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OLT TAX CORNER ~ Earned Income Credit
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 What is the EIC? |
| The earned income credit (EIC) is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund. You could qualify for EIC if your income is under the requirement for your filing status. |
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| How do I know if I qualify for EIC? |
To claim EIC on your tax return, you must meet all the following rules:
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| For more information on EIC see IRS Publication 596 |
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| In order to claim the Earned Income Credit, does the child have to be claimed as a dependent? |
| A qualifying child for the Earned Income Credit does not need to qualify as a dependent unless he or she is married. |
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| If the noncustodial parent receives permission from the custodial parent to claim a child on his or her tax return, is the noncustodial parent eligible for the Earned Income Credit? |
| The noncustodial parent cannot claim the Earned Income Credit on the basis of that child because the child did not live with that parent and does not meet the residency test. The custodial parent may be able to claim the Earned Income Credit. |
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| If both parents want to claim the Earned Income Credit, who is entitled to it if there was no marriage? |
| If the child is a qualifying child of both parents, they may choose which one will claim the credit. If there are two qualifying children, each parent may claim the credit on the basis of one of the children or one parent may claim the credit with both children. If both actually claim the credit on the basis of the same child or children, the parent who is entitled to the credit is the parent with whom the child lived for the longest period of time during the tax year, or the parent with the higher Adjusted Gross Income (AGI) if the child lived with each parent for the same amount of time during the year. |
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| My EIC has been disallowed in the past, is there any way I can still claim the Earned Income Credit? |
| Yes. If your earned income credit (EIC) for any year after 1998 was denied (disallowed) or reduced by the IRS, you may need to complete an additional form to claim the credit. Form 8862, Information To Claim Earned Income Credit After Disallowance is the form you will need to complete in order to claim EIC. For more information you can read about the Disallowance of EIC on the IRS website at: |
| Publication 596 |
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| I have two children, last year I claimed one as a dependent, and my ex-husband claimed the other. However, I claimed both children for EIC because they live with me full-time. My ex-husband was not able to claim his dependent for EIC. What did I do wrong? |
| A social security number can only be claimed for EIC once. In other words, two people cannot claim the same child for EIC. You will need to talk with the other person to decide who will claim the child for EIC. If you cannot decide, then there are guidelines laid out by the IRS. Only one of you will be able to claim the credit using that child, as follows: |
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| All of my income this year was from unemployment compensation. Can I take the earned income tax credit? |
| No, the earned income tax credit is only for individuals with earned income. Unemployment compensation is not considered earned income but will be used if additional income is earned and it makes the EIC a less amount. |
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| Can I claim the Earned Income Credit if I don't have a dependent? |
| You may still be able to if your adjusted gross income is under the EIC requirement for single filer without dependent. |
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