Claiming earned income credit (EIC) for a child
You can claim earned income credit (EIC) for one or more qualifying children. There are three different tests to find out whether your child qualifies. If your child meets these three, then you can look forward to this credit just by filing your tax return.
The preliminary requirements:
In order to qualify, your child should meet three tests – relationship, age and residential status.
The test of relationship
The child for whom you are claiming EIC must be your son, daughter, step-child, foster-child, or your grandchild. Alternatively, the child must be your brother, half brother, step-brother or sister, half sister, step-sister, or a descendant of any of them, like your niece or nephew.
An adopted child is also treated as your own child. If a child is placed with you by an authorized placement agency, and then the child is your Foster child, who also passes the relationship test.
The test of age
If your child is under 19 years of age, or under 24 years of age and a student or a disabled child, regardless of age, he or she passes the test of age. Suppose your son turned 19 on December 25. Unless he is a student and or a disabled person, he cannot qualify as a child for EIC.
To qualify as a student, your child must be a full-time student during some part of each of any calendar months during the calendar year. The calendar months need not be consecutive.
Your child can be presumed as permanently and totally disabled if he or she is unable to engage in any gainful activity because of his/her physical or mental condition and a doctor has determined that such condition has lasted or expected to last continuously for at least a year.
The test of residency
Your child must be living with you in the United States for at least half of the calendar year. Remember, the members of the armed forces of United States staying out of the country on extended active duty are considered to be living in the U.S. If a child is away from home due to illness, school attendance, military service, then he or she is presumed to have passed the test of residency.
The child must have a valid social security number and it must be correctly entered on your tax return in order to qualify. So if you have two children qualifying for EIC and only one has a valid social security number, then you can claim EIC only for the child with valid social security number.
The qualifying child can’t be used by two persons at a time to claim the EIC. When more than one person files a return claiming EIC for the same child then a tie-breaker rule is applied. So if you and your three year old daughter lived with your mother all over the year. You are 27 years old. Your only income was $10,000 from a part time job while the only income of your mother was $20,000 from a job. So your daughter meets all the tests for both you and your mother. However only one of you can treat her as a qualifying child to claim EIC.
And the final and important rule –if you want to claim EIC for your qualifying child, you cannot be a qualifying child of another person!
The EIC is primarily to help workers with low income. No doubt the criteria for qualifying for EIC are complicated. Also the low income workers can’t be expected to take help of a tax consultant. However, the IRS has provided Earned Income Tax Credit Assistant - an online program to help you. So don’t get discouraged by the complications. If you qualify, the EIC is there to put a good chunk of money in your pocket!
The preliminary requirements:
In order to qualify, your child should meet three tests – relationship, age and residential status.
The test of relationship
The child for whom you are claiming EIC must be your son, daughter, step-child, foster-child, or your grandchild. Alternatively, the child must be your brother, half brother, step-brother or sister, half sister, step-sister, or a descendant of any of them, like your niece or nephew.
An adopted child is also treated as your own child. If a child is placed with you by an authorized placement agency, and then the child is your Foster child, who also passes the relationship test.
The test of age
If your child is under 19 years of age, or under 24 years of age and a student or a disabled child, regardless of age, he or she passes the test of age. Suppose your son turned 19 on December 25. Unless he is a student and or a disabled person, he cannot qualify as a child for EIC.
To qualify as a student, your child must be a full-time student during some part of each of any calendar months during the calendar year. The calendar months need not be consecutive.
Your child can be presumed as permanently and totally disabled if he or she is unable to engage in any gainful activity because of his/her physical or mental condition and a doctor has determined that such condition has lasted or expected to last continuously for at least a year.
The test of residency
Your child must be living with you in the United States for at least half of the calendar year. Remember, the members of the armed forces of United States staying out of the country on extended active duty are considered to be living in the U.S. If a child is away from home due to illness, school attendance, military service, then he or she is presumed to have passed the test of residency.
The child must have a valid social security number and it must be correctly entered on your tax return in order to qualify. So if you have two children qualifying for EIC and only one has a valid social security number, then you can claim EIC only for the child with valid social security number.
The qualifying child can’t be used by two persons at a time to claim the EIC. When more than one person files a return claiming EIC for the same child then a tie-breaker rule is applied. So if you and your three year old daughter lived with your mother all over the year. You are 27 years old. Your only income was $10,000 from a part time job while the only income of your mother was $20,000 from a job. So your daughter meets all the tests for both you and your mother. However only one of you can treat her as a qualifying child to claim EIC.
And the final and important rule –if you want to claim EIC for your qualifying child, you cannot be a qualifying child of another person!
The EIC is primarily to help workers with low income. No doubt the criteria for qualifying for EIC are complicated. Also the low income workers can’t be expected to take help of a tax consultant. However, the IRS has provided Earned Income Tax Credit Assistant - an online program to help you. So don’t get discouraged by the complications. If you qualify, the EIC is there to put a good chunk of money in your pocket!
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