Publication 596 (2005), Earned Income Credit (EIC)

Chapter 2. Rules If You Have a Qualifying Child

Table of Contents

Rule 8. Rule 8. Your Child Must Meet the Relationship, Age, and Residency Tests
- Rule 8. . Relationship Test
- Rule 8. . Age Test
- Rule 8. . Residency Test
Rule 9. Rule 9. Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC
Rule 10. Rule 10. You Cannot Be a Qualifying Child of Another Person

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.

Rule 8. Your Child Must Meet the Relationship, Age, and Residency Tests

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.

Relationship Test

To be your qualifying child, a child must be your:

Son, daughter, stepchild, eligible foster child, or a descendant of any of them (for example, your grandchild), or
Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew).

The following definitions clarify the relationship test.

Adopted child. An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption.

Eligible foster child. For the EIC, a person is your eligible foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. (An authorized placement agency includes a state or local government agency. 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.)

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. Debbie is your eligible foster child.

Figure 2. Tests for Qualifying Child

This image is too large to be displayed in the current screen. Please click the link to view the image.

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 under the Special rule for divorced or separated parents, described later.

Age Test

Your child must be:

Under age 19 at the end of 2005,
A full-time student under age 24 at the end of 2005, or
Permanently and totally disabled at any time during 2005, 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 at the school, 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.

Hurricane Katrina. If your child enrolled in school before August 25, 2005, the child is treated as a student for any month of the enrollment period he or she was unable to attend classes because of Hurricane Katrina.

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 Internet schools do not count as schools for the EIC.

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.

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.

Residency Test

Your child must have lived with you in the United States for more than half of 2005. The following definitions clarify the residency test.

United States. This means the 50 states and the District of Columbia. It does not include Puerto Rico or U.S. possessions such as Guam.

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 2005 is treated as having lived with you for all of 2005 if your home was the child's home the entire time he or she was alive in 2005.

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 with you. Examples of a special circumstance include:

Illness,
School attendance,
Detention in a juvenile facility,
Business,
Vacation, and
Military service.

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 2005. 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:
1. An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or
2. An adoption taxpayer identification number (ATIN), 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.

Rule 9. Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC

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, if anyone, 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 which of you, if otherwise eligible, will take all of the following tax benefits based on the qualifying child.

The child's exemption.
The child tax credit.
Head of household filing status.
The credit for child and dependent care expenses.
The EIC.

The other person cannot take any of these five tax benefits unless he or she has a different qualifying child.

If you and the other person(s) cannot agree and more than one person claims the EIC or the other tax benefits just listed using the same child, the tie-breaker rule (explained in Table 2) applies. However, the tie-breaker rule does not apply if the other person is your spouse and you file a joint return.

Table 2. When More Than One Person Claims EIC Using Same Child (Tie-Breaker Rule) Caution: If a child is treated as the qualifying child of the noncustodial parent under the rules for divorced or separated parents, described later, see Applying Rule 9 to divorced or separated parents, later.

IF more than one person claims the same child as a qualifying 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 parents of the child, 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 parents of the child, 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 2005, 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 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 may be able to treat the child as a qualifying child. See Example 5. But also see You can choose which person will claim the EIC, earlier.

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 treat him as a qualifying child to claim the EIC (and, if that person qualifies, the other tax benefits listed on page 16). You agree to let your mother claim him. This means, if you do not claim your son as a qualifying child for the EIC or any of the other tax benefits listed on page 16, your mother can treat your son as a qualifying child to claim the EIC (and any other tax benefit listed on page 16 for which she qualifies).

Example 2.

The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child. In this case, you as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC and the other tax benefits listed on page 16. The IRS will disallow your mother's claim to the EIC and any other tax benefits listed on page 16 unless she has another qualifying child.

Example 3.

The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Only one of you can claim each child as a qualifying child. However, you and your mother can split the three qualifying children between you. For example, you can use one child and your mother can use the other two.

Example 4.

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 treat both you and your son as qualifying children for the EIC.

Example 5.

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 6.

You, your husband, and your 10-year-old son lived together until August 1, 2005, when your husband moved out of the household. In August and September, your son lived with you. For the rest of the year, your son lived with your husband. Your son is a qualifying child of both you and your 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 husband are not divorced, legally separated, or separated under a written separation agreement, so the special rule for divorced or separated parents does not apply.

You and your husband will file separate returns. Your husband agrees to let you treat your son as a qualifying child. This means, if your husband does not claim your son as a qualifying child for any of the tax benefits listed on page 16, you can claim him as a qualifying child for any tax benefit listed on page 16 for which you qualify. However, you cannot claim head of household filing status because you and your husband did not live apart the last 6 months of the year. As a result, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. See, Rule 3.

Example 7.

The facts are the same as in Example 6 except that you and your husband both claim your son as a qualifying child. In this case, only your husband will be allowed to treat your son as a qualifying child. This is because, during 2005, the boy lived with him longer than with you. You cannot claim the EIC for persons either with or without a qualifying child. However, because you and your husband did not live apart the last 6 months of the year, your husband cannot claim head of household filing status. As a result his filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. See Rule 3.

Example 8.

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. Your son's father agrees to let you treat the child as a qualifying child. This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed on page 16, you can claim him as a qualifying child for the EIC and any other tax benefit listed on page 16 for which you qualify.

Example 9.

The facts are the same as in Example 8 except that you and your son's father both claim your son as a qualifying child. In this case, only your son's father will be allowed to treat your son as a qualifying child. This is because his AGI, $18,000, is more than your AGI, $8,000. You cannot claim the EIC for persons either with or without a qualifying child.

Example 10.

You and your 7-year-old niece, your sister's child, lived with your mother all year. 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. Your mother agrees to let you treat the child as a qualifying child. This means, if your mother does not claim her as a qualifying child for the EIC or any of the other tax benefits listed on page 16, you can claim your niece as a qualifying child for the EIC and any other tax benefit listed on page 16 for which you qualify.

Example 11.

The facts are the same as in Example 10 except that you and your mother both claim your niece as a qualifying child. In this case, only your mother will be allowed to treat your niece as a qualifying child. This is because your mother's AGI, $15,000, is more than your AGI, $9,300.

Special rule for divorced or separated parents. A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption, but not for the EIC) if all of the following apply.

The parents:
1. Are divorced or legally separated under a decree of divorce or separate maintenance,
2. Are separated under a written separation agreement, or
3. Lived apart at all times during the last 6 months of the year.
The child received over half of his or her support for the year from the parents.
The child is in the custody of one or both parents for more than half of the year.
A decree of divorce or separate maintenance or written separation agreement that applies to 2005 provides that the noncustodial parent can claim the child as a dependent (and, in the case of a pre-1985 agreement, the noncustodial parent provides at least $600 for the support of the child during the year) or the custodial parent signs a written declaration that he or she will not claim the child as a dependent for the year.

For details, see Publication 501. Also see Applying Rule 9 to divorced or separated parents, next.

Applying Rule 9 to divorced or separated parents. If a child is treated as the qualifying child of the noncustodial parent under the special rule for children of divorced or separated parents described earlier, the noncustodial parent can claim an exemption and the child tax credit for the child but cannot claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, or the EIC. If the child is the qualifying child of more than one other person, only one of those persons can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, and the EIC. No other person can claim any of these three tax benefits unless he or she has a different qualifying child. If you and any other person file a return claiming the child as a qualifying child for any of these three tax benefits, the IRS will disallow all but one of the claims using the tie-breaker rule in Table 2.

Example 1.

You and your 5-year-old son lived with your mother all year. Under the rules for children of divorced or separated parents, your son is the qualifying child of your ex-husband, who can claim an exemption and the child tax credit for the child if he meets all the requirements to do so. Because of this, you cannot claim an exemption or the child tax credit for your son. However, your ex-husband cannot claim the boy as a qualifying child for head of household filing status, the credit for child and dependent care expenses, or the EIC. You and your mother did not have any child care expenses, but the boy is a qualifying child of both you and your mother for the EIC and head of household filing status because he meets the relationship, age, residency, and support tests for both you and your mother. (Note: The support test does not apply for the EIC.) However, you agree to let your mother claim your son. This means, if you do not claim your son as a qualifying child for the EIC or head of household filing status, your mother can claim him as a qualifying child for each of those tax benefits for which she qualifies.

Example 2.

The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC and head of household filing status. You as the child's parent will be the only one allowed to claim your son as a qualifying child for these tax benefits. The IRS will disallow your mother's claim to these tax benefits unless she has another qualifying child.

Rule 10. You Cannot Be a Qualifying Child of Another Person

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, stepchild, grandchild, or eligible foster child. Or, you are that person's brother, sister, half brother, half sister, stepbrother, or stepsister (or the child or grandchild of that person's brother, sister, half brother, half sister, stepbrother, or stepsister).
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 66a (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.