year, you are either: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government. Tax software 2005 2006 You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full time. Tax software 2005 2006 Adjusted gross income. Tax software 2005 2006   This is generally the amount on line 38 of your 2013 Form 1040; line 22 of your 2013 Form 1040A; or line 37 of your 2013 Form 1040NR. Tax software 2005 2006 However, you must add to that amount any exclusion or deduction claimed for the year for: Foreign earned income, Foreign housing costs, Income for bona fide residents of American Samoa, and Income from Puerto Rico. Tax software 2005 2006 Eligible contributions. Tax software 2005 2006   These include: Contributions to a traditional or Roth IRA, Salary reduction contributions (elective deferrals, including amounts designated as after-tax Roth contributions) to: A 401(k) plan (including a SIMPLE 401(k)), A section 403(b) annuity, An eligible deferred compensation plan of a state or local government (a governmental 457 plan), A SIMPLE IRA plan, or A salary reduction SEP, and Contributions to a section 501(c)(18) plan. Tax software 2005 2006 They also include voluntary after-tax employee contributions to a tax-qualified retirement plan or section 403(b) annuity. Tax software 2005 2006 For purposes of the credit, an employee contribution will be voluntary as long as it is not required as a condition of employment. Tax software 2005 2006 Reducing eligible contributions. Tax software 2005 2006   Reduce your eligible contributions (but not below zero) by the total distributions you received during the testing period (defined later) from any IRA, plan, or annuity included above under Eligible contributions. Tax software 2005 2006 Also reduce your eligible contributions by any distribution from a Roth IRA that is not rolled over, even if the distribution is not taxable. Tax software 2005 2006   Do not reduce your eligible contributions by any of the following. Tax software 2005 2006 The portion of any distribution which is not includible in income because it is a trustee-to-trustee transfer or a rollover distribution. Tax software 2005 2006 Distributions that are taxable as the result of an in-plan rollover to your designated Roth account. Tax software 2005 2006 Any distribution that is a return of a contribution to an IRA (including a Roth IRA) made during the year for which you claim the credit if: The distribution is made before the due date (including extensions) of your tax return for that year, You do not take a deduction for the contribution, and The distribution includes any income attributable to the contribution. Tax software 2005 2006 Loans from a qualified employer plan treated as a distribution. Tax software 2005 2006 Distributions of excess contributions or deferrals (and income attributable to excess contributions and deferrals). Tax software 2005 2006 Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k). Tax software 2005 2006 Distributions from an eligible retirement plan that are converted or rolled over to a Roth IRA. Tax software 2005 2006 Distributions from a military retirement plan. Tax software 2005 2006 Distributions from an inherited IRA by a nonspousal beneficiary. Tax software 2005 2006 Distributions received by spouse. Tax software 2005 2006   Any distributions your spouse receives are treated as received by you if you file a joint return with your spouse both for the year of the distribution and for the year for which you claim the credit. Tax software 2005 2006 Testing period. Tax software 2005 2006   The testing period consists of the year for which you claim the credit, the period after the end of that year and before the due date (including extensions) for filing your return for that year, and the 2 tax years before that year. Tax software 2005 2006 Example. Tax software 2005 2006 You and your spouse filed joint returns in 2011 and 2012, and plan to do so in 2013 and 2014. Tax software 2005 2006 You received a taxable distribution from a qualified plan in 2011 and a taxable distribution from an eligible deferred compensation plan in 2012. Tax software 2005 2006 Your spouse received taxable distributions from a Roth IRA in 2013 and tax-free distributions from a Roth IRA in 2014 before April 15. Tax software 2005 2006 You made eligible contributions to an IRA in 2013 and you otherwise qualify for this credit. Tax software 2005 2006 You must reduce the amount of your qualifying contributions in 2013 by the total of the distributions you received in 2011, 2012, 2013, and 2014. Tax software 2005 2006 Maximum eligible contributions. Tax software 2005 2006   After your contributions are reduced, the maximum annual contribution on which you can base the credit is $2,000 per person. Tax software 2005 2006 Effect on other credits. Tax software 2005 2006   The amount of this credit will not change the amount of your refundable tax credits. Tax software 2005 2006 A refundable tax credit, such as the earned income credit or the refundable amount of your child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes. Tax software 2005 2006 Maximum credit. Tax software 2005 2006   This is a nonrefundable credit. Tax software 2005 2006 The amount of the credit in any year cannot be more than the amount of tax that you would otherwise pay (not counting any refundable credits) in any year. Tax software 2005 2006 If your tax liability is reduced to zero because of other nonrefundable credits, such as the credit for child and dependent care expenses, then you will not be entitled to this credit. Tax software 2005 2006 How to figure and report the credit. Tax software 2005 2006   The amount of the credit you can get is based on the contributions you make and your credit rate. Tax software 2005 2006 Your credit rate can be as low as 10% or as high as 50%. Tax software 2005 2006 Your credit rate depends on your income and your filing status. Tax software 2005 2006 See Form 8880 to determine your credit rate. Tax software 2005 2006   The maximum contribution taken into account is $2,000 per person. Tax software 2005 2006 On a joint return, up to $2,000 is taken into account for each spouse. Tax software 2005 2006   Figure the credit on Form 8880. Tax software 2005 2006 Report the credit on line 50 of your Form 1040; line 32 of your Form 1040A; or line 47 of your Form 1040NR and attach Form 8880 to your return. Tax software 2005 2006 Prev  Up  Next   Home   More Online Publications