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Lesson 30 Earned Income Credit.  Purpose– reduce tax burden and supplement for the working low income.  Refundable – can get more than you owe  Maximum.

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Presentation on theme: "Lesson 30 Earned Income Credit.  Purpose– reduce tax burden and supplement for the working low income.  Refundable – can get more than you owe  Maximum."— Presentation transcript:

1 Lesson 30 Earned Income Credit

2  Purpose– reduce tax burden and supplement for the working low income.  Refundable – can get more than you owe  Maximum --$5666

3 Earned Income  “EARNED”  Salaries, wages, tips and other taxable employee pay  No inmate pay  Page H-1 Resource Guide

4 Investment Income  Interest and Dividends  If more than $3,100 –no EIC  Eligibility Rules pg H-3

5 Advanced EIC  Not available in is last year  Must have one child  Must complete W-5  Box 9 on W-2  Must file if you receive  Adds to the amount you owe

6 Where reported  EARNED INCOME CREDIT  Resource Guide pg 6-1 line 66a(1040)  Page 16 Line 41a 1040A instructions  Page 12 Line 9a 1040EZ instructions  ADVANCED EIC  Resource Guide pg 6-1 line 61  1040A Line 36  1040EZ can’t use – have to have a child

7 Who gets it Resource Guide pg H-2  Must have SS#  Must be a citizen or resident alien  Cannot be a qualifying child  Cannot be MFS  No Form 2555 (Foreign earned income)  No investment income over $3,100

8 If you have a child  Must be a qualifying child  Child can only be claimed by one person  Isn’t parent then qualifying child  If both use the kid than whom the child lived the longest  Highest AGI will get the EIC for debates

9 Adopted Child  Must have SS #. Can file amended when rec’d

10 If you don’t have a child   Not a dependent  6 months or more in USA

11 Income Limitations Children Single Head of Household Married Filing Joint

12  Both Earned Income and Adjusted Gross Income must be below the maximum amount.

13 Disallowance  Can be denied due to reckless or intentional disregard – 2 years  If fraud – denied for 10 years

14 Let’s review  Page 30-4 Exercises  Example pg 30-4  Page 30-6 Exercises

15 Determine the amount of EIC  EIC Tables


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