Form 1040 - Lines 60a And 60b - Earned Income Credit (Eic) Instruction (Page 4 of 10) in pdf

Form 1040—Lines 60a and 60b

Continued from page 42

Exception to “Time Lived With You” Condition. A child is

Modified AGI is the total of the amounts on Form 1040, lines 8b

considered to have lived with you for all of 2000 if the child was born

and 34, increased by:

or died in 2000 and your home was this child’s home for the entire

● Any loss claimed on Form 1040, line 13,

time he or she was alive in 2000. Temporary absences, such as for

● Any loss from the rental of personal property not used in a trade

school, vacation, medical care, or detention in a juvenile facility, count

or business,

as time lived at home. If you were in the military stationed outside the

● 75% of any losses on Form 1040, lines 12 and 18,

United States, see Members of the Military below.

● Certain nontaxable distributions from a pension, annuity, or IRA

Form 4797 Filers. If the amount on Form 1040, line 13, includes an

(see Pub. 596), and

amount from Form 4797, you must use Pub. 596 to see if you can take

● Certain amounts reported on Schedule E (see Pub. 596).

the EIC and how to figure it. To get Pub. 596, see page 7. Otherwise,

stop; you cannot take the EIC.

Example. You and your 5-year-old daughter moved in with your

Form 8862, Who Must File. You must file Form 8862 if your 1997,

mother in April 2000. You are not a qualifying child of your mother.

1998, or 1999 EIC was reduced or disallowed for any reason other than

Your daughter meets the conditions to be a qualifying child for both

a math or clerical error. But do not file Form 8862 if, after your EIC

you and your mother. Your modified AGI for 2000 was $8,000 and

was reduced or disallowed in an earlier year:

your mother’s was $14,000. Because your mother’s modified AGI was

● You filed Form 8862 (or other documents) and your EIC was

higher, your daughter is your mother’s qualifying child. You cannot

take any EIC, even if your mother does not claim the credit. You

then allowed and

would put “No” directly to the right of line 60a.

● Your EIC has not been reduced or disallowed again for any

reason other than a math or clerical error.

Salary Deferrals. Contributions from your pay to certain retirement

Also, do not file Form 8862 or take the credit if it was determined that

plans, such as a 401(k) plan or the Federal Thrift Savings Plan, shown

your error was due to reckless or intentional disregard of the EIC rules

in box 13 of your W-2 form. The “Deferred compensation” box in box

or fraud.

15 of your W-2 form should be checked.

Foster Child. Any child you cared for as your own child and who is

Salary Reductions. Amounts you could have been paid but chose

(1) your brother, sister, stepbrother, or stepsister; (2) a descendant (such

instead to have your employer contribute to certain benefit plans, such

as a child, including an adopted child) of your brother, sister,

as a cafeteria plan. A cafeteria plan is a plan that allows you to choose

stepbrother, or stepsister; or (3) a child placed with you by an

to receive either cash or certain benefits that are not taxed (such as

authorized placement agency. For example, if you acted as the parent

accident and health insurance).

of your niece or nephew, this child is considered your foster child.

Social Security Number (SSN). For purposes of taking the EIC, an

Grandchild. Any descendant of your son, daughter, or adopted child.

SSN is a number issued by the Social Security Administration to a

For example, a grandchild includes your great-grandchild,

U.S. citizen or to a person who has permission from the Immigration

great-great-grandchild, etc.

and Naturalization Service to work in the United States. It does not

include an SSN issued only to allow a person to apply for or receive

Married Child. A child who was married at the end of 2000 is a

Federally funded benefits. If your social security card, or your spouse’s

qualifying child only if (1) you can claim him or her as your dependent

if filing a joint return, says “Not valid for employment,” you cannot

on Form 1040, line 6c, or (2) this child’s other parent claims him or

take the EIC.

her as a dependent under the rules in Pub. 501 for children of divorced

To find out how to get an SSN, see page 19. If you will not have an

or separated parents.

SSN by April 16, 2001, see What if You Cannot File on Time? on

Members of the Military. If you were on extended active duty

page 15.

outside the United States, your home is considered to be in the United

Student. A child who during any 5 months of 2000:

States during that duty period. Extended active duty is military duty

● Was enrolled as a full-time student at a school or

ordered for an indefinite period or for a period of more than 90 days.

Once you begin serving extended active duty, you are considered to be

● Took a full-time, on-farm training course given by a school or a

on extended active duty even if you serve fewer than 90 days.

state, county, or local government agency.

A school includes technical, trade, and mechanical schools. It does

Nonresident Aliens. If your filing status is married filing jointly, go

not include on-the-job training courses, correspondence schools, or

to Step 2 on page 40. Otherwise, stop; you cannot take the EIC.

night schools.

Permanently and Totally Disabled Child. A child who cannot

Welfare Benefits, Effect of Credit on. Any refund you receive as

engage in any substantial gainful activity because of a physical or

a result of taking the EIC will not be used to determine if you are

mental condition and a doctor has determined that this condition:

eligible for the following programs, or how much you can receive from

● Has lasted or can be expected to last continuously for at least a

them.

year or

● Temporary Assistance for Needy Families (TANF).

● Can lead to death.

● Medicaid and supplemental security income (SSI).

Qualifying Child of More Than One Person. If the child meets

● Food stamps and low-income housing.

the conditions to be a qualifying child of more than one person, only

Workfare Payments. Cash payments certain people receive from a

the person who had the highest modified AGI (adjusted gross income)

state or local agency that administers public assistance programs funded

for 2000 may treat that child as a qualifying child. The other person(s)

under the Federal Temporary Assistance for Needy Families (TANF)

cannot take the EIC for people who do not have a qualifying child. If

program in return for certain work activities such as:

the other person is your spouse and you are filing a joint return, this

● Work experience activities (including work associated with

rule does not apply. If you have the highest modified AGI, this child is

your qualifying child. The child must have a social security number as

remodeling or repairing publicly assisted housing) if sufficient

defined on this page unless the child was born and died in 2000. Skip

private sector employment is not available or

Step 5; go to Step 6 on page 41. If you do not have the highest

● Community service program activities.

modified AGI, stop; you cannot take the EIC. Put “No” directly to the

right of line 60a.

- 43 -

Need more information or forms? See page 7.

Form 1040 - Lines 60a And 60b - Earned Income Credit (Eic) Instruction Page 4

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