How To Figure the EIC Yourself

You may be able to use an EIC worksheet in your tax package instead of EIC Worksheet A or B at the end of this chapter.

• If you are filing Form 1040EZ, you can use the worksheet in your tax package.
• If you are filing Form 1040A, you can use the worksheet in your tax package if you answered "No" to the first two questions in Step 3 of the instructions for lines 39a and b.
• If you are filing Form 1040, you can use a worksheet in your tax package if you got to Step 3 of the instructions for lines 61a and 61b and answered "No" to the first six questions in that step.

If you have a qualifying child, complete and attach Schedule EIC (discussed in detail on page 28).

How To Use EIC Worksheets A and B

Tip:Keep your tax return handy while you complete EIC Worksheet A or B. Use EIC Worksheet A (page 29) or EIC Worksheet B (page 30) to figure the amount of your EIC. This section explains how to use these worksheets and how to report the EIC on your return.

EIC Worksheet A. Use EIC Worksheet A if you are not self-employed, a church employee who files Schedule SE, or a statutory employee filing Schedule C or C-EZ. You will need the amounts you figured in the worksheets earlier in this chapter to complete EIC Worksheet A.

EIC Worksheet B. Use EIC Worksheet B if you are self-employed, a church employee who files Schedule SE, or a statutory employee filing Schedule C or C-EZ. You will need the amounts you figured in the worksheets earlier in this chapter to complete EIC Worksheet B. If any of the following situations apply to you, read the paragraph and then complete EIC Worksheet B.

Net earnings from self-employment. If your net earnings from self-employment are $400 or more, be sure to correctly fill out Schedule SE (Form 1040) and pay the proper amount of self-employment tax. If you do not, you may not get all the EIC you are entitled to.

When to use the optional methods of figuring net earnings. Using the optional methods on Schedule SE to figure your net earnings from self-employment may qualify you for the EIC or give you a larger credit. If your net earnings (without using the optional methods) are less than $1,600, see Publication 533, Self-Employment Tax, and the instructions for Schedule SE, for details about the optional methods.

When both spouses have self-employment income. You must complete both Parts 1 and 2 of EIC Worksheet B if all of the following conditions apply to you.

1. You are married filing a joint return.
2. Both you and your spouse have income from self-employment.
3. You or your spouse files a Schedule SE and the other spouse does not file Schedule SE.

Statutory employees. Statutory employees report wages and expenses on Schedule C or C-EZ. They do not file Schedule SE. If you are a statutory employee, enter amounts from Schedule C or C-EZ in Part 3 when you complete EIC Worksheet B.

Special Instructions for Clergy, Prison Inmates, Deferred Compensation Plans, and Coverdell ESAs

Use the following special instructions if one of the following situations applies to you.

Minister or member of a religious order. If you are filing Schedule SE and line 2 of that schedule includes an amount that is also included on line 7 (Form 1040), print "Clergy" directly to the right of line 61a (Form 1040). Also show the amount included on both lines (for example, "Clergy $800"). If you received a housing allowance or were provided housing and you were required to include the allowance or the rental value of the parsonage on Schedule SE, line 2, do not include it as nontaxable earned income on line 61b (Form 1040).

Inmates. If you were an inmate in a penal institution and the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ) includes an amount paid to you for work you performed while an inmate, print "PRI" and the amount paid on the dotted line next to line 7 (Form 1040), in the space to the left of line 7 (Form 1040A), or in the space to the right of the words "W-2 form(s)" on line 1 (Form 1040EZ).

Deferred compensation plans. If you received a pension or annuity from a nonqualified deferred compensation plan or a section 457 plan, put "DFC" and the amount subtracted on the dotted line next to line 7 (Form 1040). This amount may be reported in box 11 of your Form W-2. If you received such an amount but box 11 is blank, contact your employer for the amount of the pension or annuity.

Coverdell ESAs. If you received a Coverdell ESA (Education Savings Account) distribution that was not fully taxable, write "ESA "and the amount of the distribution that was nontaxable directly to the right of line 61a (Form 1040) or line 39a (Form 1040A).

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