Publication 554 - Older Americans' Tax Guide - 2004 Page 25
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It must be included in your income as wages (or
Investment income more than $2,650. You cannot claim
payments in lieu of wages) for the time you are
the earned income credit unless your investment income is
absent from work because of permanent and total
$2,650 or less. For most people, investment income is
disability.
taxable interest (line 8a of Form 1040 or 1040A, or Form
1040EZ, line 2), tax-exempt interest (line 8b of Form 1040
Payments that are not disability income. Any pay-
or 1040A, or written to the right of the words Form 1040EZ
ment you receive from a plan that does not provide for
on Form 1040EZ, line 2), dividend income (line 9a of Form
disability retirement is not disability income. Any lump-sum
1040 or 1040A), and capital gain net income (Form 1040,
payment for accrued annual leave that you receive when
line 13, if more than zero on Form 1040A, line 10). See
you retire on disability is a salary payment and is not
Publication 596 for more information.
disability income.
For purposes of the credit for the elderly or the disabled,
Credit has no effect on certain welfare benefits. The
disability income does not include amounts you receive
earned income credit and any advance earned income
after you reach mandatory retirement age. Mandatory re-
credit payments you receive generally will not be used to
tirement age is the age set by your employer at which you
determine whether you are eligible for the following benefit
would have had to retire had you not become disabled.
programs, or how much you can receive from the pro-
grams.
Figuring the Credit
•
Medicaid and supplemental security income (SSI).
•
If you figure the credit yourself, fill out the front of either
Food stamps.
Schedule R (if you are filing Form 1040) or Schedule 3 (if
•
Low-income housing.
you are filing Form 1040A). Next, fill out Part III of either
Schedule R or Schedule 3.
Temporary assistance for needy families (TANF) benefits
may be affected. Please check with your state.
Child and Dependent
Social security number. You must provide a correct and
valid social security number (SSN) for yourself, your
Care Credit
spouse, and any qualifying children. If an SSN is missing
or incorrect, you may not get the credit. See Publication
596 for more detailed information.
You may be able to claim this credit if you pay someone to
care for your dependent who is under age 13 or for your
The social security number must be issued by the
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spouse or dependent who is not able to care for himself or
Social Security Administration to a U.S. citizen or
herself. The credit can be up to 35% of your expenses. To
to a person who has permission to work in the
CAUTION
qualify, you must pay these expenses so you can work or
United States. If your social security card says not valid for
look for work.
employment, you cannot get the earned income credit.
If you claim this credit, you must include on your
!
return the name and taxpayer identification num-
Self-employed persons. If you are self-employed and
ber (generally the social security number) of each
your net earnings are $400 or more, be sure to fill out
CAUTION
qualifying person. If the correct information is not shown,
correctly Schedule SE (Form 1040), Self-Employment
the credit may be reduced or disallowed.
Tax, and pay the proper amount of self-employment tax. If
you do not, you may not get all the credit to which you are
You also must show on your return the name, address,
entitled.
and the taxpayer identification number of the person(s) or
organization(s) that provided the care.
Who Can Claim the Credit?
For more information, see Publication 503, Child and
Dependent Care Expenses.
The earned income credit is available to persons with or
without a qualifying child. Some of the rules are the same,
but some of the rules only apply to persons with a qualify-
Earned Income Credit
ing child or to persons without a qualifying child.
The earned income credit (EIC) is a tax credit for certain
people who work and have earned income under $35,458.
Persons Who Work and Have
The earned income credit is available to persons with or
One or More Qualifying Children
without a qualifying child. This section will list separately
the rules that persons with a qualifying child and persons
Generally, if you are a nonresident alien for any part of the
without a qualifying child must meet to get the credit. After
year, you cannot claim the credit. To claim the earned
you have read the rules, if you think you may qualify for the
income credit under this section, you must meet all the
credit, see Publication 596, Earned Income Credit. You
following rules.
also can find information in the instructions for Form 1040
1. You must have a qualifying child who lived with you
(line 65a), Form 1040A (line 41a), or Form 1040EZ (line
8a).
in the United States for more than half the year.
Chapter 5 Credits
Page 25
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