| Pub. 596, Earned Income Credit (EIC) |
2004 Tax Year |
Introductory Material
This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Introduction– Begin Here
This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
What is the EIC?
The earned income credit (EIC) is a tax credit for certain people who work and have earned income under $35,458. A tax credit
usually means
more money in your pocket. It reduces the amount of tax you owe. The EIC may also give you a refund.
To claim the EIC, you must meet certain rules. These rules are summarized in Table 1.
Table 1. Earned Income Credit in a Nutshell
| First, you must meet all the rules in this column. |
Second, you must meet all the rules in one of these columns, whichever
applies. |
Third, you must meet the rule in this column. |
Chapter 1.
Rules for Everyone |
Chapter 2.
Rules If You Have a Qualifying Child |
Chapter 3.
Rules If You Do Not Have a Qualifying Child |
Chapter 4.
Figuring and Claiming the EIC |
1. Your
adjusted gross income (AGI) must be less than:
•$34,458
($35,458 for married filing jointly) if you have more than one qualifying child,
•$30,338 ($31,338 for married filing jointly) if you have one qualifying child, or
•$11,490 ($12,490 for married filing jointly) if you do not have a qualifying child.
(See page 6.)
|
2. You must have a valid social security number.
(See page 6.)
3. Your filing status cannot be “Married filing separately.”
(See page 7.)
4. You must be a U.S. citizen or resident alien all year.
(See page 7.)
5. You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income).
(See page 8.)
6. Your investment income must be $2,650 or less.
(See page 8.)
7. You must have earned income.
(See page 10.)
|
8. Your child must meet the relationship, age, and residency tests.
(See page 13.)
9. Your qualifying child cannot be used by more than one person to claim the EIC.
(See page 17.)
10. You cannot be a qualifying child of another person. (See page 19.)
|
11. You must be at least age 25 but under age 65.
(See page 20.)
12. You cannot be the dependent of another person.
(See page 20.)
13. You cannot be a qualifying child of another person.
(See page 21.)
14. You must have lived in the United States more than half of the year.
(See page 21.)
|
15. Your earned income must be less than:
•$34,458
($35,458 for married filing jointly) if you have more than one qualifying child,
•$30,338
($31,338 for married filing jointly) if you have one qualifying child, or
•$11,490 ($12,490 for married filing jointly) if you do not have a qualifying child. (See page 22.)
|
Do I Need This Publication?
Certain people who file Form 1040 must use Worksheet 1 in this publication, instead of Step 2 in their Form 1040 instructions, when they
are checking whether they can take the EIC. You are one of those people if any of the following statements are true for 2004.
-
You are filing Schedule E (Form 1040).
-
You are reporting income or a loss from the rental of personal property not used in a trade or business.
-
You are reporting income on Form 1040, line 21, from Form 8814 (relating to election to report child's interest and dividends).
-
You are reporting an amount on Form 1040, line 13, that includes an amount from Form 4797.
In addition, if you are the parent of a kidnapped child, you may need to read Rule 8 in this publication to find out if you can
claim the EIC.
If none of the statements above apply to you, your tax form instructions have all the information you need to find out if
you can claim the EIC and
to figure the amount of your EIC. You do not need this publication. But you can read it to find out whether you can take the
EIC and to learn more
about the EIC.
How Do I Figure the Amount of EIC?
If you can claim the EIC, you can either have the IRS figure the amount of your credit, or you can figure it yourself. To
figure it yourself, you
can complete a worksheet in the instructions for the form you file. To find out how to have the IRS figure it for you, see
chapter 4.
How Can I Quickly Locate Specific Information?
You can use the index to look up specific information. In most cases, index entries will point you to headings, tables, or
a worksheet.
How Can I Get EIC in My Paycheck in 2005?
You may prefer to get some of next year's EIC throughout the year, rather than wait and get EIC after you file your tax return.
Chapter 6 explains
advance payment of EIC and tells how, if you have a qualifying child, you may be able to get some of the EIC in your paycheck
in 2005.
Earned income amount is more.
The maximum amount of income you can earn and still get the credit has increased. You may be able to take the credit
if:
-
You have more than one qualifying child and you earned less than $34,458 ($35,458 if married filing jointly),
-
You have one qualifying child and you earned less than $30,338 ($31,338 if married filing jointly), or
-
You do not have a qualifying child and you earned less than $11,490 ($12,490 if married filing jointly).
Your adjusted gross income also must be less than the amount in the above list that applies to you. For details, see Rules 1 and
15.
Investment income amount is more.
The maximum amount of investment income you can have and still get the credit has increased to $2,650. See Rule 6.
Form 8836.
If you received Form 8836, Qualifying Children Residency Statement, you have been selected to participate in the EIC
certification pilot program.
File the form with the IRS, following the form instructions, to show that your child met the residency test described in Rule 8. If you did
not receive the form, you do not need to get it or file it. You have to file Form 8836 only if it was mailed to you.
Nontaxable combat pay election.
You can now elect to have your nontaxable combat pay included in earned income for the earned income credit. For details,
see Rule 7 and
Rule 15.
Increased EIC on certain joint returns.
A married person filing a joint return may get more EIC than someone with the same income but a different filing status.
As a result, the EIC table
has different columns for married persons filing jointly than for everyone else. When you look up your EIC in the EIC Table,
be sure to use the
correct column for your filing status and the number of children you have.
Reporting advance payments of EIC received in 2004.
If you received advance payments of EIC in 2004, you must file Form 1040 or Form 1040A to report the payments. Your
Form W-2, box 9, (as shown in
Figure 1) will show the amount you received.
Report the amount on line 60 (Form 1040) or line 37 (Form 1040A).
Figure 1. Reporting Advance EIC
Earned income credit has no effect on certain welfare benefits.
Any refund you receive because of the EIC and any advance EIC payments you receive will not be considered income when
determining whether you are
eligible for the following benefit programs, or how much you can receive from these programs. However, if the amounts you
receive are not spent within
a certain period of time, they may count as an asset (or resource) and affect your eligibility.
Temporary assistance for needy families (TANF) benefits may be affected. Please check with your state.
Disallowed EIC.
If you claim the EIC and it is later disallowed, you may have to complete an additional form if you want to claim
the credit in a later year. See
chapter 5 for more information.
EIC questioned by IRS.
The IRS may ask you to provide documents to prove you are entitled to claim the EIC. We will tell you what documents
to send us. These may include:
birth certificates, school records, medical records, etc. We will also send you a letter with the name, address, and telephone
number of the IRS
employee assigned to your case. The process of establishing your eligibility will delay your refund.
Spanish version of Publication 596.
You can order Publicación 596SP, Crédito por Ingreso del Trabajo, from the IRS. It is a Spanish translation of Publication
596. See
How To Get Tax Help in the Appendix to find out how to order this and other IRS forms and publications.
Photographs of missing children.
The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs
of missing children
selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children
home by looking at the
photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
Comments and suggestions.
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number,
including the area code, in
your correspondence.
You can email us at
*[email protected]. (The asterisk must be included in the
address.) Please put “ Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your
feedback and will consider your comments as we revise our tax products.
Tax questions.
If you have a tax question, visit
www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either
of the addresses listed above.
Ordering forms and publications.
Visit
www.irs.gov/formspubs
to download forms and publications, call 1-800-829-3676, or write to one of the three addresses shown under How To Get Tax Help in the back
of this publication.
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