Table of Contents
This chapter briefly discusses the credit for the elderly or disabled, the child and dependent care credit, and the earned income credit. You may be able to reduce your federal income tax by claiming one or more of these credits.
This section explains who qualifies for the credit for the elderly or the disabled and how to figure this credit. For more information, see Publication 524, Credit for the Elderly or the Disabled.
You can take the credit only if you file Form 1040 or Form 1040A. You cannot take the credit if you file Form 1040EZ or Form 1040NR.You can take the credit for the elderly or the disabled if:
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You are a qualified individual, and
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Your income is not more than certain limits.
See Figures 5-A and 5-B, later.
You are a qualified individual for this credit if you are a U.S. citizen or resident alien, and either of the following applies.
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You were age 65 or older at the end of 2008.
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You were under age 65 at the end of 2008 and all three of the following statements are true.
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You retired on permanent and total disability (explained later).
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You received taxable disability income for 2008.
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On January 1, 2008, you had not reached mandatory retirement age (defined later under Disability income).
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Age 65. You are considered to be age 65 on the day before your 65th birthday. Therefore, you are considered to be age 65 at the end of the year if you were born before January 2, 1944.
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You were permanently and totally disabled when you retired, and
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You retired on disability before the end of the tax year.
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It must be paid under your employer's accident or health plan or pension plan.
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It must be included in your income as wages (or payments in lieu of wages) for the time you are absent from work because of permanent and total disability.
You can figure the credit yourself, or the IRS will figure it for you.
You may be able to claim this credit if you pay someone to care for your dependent who is under age 13 or for your spouse or dependent who is not able to care for himself or herself. The credit can be up to 35% of your expenses. To qualify, you must pay these expenses so you can work or look for work.
If you claim this credit, you must include on your return the name and taxpayer identification number (generally the social security number) of each qualifying person for whom care is provided. If the correct information is not shown, the credit may be reduced or disallowed.You also must show on your return the name, address, and the taxpayer identification number of the person(s) or organization(s) that provided the care.
For more information, see Publication 503, Child and Dependent Care Expenses.
The earned income credit (EIC) is a refundable tax credit for certain people who work and have earned income under $41,646. The EIC is available to persons with or without a qualifying child.
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Medicaid and supplemental security income (SSI).
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Food stamps.
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Low-income housing.
To qualify to claim the EIC, you must first meet Rules 1 through 7 in Part A of Table 5-1, Rules for Everyone. Then you must meet Rules 8 through 10 in Part B of Table 5-1, Rules If You Have a Qualifying Child, or Rules 11 through 14 in Part C of Table 5-1, Rules If You Do Not Have a Qualifying Child. There is one final rule you must meet, Rule 15, in Part D of Table 5-1, Figuring and Claiming the EIC. You qualify for the credit if you meet all the rules in each part that applies to you.
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If you have a qualifying child, the rules in Parts A, B, and D apply to you.
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If you do not have a qualifying child, the rules in Parts A, C, and D apply to you.
Table 5-1. 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. | |||
Part A. Rules for Everyone |
Part B. Rules If You Have a Qualifying Child |
Part C. Rules If You Do Not Have a Qualifying Child |
Part D. Figuring and Claiming the EIC |
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1. Your adjusted gross income (AGI) must be less than: •$38,646 ($41,646 for married filing jointly) if you have more than one qualifying child, •$33,995 ($36,995 for married filing jointly) if you have one qualifying child, or •$12,880 ($15,880 for married filing jointly) if you do not have a qualifying child. |
2. You must have a valid social security number. 3. Your filing status cannot be “Married filing separately.” 4. You must be a U.S. citizen or resident alien all year. 5. You cannot file Form 2555 or Form 2555-EZ (relating to foreign earned income). 6. Your investment income must be $2,950 or less. 7. You must have earned income. |
8. Your child must meet the relationship, age, and residency tests. 9. Your qualifying child cannot be used by more than one person to claim the EIC. 10. You cannot be a qualifying child of another person. |
11. You must be at least age 25 but under age 65. 12. You cannot be the dependent of another person. 13. You cannot be a qualifying child of another person. 14. You must have lived in the United States more than half of the year. |
15. Your earned income must be less than: •$38,646 ($41,646 for married filing jointly) if you have more than one qualifying child, •$33,995 ($36,995 for married filing jointly) if you have one qualifying child, or •$12,880 ($15,880 for married filing jointly) if you do not have a qualifying child. |
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Taxable interest (line 8a of Form 1040 or 1040A).
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Tax-exempt interest (line 8b of Form 1040 or 1040A).
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Dividend income (line 9a of Form 1040 or 1040A).
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Capital gain net income (line 13 of Form 1040, if more than zero, or line 10 of Form 1040A).
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Wages, salaries, tips, and other taxable employee pay. Employee pay is earned income only if it is taxable. Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is generally not earned income.
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Net earnings from self-employment.
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Gross income received as a statutory employee.
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Relationship,
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Age, and
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Residency.
Figure 5-C. Tests for Qualifying Child
A qualifying child for the EIC is a child who is your... | ||
Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild) |
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OR | ||
Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew) |
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was ... | ||
Under age 19 at the end of 2008 | ||
OR | ||
Under age 24 at the end of 2008 and a student | ||
OR | ||
Permanently and totally disabled at any time during the year, regardless of age | ||
who... | ||
Lived with you in the United States for more than half of 2008. If the child did not live with you for the required time, see Publication 596 for more information. |
To figure the amount of your credit, you have two choices.
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Have the IRS figure the EIC for you. If you want to do this, see IRS Will Figure the EIC for You in Publication 596.
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Figure the EIC yourself. If you want to do this, see How To Figure the EIC Yourself in Publication 596.
If you have a qualifying child and expect to qualify for the EIC in 2009, you can choose to receive advance payments of part of the credit in your regular paycheck.
You can request advance payments of the credit for 2009 by completing a 2009 Form W-5. See Publication 596 or the Form W-5 instructions for more information on the advance EIC.
If you received advance payments of EIC in 2008, you must file a 2008 return to report payments and to get any additional earned income credit for 2008.More Online Publications |