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Taxact login tax return taxact login page taxact sign page 2. Taxact login tax return taxact login page taxact sign page   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Taxact login tax return taxact login page taxact sign page The pay may be in cash, property, or services. Taxact login tax return taxact login page taxact sign page It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Taxact login tax return taxact login page taxact sign page For information about deducting employment taxes, see chapter 5. Taxact login tax return taxact login page taxact sign page You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Taxact login tax return taxact login page taxact sign page Empowerment zone employment credit (Form 8844). Taxact login tax return taxact login page taxact sign page Indian employment credit (Form 8845). Taxact login tax return taxact login page taxact sign page Work opportunity credit (Form 5884). Taxact login tax return taxact login page taxact sign page Credit for employer differential wage payments (Form 8932). Taxact login tax return taxact login page taxact sign page Reduce your deduction for employee wages by the amount of employment credits you claim. Taxact login tax return taxact login page taxact sign page For more information about these credits, see the form on which the credit is claimed. Taxact login tax return taxact login page taxact sign page Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Taxact login tax return taxact login page taxact sign page Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Taxact login tax return taxact login page taxact sign page These and other requirements that apply to all business expenses are explained in chapter 1. Taxact login tax return taxact login page taxact sign page In addition, the pay must meet both of the following tests. Taxact login tax return taxact login page taxact sign page Test 1. Taxact login tax return taxact login page taxact sign page It must be reasonable. Taxact login tax return taxact login page taxact sign page Test 2. Taxact login tax return taxact login page taxact sign page It must be for services performed. Taxact login tax return taxact login page taxact sign page The form or method of figuring the pay does not affect its deductibility. Taxact login tax return taxact login page taxact sign page For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Taxact login tax return taxact login page taxact sign page Test 1—Reasonableness You must be able to prove that the pay is reasonable. Taxact login tax return taxact login page taxact sign page Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Taxact login tax return taxact login page taxact sign page If the pay is excessive, the excess pay is disallowed as a deduction. Taxact login tax return taxact login page taxact sign page Factors to consider. Taxact login tax return taxact login page taxact sign page   Determine the reasonableness of pay by the facts and circumstances. Taxact login tax return taxact login page taxact sign page Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Taxact login tax return taxact login page taxact sign page   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Taxact login tax return taxact login page taxact sign page The duties performed by the employee. Taxact login tax return taxact login page taxact sign page The volume of business handled. Taxact login tax return taxact login page taxact sign page The character and amount of responsibility. Taxact login tax return taxact login page taxact sign page The complexities of your business. Taxact login tax return taxact login page taxact sign page The amount of time required. Taxact login tax return taxact login page taxact sign page The cost of living in the locality. Taxact login tax return taxact login page taxact sign page The ability and achievements of the individual employee performing the service. Taxact login tax return taxact login page taxact sign page The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Taxact login tax return taxact login page taxact sign page Your policy regarding pay for all your employees. Taxact login tax return taxact login page taxact sign page The history of pay for each employee. Taxact login tax return taxact login page taxact sign page Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Taxact login tax return taxact login page taxact sign page Employee-shareholder salaries. Taxact login tax return taxact login page taxact sign page   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Taxact login tax return taxact login page taxact sign page The excessive part of the salary would not be allowed as a salary deduction by the corporation. Taxact login tax return taxact login page taxact sign page For more information on corporate distributions to shareholders, see Publication 542, Corporations. Taxact login tax return taxact login page taxact sign page Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Taxact login tax return taxact login page taxact sign page For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Taxact login tax return taxact login page taxact sign page Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Taxact login tax return taxact login page taxact sign page If you give property to an employee as an employee achievement award, your deduction may be limited. Taxact login tax return taxact login page taxact sign page Achievement awards. Taxact login tax return taxact login page taxact sign page   An achievement award is an item of tangible personal property that meets all the following requirements. Taxact login tax return taxact login page taxact sign page It is given to an employee for length of service or safety achievement. Taxact login tax return taxact login page taxact sign page It is awarded as part of a meaningful presentation. Taxact login tax return taxact login page taxact sign page It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Taxact login tax return taxact login page taxact sign page Length-of-service award. Taxact login tax return taxact login page taxact sign page    An award will qualify as a length-of-service award only if either of the following applies. Taxact login tax return taxact login page taxact sign page The employee receives the award after his or her first 5 years of employment. Taxact login tax return taxact login page taxact sign page The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Taxact login tax return taxact login page taxact sign page Safety achievement award. Taxact login tax return taxact login page taxact sign page    An award for safety achievement will qualify as an achievement award unless one of the following applies. Taxact login tax return taxact login page taxact sign page It is given to a manager, administrator, clerical employee, or other professional employee. Taxact login tax return taxact login page taxact sign page During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Taxact login tax return taxact login page taxact sign page Deduction limit. Taxact login tax return taxact login page taxact sign page   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Taxact login tax return taxact login page taxact sign page $400 for awards that are not qualified plan awards. Taxact login tax return taxact login page taxact sign page $1,600 for all awards, whether or not qualified plan awards. Taxact login tax return taxact login page taxact sign page   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Taxact login tax return taxact login page taxact sign page   A highly compensated employee is an employee who meets either of the following tests. Taxact login tax return taxact login page taxact sign page The employee was a 5% owner at any time during the year or the preceding year. Taxact login tax return taxact login page taxact sign page The employee received more than $115,000 in pay for the preceding year. Taxact login tax return taxact login page taxact sign page You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Taxact login tax return taxact login page taxact sign page   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Taxact login tax return taxact login page taxact sign page To figure this average cost, ignore awards of nominal value. Taxact login tax return taxact login page taxact sign page Deduct achievement awards as a nonwage business expense on your return or business schedule. Taxact login tax return taxact login page taxact sign page You may not owe employment taxes on the value of some achievement awards you provide to an employee. Taxact login tax return taxact login page taxact sign page See Publication 15-B. Taxact login tax return taxact login page taxact sign page Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Taxact login tax return taxact login page taxact sign page However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Taxact login tax return taxact login page taxact sign page If the bonus is paid in property, see Property , later. Taxact login tax return taxact login page taxact sign page Gifts of nominal value. Taxact login tax return taxact login page taxact sign page    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Taxact login tax return taxact login page taxact sign page Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Taxact login tax return taxact login page taxact sign page For more information on this deduction limit, see Meals and lodging , later. Taxact login tax return taxact login page taxact sign page Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Taxact login tax return taxact login page taxact sign page Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Taxact login tax return taxact login page taxact sign page For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Taxact login tax return taxact login page taxact sign page Fringe Benefits A fringe benefit is a form of pay for the performance of services. Taxact login tax return taxact login page taxact sign page You can generally deduct the cost of fringe benefits. Taxact login tax return taxact login page taxact sign page You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Taxact login tax return taxact login page taxact sign page You also may not owe employment taxes on the value of the fringe benefits. Taxact login tax return taxact login page taxact sign page See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Taxact login tax return taxact login page taxact sign page Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Taxact login tax return taxact login page taxact sign page Certain fringe benefits are discussed next. Taxact login tax return taxact login page taxact sign page See Publication 15-B for more details on these and other fringe benefits. Taxact login tax return taxact login page taxact sign page Meals and lodging. Taxact login tax return taxact login page taxact sign page   You can usually deduct the cost of furnishing meals and lodging to your employees. Taxact login tax return taxact login page taxact sign page Deduct the cost in whatever category the expense falls. Taxact login tax return taxact login page taxact sign page For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Taxact login tax return taxact login page taxact sign page If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Taxact login tax return taxact login page taxact sign page Deduction limit on meals. Taxact login tax return taxact login page taxact sign page   You can generally deduct only 50% of the cost of furnishing meals to your employees. Taxact login tax return taxact login page taxact sign page However, you can deduct the full cost of the following meals. Taxact login tax return taxact login page taxact sign page Meals whose value you include in an employee's wages. Taxact login tax return taxact login page taxact sign page Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Taxact login tax return taxact login page taxact sign page This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Taxact login tax return taxact login page taxact sign page Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Taxact login tax return taxact login page taxact sign page Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Taxact login tax return taxact login page taxact sign page Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Taxact login tax return taxact login page taxact sign page This does not include meals you furnish on vessels primarily providing luxury water transportation. Taxact login tax return taxact login page taxact sign page Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Taxact login tax return taxact login page taxact sign page This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Taxact login tax return taxact login page taxact sign page Employee benefit programs. Taxact login tax return taxact login page taxact sign page   Employee benefit programs include the following. Taxact login tax return taxact login page taxact sign page Accident and health plans. Taxact login tax return taxact login page taxact sign page Adoption assistance. Taxact login tax return taxact login page taxact sign page Cafeteria plans. Taxact login tax return taxact login page taxact sign page Dependent care assistance. Taxact login tax return taxact login page taxact sign page Education assistance. Taxact login tax return taxact login page taxact sign page Life insurance coverage. Taxact login tax return taxact login page taxact sign page Welfare benefit funds. Taxact login tax return taxact login page taxact sign page   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Taxact login tax return taxact login page taxact sign page For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Taxact login tax return taxact login page taxact sign page ). Taxact login tax return taxact login page taxact sign page Life insurance coverage. Taxact login tax return taxact login page taxact sign page   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Taxact login tax return taxact login page taxact sign page See Regulations section 1. Taxact login tax return taxact login page taxact sign page 264-1 for more information. Taxact login tax return taxact login page taxact sign page Welfare benefit funds. Taxact login tax return taxact login page taxact sign page   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Taxact login tax return taxact login page taxact sign page Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Taxact login tax return taxact login page taxact sign page   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Taxact login tax return taxact login page taxact sign page If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Taxact login tax return taxact login page taxact sign page   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Taxact login tax return taxact login page taxact sign page The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Taxact login tax return taxact login page taxact sign page The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Taxact login tax return taxact login page taxact sign page These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Taxact login tax return taxact login page taxact sign page   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Taxact login tax return taxact login page taxact sign page Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Taxact login tax return taxact login page taxact sign page However, if the employee performs no services, treat the amount you advanced as a loan. Taxact login tax return taxact login page taxact sign page If the employee does not repay the loan, treat it as income to the employee. Taxact login tax return taxact login page taxact sign page Below-market interest rate loans. Taxact login tax return taxact login page taxact sign page   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Taxact login tax return taxact login page taxact sign page See Below-Market Loans in chapter 4. Taxact login tax return taxact login page taxact sign page Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Taxact login tax return taxact login page taxact sign page The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Taxact login tax return taxact login page taxact sign page You can claim the deduction only for the tax year in which your employee includes the property's value in income. Taxact login tax return taxact login page taxact sign page Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Taxact login tax return taxact login page taxact sign page You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Taxact login tax return taxact login page taxact sign page Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Taxact login tax return taxact login page taxact sign page These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Taxact login tax return taxact login page taxact sign page Restricted property. Taxact login tax return taxact login page taxact sign page   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Taxact login tax return taxact login page taxact sign page However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Taxact login tax return taxact login page taxact sign page    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Taxact login tax return taxact login page taxact sign page This means that the recipient is not likely to have to give up his or her rights in the property in the future. Taxact login tax return taxact login page taxact sign page Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Taxact login tax return taxact login page taxact sign page However, your deduction may be limited. Taxact login tax return taxact login page taxact sign page If you make the payment under an accountable plan, deduct it in the category of the expense paid. Taxact login tax return taxact login page taxact sign page For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Taxact login tax return taxact login page taxact sign page If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Taxact login tax return taxact login page taxact sign page See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Taxact login tax return taxact login page taxact sign page Sick and Vacation Pay Sick pay. Taxact login tax return taxact login page taxact sign page   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Taxact login tax return taxact login page taxact sign page However, your deduction is limited to amounts not compensated by insurance or other means. Taxact login tax return taxact login page taxact sign page Vacation pay. Taxact login tax return taxact login page taxact sign page   Vacation pay is an employee benefit. Taxact login tax return taxact login page taxact sign page It includes amounts paid for unused vacation leave. Taxact login tax return taxact login page taxact sign page You can deduct vacation pay only in the tax year in which the employee actually receives it. Taxact login tax return taxact login page taxact sign page This rule applies regardless of whether you use the cash or accrual method of accounting. 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Understanding Your CP75D Notice

We’re auditing your tax return and we need documentation to verify the income and withholding you reported on your tax return. This may affect your eligibility for the Earned Income Credit (EIC), dependent exemption(s) and other refundable credits that you claimed. We are holding your refund pending the results of the audit.


What you need to do

  • Read the notice and the enclosed forms carefully. They explain the information you must send to us.
  • Provide copies of supporting documentation to verify the items we're auditing.
  • Complete the response form by indicating which items your supporting documentation addresses on the copies you're submitting and return the form with the documents you are submitting.

You may want to


Answers to Common Questions

Why was my return selected for audit?
While most returns are accepted as filed, some are selected for examination. The IRS examines (or audits) some federal tax returns to determine if income, expenses, and credits are reported accurately. The IRS selects returns for examination using various methods which include random sampling, computerized screening, and comparison of information received by the IRS such as Forms W-2 and 1099. Having your return selected for examination doesn't suggest you made an error or were dishonest.

Why are my wages being audited?
The amounts you reported on the wages and withholding lines of your tax return appear incorrect.

Can I claim the earned income credit for my fiancé’s child?
No. You must be married to the child’s parent during the tax year in question to receive EIC.

What do I need to send?
Refer to the applicable Form 886-H and Form 886-L you received with your notice. There is a separate form for each item being audited that explains what supporting documentation to send.

What if I can’t provide the requested documentation?
We’ll disallow the items being audited and send you an examination report that shows the proposed changes to your tax return.

What if I did not file a tax return claiming the items you are questioning and someone else is using my name and social security number?
Contact us at the number listed on the top right corner of your notice. You can also refer to the IRS Identity Theft resource page for more information.

Can I file my tax return while I am being audited?
Yes, you should continue to file all required tax returns before the due date to avoid additional penalties and interest.


Tips for next year

Avoid errors that can delay your refund or result in IRS denying your EITC claim. Find out the most common errors in claiming EITC here.

Page Last Reviewed or Updated: 07-Mar-2014

How to get help

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

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Taxact login tax return taxact login page taxact sign page Publication 596 - Introductory Material Table of Contents Future Developments What is the EIC? Can I Claim the EIC? Do I Need This Publication? Do I Have To Have A Child To Qualify For The EIC? How Do I Figure the Amount of EIC? How Can I Quickly Locate Specific information? Is There Help Online? What's New for 2013 Reminders Future Developments For the latest information about developments related to Publication 596, such as legislation enacted after it was published, go to www. Taxact login tax return taxact login page taxact sign page irs. Taxact login tax return taxact login page taxact sign page gov/pub596. Taxact login tax return taxact login page taxact sign page What is the EIC? The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $51,567. Taxact login tax return taxact login page taxact sign page A tax credit usually means more money in your pocket. Taxact login tax return taxact login page taxact sign page It reduces the amount of tax you owe. Taxact login tax return taxact login page taxact sign page The EIC may also give you a refund. Taxact login tax return taxact login page taxact sign page Can I Claim the EIC? To claim the EIC, you must meet certain rules. Taxact login tax return taxact login page taxact sign page These rules are summarized in Table 1. Taxact login tax return taxact login page taxact sign page Table 1. Taxact login tax return taxact login page taxact sign page Earned Income Credit in a Nutshell First, you must meet all the rules in this column. Taxact login tax return taxact login page taxact sign page Second, you must meet all the rules in one of these columns, whichever applies. Taxact login tax return taxact login page taxact sign page Third, you must meet the rule in this column. Taxact login tax return taxact login page taxact sign page Chapter 1. Taxact login tax return taxact login page taxact sign page  Rules for Everyone Chapter 2. Taxact login tax return taxact login page taxact sign page  Rules If You Have a Qualifying Child Chapter 3. Taxact login tax return taxact login page taxact sign page  Rules If You Do Not Have a Qualifying Child Chapter 4. Taxact login tax return taxact login page taxact sign page  Figuring and Claiming the EIC 1. Taxact login tax return taxact login page taxact sign page 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. Taxact login tax return taxact login page taxact sign page 2. Taxact login tax return taxact login page taxact sign page You must have a valid social security number. Taxact login tax return taxact login page taxact sign page   3. Taxact login tax return taxact login page taxact sign page Your filing status cannot be Married filing separately. Taxact login tax return taxact login page taxact sign page   4. Taxact login tax return taxact login page taxact sign page You must be a U. Taxact login tax return taxact login page taxact sign page S. Taxact login tax return taxact login page taxact sign page citizen or resident alien all year. Taxact login tax return taxact login page taxact sign page   5. Taxact login tax return taxact login page taxact sign page You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). Taxact login tax return taxact login page taxact sign page   6. Taxact login tax return taxact login page taxact sign page Your investment income must be $3,300 or less. Taxact login tax return taxact login page taxact sign page    7. Taxact login tax return taxact login page taxact sign page You must have earned income. Taxact login tax return taxact login page taxact sign page 8. Taxact login tax return taxact login page taxact sign page Your child must meet the relationship, age, residency, and joint return tests. Taxact login tax return taxact login page taxact sign page   9. Taxact login tax return taxact login page taxact sign page Your qualifying child cannot be used by more than one person to claim the EIC. Taxact login tax return taxact login page taxact sign page   10. Taxact login tax return taxact login page taxact sign page You cannot be a qualifying child of another person. Taxact login tax return taxact login page taxact sign page 11. Taxact login tax return taxact login page taxact sign page You must be at least age 25 but under age 65. Taxact login tax return taxact login page taxact sign page    12. Taxact login tax return taxact login page taxact sign page You cannot be the dependent of another person. Taxact login tax return taxact login page taxact sign page   13. Taxact login tax return taxact login page taxact sign page You cannot be a qualifying child of another person. Taxact login tax return taxact login page taxact sign page   14. Taxact login tax return taxact login page taxact sign page You must have lived in the United States more than half of the year. Taxact login tax return taxact login page taxact sign page 15. Taxact login tax return taxact login page taxact sign page 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. Taxact login tax return taxact login page taxact sign page Do I Need This Publication? Certain people who file Form 1040 must use Worksheet 1 in this publication, instead of Step 2 in their Form 1040 instructions, when they are checking whether they can take the EIC. Taxact login tax return taxact login page taxact sign page You are one of those people if any of the following statements are true for 2013. Taxact login tax return taxact login page taxact sign page You are filing Schedule E (Form 1040). Taxact login tax return taxact login page taxact sign page You are reporting income from the rental of personal property not used in a trade or business. Taxact login tax return taxact login page taxact sign page You are reporting income on Form 1040, line 21, from Form 8814 (relating to election to report child's interest and dividends). Taxact login tax return taxact login page taxact sign page You are reporting an amount on Form 1040, line 13, that includes an amount from Form 4797. Taxact login tax return taxact login page taxact sign page If none of the statements above apply to you, your tax form instructions have all the information you need to find out if you can claim the EIC and to figure the amount of your EIC. Taxact login tax return taxact login page taxact sign page You do not need this publication. Taxact login tax return taxact login page taxact sign page But you can read it to find out whether you can take the EIC and to learn more about the EIC. Taxact login tax return taxact login page taxact sign page Do I Have To Have A Child To Qualify For The EIC? No, you can qualify for the EIC without a qualifying child if you are at least age 25 but under age 65 and your earned income is less than $14,340 ($19,680 if married filing jointly). Taxact login tax return taxact login page taxact sign page See chapter 3. Taxact login tax return taxact login page taxact sign page How Do I Figure the Amount of EIC? If you can claim the EIC, you can either have the IRS figure the amount of your credit, or you can figure it yourself. Taxact login tax return taxact login page taxact sign page To figure it yourself, you can complete a worksheet in the instructions for the form you file. Taxact login tax return taxact login page taxact sign page To find out how to have the IRS figure it for you, see chapter 4. Taxact login tax return taxact login page taxact sign page How Can I Quickly Locate Specific information? You can use the index to look up specific information. Taxact login tax return taxact login page taxact sign page In most cases, index entries will point you to headings, tables, or a worksheet. Taxact login tax return taxact login page taxact sign page Is There Help Online? Yes. Taxact login tax return taxact login page taxact sign page You can use the EITC Assistant at www. Taxact login tax return taxact login page taxact sign page irs. Taxact login tax return taxact login page taxact sign page gov/eitc to find out if you may be eligible for the credit. Taxact login tax return taxact login page taxact sign page The EITC Assistant is available in English and Spanish. Taxact login tax return taxact login page taxact sign page What's New for 2013 Earned income amount is more. Taxact login tax return taxact login page taxact sign page The maximum amount of income you can earn and still get the credit has increased. Taxact login tax return taxact login page taxact sign page You may be able to take the credit if: You have three or more qualifying children and you earned less than $46,227 ($51,567 if married filing jointly), You have two qualifying children and you earned less than $43,038 ($48,378 if married filing jointly), You have one qualifying child and you earned less than $37,870 ($43,210 if married filing jointly), or You do not have a qualifying child and you earned less than $14,340 ($19,680 if married filing jointly). Taxact login tax return taxact login page taxact sign page Your adjusted gross income also must be less than the amount in the above list that applies to you. Taxact login tax return taxact login page taxact sign page For details, see Rules 1 and 15. Taxact login tax return taxact login page taxact sign page Investment income amount is more. Taxact login tax return taxact login page taxact sign page The maximum amount of investment income you can have and still get the credit has increased to $3,300. Taxact login tax return taxact login page taxact sign page See Rule 6—Your Investment Income Must Be $3,300 or Less . Taxact login tax return taxact login page taxact sign page Reminders Increased EIC on certain joint returns. Taxact login tax return taxact login page taxact sign page . Taxact login tax return taxact login page taxact sign page  A married person filing a joint return may get more EIC than someone with the same income but a different filing status. Taxact login tax return taxact login page taxact sign page As a result, the EIC table has different columns for married persons filing jointly than for everyone else. Taxact login tax return taxact login page taxact sign page When you look up your EIC in the EIC Table, be sure to use the correct column for your filing status and the number of children you have. Taxact login tax return taxact login page taxact sign page Earned income credit has no effect on certain welfare benefits. Taxact login tax return taxact login page taxact sign page  Any refund you receive because of the EIC cannot be counted as income when determining whether you or anyone else is eligible for benefits or assistance, or how much you or anyone else can receive, under any federal program or under any state or local program financed in whole or in part with federal funds. Taxact login tax return taxact login page taxact sign page These programs include the following. Taxact login tax return taxact login page taxact sign page Temporary Assistance for Needy Families (TANF). Taxact login tax return taxact login page taxact sign page Medicaid. Taxact login tax return taxact login page taxact sign page Supplemental security income (SSI). Taxact login tax return taxact login page taxact sign page Supplemental Nutrition Assistance Program (food stamps). Taxact login tax return taxact login page taxact sign page Low-income housing. Taxact login tax return taxact login page taxact sign page In addition, when determining eligibility, the refund cannot be counted as a resource for at least 12 months after you receive it. Taxact login tax return taxact login page taxact sign page Check with your local benefit coordinator to find out if your refund will affect your benefits. Taxact login tax return taxact login page taxact sign page Do not overlook your state credit. Taxact login tax return taxact login page taxact sign page  If you can claim the EIC on your federal income tax return, you may be able to take a similar credit on your state or local income tax return. Taxact login tax return taxact login page taxact sign page For a list of states that offer a state EIC, go to www. Taxact login tax return taxact login page taxact sign page irs. Taxact login tax return taxact login page taxact sign page gov/eitc. Taxact login tax return taxact login page taxact sign page EIC questioned by IRS. Taxact login tax return taxact login page taxact sign page  The IRS may ask you to provide documents to prove you are entitled to claim the EIC. Taxact login tax return taxact login page taxact sign page We will tell you what documents to send us. Taxact login tax return taxact login page taxact sign page These may include: birth certificates, school records, etc. Taxact login tax return taxact login page taxact sign page The process of establishing your eligibility will delay your refund. Taxact login tax return taxact login page taxact sign page Spanish version of Publication 596. Taxact login tax return taxact login page taxact sign page  You can order Publicación 596SP, Crédito por Ingreso del Trabajo, from the IRS. Taxact login tax return taxact login page taxact sign page It is a Spanish translation of Publication 596. Taxact login tax return taxact login page taxact sign page See How To Get Tax Help to find out how to order this and other IRS forms and publications. Taxact login tax return taxact login page taxact sign page Photographs of missing children. Taxact login tax return taxact login page taxact sign page  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Taxact login tax return taxact login page taxact sign page Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Taxact login tax return taxact login page taxact sign page You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Taxact login tax return taxact login page taxact sign page Comments and suggestions. Taxact login tax return taxact login page taxact sign page  We welcome your comments about this publication and your suggestions for future editions. Taxact login tax return taxact login page taxact sign page You can write to us at the following address:  Internal Revenue Service Individual Forms and Publications Branch 1111 Constitution Ave. Taxact login tax return taxact login page taxact sign page NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Taxact login tax return taxact login page taxact sign page Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Taxact login tax return taxact login page taxact sign page You can send your comments from www. Taxact login tax return taxact login page taxact sign page irs. Taxact login tax return taxact login page taxact sign page gov/formspubs/. Taxact login tax return taxact login page taxact sign page Click on “More Information” and then on “Comment on Tax Forms and Publications. Taxact login tax return taxact login page taxact sign page ” Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Taxact login tax return taxact login page taxact sign page Ordering forms and publications. Taxact login tax return taxact login page taxact sign page  Visit www. Taxact login tax return taxact login page taxact sign page irs. Taxact login tax return taxact login page taxact sign page gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Taxact login tax return taxact login page taxact sign page  Internal Revenue Service 1201 N. Taxact login tax return taxact login page taxact sign page Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Taxact login tax return taxact login page taxact sign page  If you have a tax question, check the information available on IRS. Taxact login tax return taxact login page taxact sign page gov or call 1-800-829-1040. Taxact login tax return taxact login page taxact sign page We cannot answer tax questions sent to either of the above addresses. Taxact login tax return taxact login page taxact sign page Prev  Up  Next   Home   More Online Publications