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 2011 ---2010 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  25-65  Not a dependent  6 months or more in USA

11. Income Limitations Children Single Head of Household Married Filing Joint 01346018470 13553540545 24036345373 34335248362

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