| Pub. 596, Earned Income Credit (EIC) |
2004 Tax Year |
Chapter 2 - Rules If You Have a Qualifying Child
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.
If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. This chapter discusses
Rules
8 through 10 . You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned
income
credit with a qualifying child.
You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. (You cannot file Form 1040EZ.) You also must
complete
Schedule EIC and attach it to your return. If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find
out what to do
next.
No qualifying child.
If you do not meet Rule 8, you do not have a qualifying child. Read chapter 3 to find out if you can get the earned income credit
without a qualifying child.
Your Child Must Meet the Relationship, Age, and Residency Tests
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.
Your child is a qualifying child if your child meets three tests. The three tests are:
-
Relationship,
-
Age, and
-
Residency.
The three tests are illustrated in Figure 2 on page 14. The paragraphs that follow contain more information about each test.
To be your qualifying child, a child must be your:
-
Son, daughter, adopted child, stepchild, or a descendant (for example, your grandchild) of any of them, or
-
Brother, sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them whom you cared
for as you would
your own child, or
-
Eligible foster child.
The following definitions clarify the relationship test.
Adopted child.
An adopted child is always treated as your own child. Your adopted child includes a child placed with you for adoption
by an authorized placement
agency, even if the adoption is not final.
An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.
Eligible foster child.
For the EIC, a person is your eligible foster child if both of the following are true.
-
The child is placed with you by an authorized placement agency. (An authorized placement agency includes a state or local
government agency
or court. It also includes a tax-exempt organization licensed by a state. In addition, it includes an Indian tribal government
or an organization
authorized by an Indian tribal government to place Indian children.)
-
You cared for that child as you would your own child.
Example.
Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children
in foster homes. You care
for her as you would your own child. Debbie is your eligible foster child.
Figure 2. Tests for Qualifying Child
Child not a dependent.
Your child does not have to be your dependent to be a qualifying child, unless he or she is married.
Married child.
If your child was
married at the end of the year, he or she does not meet the relationship test unless either of these two
situations applies to you:
-
You can claim the child's exemption, or
-
The reason you cannot claim the child's exemption is that you gave that right to your child's other parent:
-
When you completed Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or a similar written
statement,
or
-
In a pre-1985 agreement (such as a separation agreement or divorce decree).
Your child must be:
-
Under age 19 at the end of 2004,
-
A full-time student under age 24 at the end of 2004, or
-
Permanently and totally disabled at any time during 2004, regardless of age.
The following example and definitions clarify the age test.
Example.
Your son turned 19 on December 10. Unless he was disabled or a full-time student, he is not a qualifying child because, at
the end of the year, he
was not under age 19.
Full-time student.
A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time
attendance.
Student defined.
To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar
year:
-
A full-time student at a school that has a regular teaching staff, course of study, and regular student body, or
-
A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local
government.
The 5 calendar months need not be consecutive.
School defined.
A
school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical
school. However, on-the-job training courses, correspondence schools, and night schools do not count as schools for the EIC.
(But see Night
school, later.)
Vocational high school students.
Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical
training are considered
full-time students.
Night school.
Your child is not a full-time student if he or she attends school only at night. However, full-time attendance at
a school may include some
attendance at night as part of a full-time course of study.
Permanently and totally disabled.
Your child is permanently and totally disabled if both of the following apply.
-
He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
-
A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.
Your child must have lived with you in the United States for more than half of 2004. The following definitions clarify the
residency test.
United States.
This means the 50 states and the District of Columbia. It does not include U.S. possessions, such as Guam and
Puerto Rico.
Homeless shelter.
Your home can be any location where you regularly live. You do not need a traditional home. For example, if your child
lived with you for more than
half the year in one or more homeless shelters, your child meets the residency test.
Military personnel stationed outside the United States.
U.S. military personnel stationed outside the United States on extended active duty are considered to live in the
United States during that duty
period for purposes of the EIC.
Extended active duty.
Extended active duty means you are called or ordered to duty for an indefinite period or for a period of
more than 90 days. Once you begin serving your extended active duty, you are still considered to have been on extended active
duty even if you do not
serve more than 90 days.
Birth or death of child.
A
child who was born or died in 2004 is treated as having lived with you for all of 2004 if your home was
the child's home the entire time he or she was alive in 2004.
Temporary absences.
Count time that you or your child is away from home on a temporary absence due to a special circumstance as time lived
at home. Examples of a
special circumstance include:
Kidnapped child.
A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more
than half the part of the year
before the date of the kidnapping. The child must be presumed by law enforcement authorities to have been kidnapped by someone
who is not a member of
your family or the child's family. This treatment applies for all years until the child is returned. However, the last year
this treatment can apply
is the earlier of:
-
The year there is a determination that the child is dead, or
-
The year the child would have reached age 18.
If your qualifying child has been kidnapped and meets these requirements, enter “ KC,” instead of a number, on line 6 of Schedule EIC.
Social security number.
Your qualifying child must have a valid social security number (SSN), unless the child was
born and died in 2004. You cannot claim the EIC on the basis of a qualifying child if:
-
Your qualifying child's SSN is missing from your tax return or is incorrect,
-
Your qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded
benefit, or
-
Instead of an SSN, your qualifying child has:
-
An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or
-
An adoption taxpayer identification number (ATIN), which is issued to adopting parents who cannot get an SSN for the child
being adopted
until the adoption is final.
If you have two qualifying children and only one has a valid SSN, you can claim the EIC only on the basis of that child. For
more information about
SSNs, see Rule 2.
Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC
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.
Sometimes a child meets the rules to be a qualifying child of more than one person. However, only one person can treat that
child as a qualifying
child and claim the EIC using that child. The paragraphs that follow will help you decide who can claim the EIC when more
than one person has the same
qualifying child.
You can choose which person will claim the EIC.
If you and someone else have the same qualifying child, you and the other person(s) can decide who will claim the
credit using that qualifying
child. But if you and the other person(s) cannot agree and more than one person claims the credit using the same child, the
tie-breaker rule
(explained in Table 2, next) applies. If the other person is your spouse and you file a joint return, this rule does not apply.
Table 2. When More Than One Person Claims EIC Using Same Child (Tie-Breaker Rule)
| IF more than one person claims the EIC using the same child and .... |
|
|
THEN .... |
|
|
Only one of the persons is the child's parent
|
|
Only the parent can treat the child as a qualifying child.
|
|
Two of the persons are the child's parent, and they do not file a joint
return together
|
|
Only the parent with whom the child lived the longest during the year can treat the
child as a qualifying child.
|
|
Two of the persons are the child's parent, the child lived with each
parent the same amount of time during the year, and the parents do not file a joint return together
|
|
Only the parent with the highest adjusted gross income (AGI) can treat
the child as a qualifying child.
|
|
None of the persons are the child's parent
|
|
Only the person with the highest AGI can treat the child as a qualifying
child.
|
If another person claims the EIC using this child.
If your EIC is denied because your qualifying child is treated under this rule as the qualifying child of another
person for 2004, you may be able
to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in chapter 3 for people who
do not have a qualifying
child. If you do not have another qualifying child, you cannot take the EIC. Put “ No” beside line 65a (Form 1040) or line 41a (Form 1040A).
If the other person cannot claim the EIC.
If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she
is not eligible or his or her
earned income or AGI is too high, you can treat the child as a qualifying child. See Example 4 on the next page.
Examples. The following examples may help you in determining whether you can claim the EIC when you and someone else have the same
qualifying child.
Example 1.
You and your 2-year-old son lived with your mother all year. You are 25 years old. Your only income was $9,000 from a part-time
job. Your mother's
only income was $20,000 from her job. Your son is a qualifying child of both you and your mother because he meets the relationship,
age, and residency
tests for both you and your mother. However, only one of you can use him to claim the EIC. You and your mother may choose
which of you will treat the
child as a qualifying child to claim the EIC. However, if you and she disagree and both use him to claim the EIC, you as the
child's parent will be
the only one allowed to claim the credit using this child.
Example 2.
The facts are the same as in Example 1, except that you also have two other young children who lived with you and your mother and are
qualifying children of both you and your mother. Only one of you can use each child to claim the EIC. However, you and your
mother can split the three
qualifying children between you. For example, you can use one child to claim the EIC and your mother can use the other two.
Example 3.
The facts are the same as in Example 1, except that you are only 18 years old. This means you are a qualifying child of your mother.
Because of Rule 10, discussed next, you cannot claim the EIC. Only your mother may be able to treat your son as a qualifying child to claim
the EIC. If your mother meets all the other requirements for claiming the EIC, she can use both you and your son to claim
the EIC.
Example 4.
The facts are the same as in Example 1, except that your mother earned $50,000 from her job. Because your mother's earned income is too
high for her to claim the EIC, only you can claim the EIC using your son.
Example 5.
You, your husband, and your 10-year-old son lived together until July 1, 2004, when your husband moved out of the household.
In July and August,
your son lived with your husband. In September and October, the boy lived with you. On November 1, 2004, you and your husband
were divorced. For the
rest of the year, your son lived with your ex-husband, who was given custody. Your son is a qualifying child of both you and
your ex-husband because
your son lived with each of you for more than half the year and because he met the relationship and age tests for both of
you.
You and your ex-husband may choose which of you will treat the child as a qualifying child to claim the EIC. However, if you
and he are unable to
agree and both use the child to claim the EIC, only your ex-husband will be allowed to claim the credit using this child.
This is because, during
2004, the child lived with him longer than with you. You cannot claim the EIC for persons either with or without a qualifying
child.
Example 6.
You, your 5-year-old son, and your son's father lived together all year. You and your son's father are not married. Your son
is a qualifying child
of both you and his father because he meets the relationship, age, and residency tests for both you and his father. You earned
$8,000 and your son's
father earned $18,000. Neither of you had any other income. You and your son's father may choose which of you will treat the
child as a qualifying
child to claim the EIC. However, if you and he are unable to agree and both use the child to claim the EIC, only the father
will be allowed to claim
the credit using this child. This is because his AGI ($18,000) was more than your AGI ($8,000). You cannot claim the EIC for
persons either with or
without a qualifying child.
Example 7.
You and your 7-year-old niece lived with your mother all year. You care for your niece as you would your own child. You are
25 years old, and your
only income was $9,300 from a part-time job. Your mother's only income was $15,000 from her job. Your niece is a qualifying
child of both you and your
mother because she meets the relationship, age, and residency tests for both you and your mother. However, only one of you
can treat her as a
qualifying child to claim the EIC. You and your mother may choose which of you will use the child to claim the EIC. However,
if you and she are unable
to agree and both use the child to claim the EIC, only your mother will be allowed to claim the credit using this child. This
is because her AGI
($15,000) is higher than your AGI ($9,300).
You Cannot Be a Qualifying Child of Another Person
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.
You are a qualifying child of another person (your parent, guardian, foster parent, etc.) if all of the
following statements are true.
-
You are that person's son, daughter, adopted child, stepchild, grandchild, or eligible foster child.
Or, you are that person's brother, sister, stepbrother, or stepsister (or the child or grandchild of that
person's brother, sister, stepbrother, or stepsister) and that person cares for you as his or her own child.
-
At the end of the year you were under age 19, or under age 24 and a full-time student, or any age if you were permanently
and totally
disabled at any time during the year.
-
You lived with that person in the United States for more than half of the year.
For more details about the tests to be a qualifying child, see Rule 8.
If you (or your spouse, if filing a joint return) are a qualifying child of another person, you cannot claim the EIC. This
is true even if the
person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Put “No” beside line 65a (Form 1040)
or line 41a (Form 1040A).
Example.
You and your daughter lived with your mother all year. You are 22 years old and attended a trade school full time. You had
a part-time job and
earned $5,700. You had no other income. Because you meet the relationship, age, and residency tests, you are a qualifying
child of your mother. She
can claim the EIC if she meets all the other requirements. Because you are your mother's qualifying child, you cannot claim
the EIC. This is so even
if your mother cannot or does not claim the EIC.
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