Do You Qualify for the Credit?

To see if you can claim the EIC, you must first meet all of the rules explained in Part A, Rules for Everyone. Then you must meet the rules in Part B, Rules If you Have a Qualifying Child, or Part C, Rules If You Do Not Have a Qualifying Child. There are two final rules you must meet in Part D, Figuring and Claiming the EIC. You qualify for the credit if you meet all the rules in each part that applies to you. For example:

• If you have a qualifying child, the rules in Parts A, B, and D apply to you, or
• If you do not have a qualifying child, the rules in Parts A, C, and D apply to you.

Table 37-1, Earned Income Credit in a Nutshell. Use Table 37-1 as a guide to Parts A, B, C, and D. The table is a summary list of all the rules in each part. Each rule listed has a rule number. Use the rule number to find a discussion of that rule in this chapter.

Do you have a qualifying child? Basically, a qualifying child is a child who:

1. Is your son, daughter, adopted child, grandchild, stepchild, or eligible foster child, and
2. Was (at the end of 2001) under age 19, under age 24 and a full-time student, or any age and permanently and totally disabled during the year, and
3. Lived with you in the United States for more than half of 2001 (for all of 2001 if the child is your eligible foster child).

See Rule 7 for more detailed information.

If Improper Claim Made in Prior Year

You must file Form 8862 if for any year after 1996 your EIC was denied or reduced for any reason other than a math or clerical error. But do not file Form 8862 if, after your EIC was denied or reduced in an earlier year, you filed Form 8862 (or other documents) and your EIC was then allowed.

If it was determined that your error was due to reckless or intentional disregard of the EIC rules or fraud, you cannot claim the EIC for the next 2 years (10 years in the case of fraud).

More information. See chapter 5 in Publication 596 for more detailed information about the disallowance period and Form 8862.

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