Lesson 5
Earned Income Credit
(EIC)
Objectives
• Determine which taxpayers are eligible for the
earned income credit using Publication 4012 and
Form 13614
• Determine when a taxpayer has a qualifying child
for the EIC
• Calculate and report the credit using the EIC
worksheet
• Explain how to request advance earned income
credit (AEIC) payments
• Report AEIC payments on the tax return
Intake/Interview Process
Form 13614 – Intake and Interview Sheet
– Credits Section
Military Combat Pay
Inclusion of combat pay as
earned income
Who Can Claim The EIC
General Eligibility Rules
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Earned income and adjusted gross income
limited
Have valid SSN
No MFS filing status
A US citizen or resident alien
Not file Form 2555 or 2555-EZ
Investment income limitation
Who Can Claim The EIC
General Requirements - continued
•
•
Have earned income
Cannot be qualifying child of another
person
Investment Income
Includes:
– Taxable interest
– Tax-exempt interest
– Ordinary dividends
– Capital gain net income
– Certain net income form rents and
royalties
– Net income from passive activities
Earned Income
• Review notes
– While an inmate
– While an household employee
– Disability benefits
– Disability insurance payments
• Examples of Earned Income
EIC Interview Tips
EIC General Eligibility Rules
Who Can Claim The Credit
With A Qualifying Children
Must meet all 3 tests
– Relationship Test
– Age Test
– Residency Test
Definitions
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Eligible foster child
Adopted child
Permanently and totally disabled
Child who was kidnapped
Qualifying Child of More
than One Taxpayer
• Cannot be used by more than one person
• EIC Tie-Breaker Rule
Children of Divorced or
Separated Parents
• If the rules for Divorced or Separated
Parents apply:
– The custodial parent can claim the EIC
benefit even if he or she cannot claim the
child as a dependent
Interview Tips
EIC With A Qualifying Child
Who Can Claim the EIC
Without a Child
• Lived in the United States more than
half the tax year.
• At least 25 but under age 65 on
Dec. 31.
• Not qualify as the dependent of
another person.
EIC Eligibility Requirements Summary
• Rules for Everyone
• Rules If You Have a Qualifying Child
• Rules If You Do Not Have a
Qualifying Child
• Earned Income and AGI Limitations
Determining Eligibility and
Figuring the Credit
• EIC Worksheets
• EIC Tables
Schedule EIC for
Qualifying Child(ren)
Reporting Qualifying Child
Information
EIC – General Information
• EIC – Eligibility Tools
• Common EIC Return Errors
• Disallowed Earned Income Credit
• Advance Earned Income Credit
Payments (AEIC)
Quality Review (QR)
Form 8158 – Quality Review Checklist
Adjustments, Deductions, and Credits
Section
Lesson Summary
• General EIC Requirements
& Eligibility Rules
• Schedule EIC
• Common EIC Return Errors
• Disallowed EIC
• Advance EIC Payments