UNTIL TAX DAY 2012

Earned Income Credit

The Earned Income Credit (EIC) is a tax credit for certain people who work and have earned income below a specific amount. This credit may give you a refund even if you do not owe any tax. In order to claim this credit, you must file an income tax return and qualify by meeting certain rules.

A CREDIT CAN BE AS MUCH AS:

$457 for earned income and adjusted gross income (AGI) less than $13,460 with no children ($18,470 if married filing jointly)
$3,050 for earned income and AGI less than $35,535 and one qualifying child ($40,545 if married filing jointly)
$5,036 for earned income and AGI less than $40,363 and two qualifying children ($45,373 if married filing jointly).
$5,666 for earned income and AGI less than $43,352 and three or more qualifying children ($48,362 if married filing jointly).

RULES FOR ALL FILERS FOR EIC:

You must have earned income (wages or self-employment income)
You (AND your spouse AND any qualifying child) must have a valid Social Security number
Your filing status cannot be married filing separately
You must be a U.S. citizen or resident alien all year
You cannot file Form 2555 or Form 2555-EZ (which excludes foreign earned income)
Your investment income must be $3,100 or less

ADDITIONAL RULES IF YOU HAVE QUALIFYING CHILDREN:

Your child must meet the relationship, age and residency tests, and be younger than you
Your qualifying child cannot be used by more than one person to claim the EIC
You cannot be a qualifying child of another person

ADDITIONAL RULES IF YOU DON'T HAVE A QUALIFYING CHILD:

You must be at least age 25, but under age 65
You cannot be the dependent of another person
You cannot be a qualifying child of another person
You must have lived in the United States for more than half the year

QUALIFYING CHILD:

For EIC purposes a qualifying child must meet the relationship, residency, and age test.

Relationship test: The qualifying child must be your son or daughter (including adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of one of these.

An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final.

An eligible foster child is any child who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

Residency test: The qualifying child must live with you in the U.S. for more than half of the year. A child who was born or died during the year is considered to have lived with you for the entire year if your home was the child’s home for the entire time he or she was alive during the year.

Age test: The qualifying child must be under age 19 at the end of the year and younger than you (or your spouse if filing jointly), or a full-time student under age 24 at the end of the year and younger than you (or your spouse if filing jointly), or, if permanently and totally disabled, can be any age.

EARNED INCOME FOR PURPOSES OF EARNED INCOME CREDIT INCLUDES: