1 NTTC TRAINING 2009 LESSON 30: EARNED INCOME CREDIT PUB 4012 TAB H 1040 LINE 64A PUB 17 CHAPTER 36

2 NTTC TRAINING 2009 ELIGIBILITY TAB H  Taxpayer must have earned income  AGI is limited  Refundable credit (1040 payments)

3 NTTC TRAINING 2009 CALCULATE EIC  TaxWise calculates EIC!  On Main Info, assume children will qualify for EIC – Check the box - TaxWise schedules will ask necessary questions  List children from youngest to oldest

4 NTTC TRAINING 2009 GENERAL ELIGIBILITY TAB H  Cannot be “Married Filing Separate”  Must have valid SSN - NO ITIN  Citizen/ resident alien  Investment income limited  Cannot be qualifying child of another

5 NTTC TRAINING 2009 EIC WITH QUALIFYING CHILD TAB H  Child must have valid-for-work SS#  Relationship  Age  Unmarried (with exceptions)  Residency  Cannot be claimed by another  Support is not an issue  Increased credit for second/third child

6 NTTC TRAINING 2009 EIC WITHOUT CHILDREN TAB H  Dependency  Age  Residency  If taxpayer fails to qualify with child(ren) may qualify without children following rules above.

7 NTTC TRAINING 2009 SCHEDULE EIC TAB 6  Select Sch EIC from the Forms Tree  If there are any RED marks on Line 4, answer 4a OR 4b, not both  Do NOT click on any boxes that aren’t still in RED

8 NTTC TRAINING 2009 NOTE Do NOT check this box just because it’s RED. That will disallow EIC and you’ll never know why. 2009

9 NTTC TRAINING 2009 ADVANCE EIC REQUIREMENTS  Be employed  Have at least one qualifying child  Expect to be eligible for EIC  Expect earned income and AGI to be less than $30,000  File Form W-5, EIC Advance Payment Certificate, with employer

10 NTTC TRAINING 2009 ADVANCE EIC REPORTING REQUIREMENTS  TP must file a tax return to report Advance EIC  Taxpayer’s W-2 shows Advance EIC in Box 9

11 NTTC TRAINING 2009 DISALLOWED EIC TAB H  Special rules apply if the taxpayer was previously denied EIC  Make sure the taxpayer didn’t answer YES to being disallowed because of an error correction on a previous return

12 NTTC TRAINING 2009 OTHER CONSIDERATIONS PUB 17 CHPT 36  For EIC, support is not an issue – an exception to the Uniform definition  Under rules for divorced/separated parents, only custodial parent qualifies

13 NTTC TRAINING 2009 TIE-BREAKER RULES TAB H  TaxAide will never invoke Tie-Breaker  That’s an IRS function  Priority order is:  Parent  Parent with whom child lived longest  Parent with highest AGI  If no-one is the parent, person with highest AGI

14 NTTC TRAINING 2009 EARNED INCOME CREDIT QUESTIONS?