Certain people must use Publication 596.
Certain people must use Publication 596 to see if they meet the rules to take the EIC and to figure the amount of the credit. You must use Publication 596 if any of the following situations applies to you.
- The amount on Form 1040, line 21, includes an amount from Form 8814, Parents Election To Report Childs Interest and Dividends.
- Your investment income ( Rule 5 ) is $2,400 or more and you are filing Form 4797, Sales of Business Property.
- You are filing Schedule E, Supplemental Income and Loss, (Form 1040).
- You are reporting income or a loss from the rental of personal property not used in a trade or business.
- You are claiming a loss on Form 1040, line 12, 13, or 18.
- You (or your spouse if filing a joint return) received distributions from a pension, annuity, or IRA that are not fully taxable.
- You owe alternative minimum tax (AMT), found on Form 1040, line 41, or included in the total found on Form 1040A, line 35.
For information on how you can get Publication 596, Earned Income Credit, or other free IRS publications, see How To Get Tax Help in the back of this publication.
Modified AGI (adjusted gross income).
Your modified AGI used to limit your credit includes:
- Tax-exempt interest, and
- The nontaxable part of a pension, annuity, or individual retirement arrangement (IRA) distribution, except any amount that is nontaxable because it was a trustee-to-trustee transfer or a rollover distribution.
Also, the amount of business losses that must be added back to AGI to figure modified AGI is 75%.
See Publication 596 for more detailed information on modified AGI.
Advance payment of the earned income credit in your paycheck.
If you qualify for the earned income credit in 2001, you can receive part of it in each paycheck throughout the year. See Advance Earned Income Credit, later, for more information.
Earned income credit has no effect on certain welfare benefits.
Any refund you receive because of the earned income credit and any advance earned income credit payments you receive will not be used to determine whether you are eligible for the following benefit programs, or how much you can receive from these programs.
- Temporary assistance for needy families (TANF).
- Medicaid and supplemental security income (SSI).
- Food stamps.
- Low-income housing.
Social security numbers.
To claim the EIC, you must have a valid social security number (SSN) for you and your spouse (if filing a joint return) and any qualifying children. If an SSN is missing or incorrect, you may not get the credit. See Rule 1 , later.
Form 8862 to claim EIC after disallowance.
If your EIC for any year after 1996 was denied or reduced for any reason other than a mathematical or clerical error, you must attach a completed Form 8862, Information To Claim Earned Income Credit After Disallowance, to your next return if you wish to claim the EIC. The date on which your EIC was denied and the date on which you file your 2000 return affect whether you need to attach Form 8862 to your 2000 return or to a later return. See chapter 5 in Publication 596 for more information.
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