Qualify for the Earned Income Credit: Do You?You can qualify for the Earned Income Credit without children. However, the main people who will benefit from the Earned Income Credit are taxpayers with children. On this page, then, we're going to concentrate on the bigger Earned Income Credit claims, which are available to taxpayers with "qualifying children" on their tax returns. For taxpayers with children, the Earned Income Credit is a big deal. For tax year 2009, you can get an Earned Income Credit of up to $5,657 if you have three or more kids on your return. But be careful. The IRS is looking at Earned Income Credit fraud more and more every year, so make sure you qualify. Think You Qualify for the EIC? Test YourselfInstead of leading you through the finer points of the Earned Income Credit Qualifying form itself, let's cut right to the heart of the matter and help you qualify for the EIC. The good news is, you can test yourself. There are three basic tests for qualifying for the Earned Income Credit with qualifying children: 1. Relationship With the ChildA "qualifying child" for the Earned Income Credit is defined by the IRS as your son, daughter, brother, sister, adopted child, grandchild, stepchild, or a descendent of any of these. In other words, close family.*No cousins unless they're either adopted, in the process of adoption, or you have legal custody.* 2. Age of the ChildA qualifying child must be either:
or 3. Residency of the ChildA qualifying child must have lived with you for at least six months of the year for which you are claiming the Earned Income Credit.Exceptions to the EIC RulesThere are exceptions to the three tests named above, but those are the three basic tests of whether or not you qualify to claim the EIC with kids. For a more detailed, personalized review of your Earned Income Credit eligibility, please contact Pronto today. Don't Claim the EIC If You Don't QualifyIt is not wise to claim the Earned Income Credit if you cannot pass the basic three tests documented on this page. You may get a bigger tax refund now, but it won't be legal and you could have to pay it all back when you get audited, plus penalties and interest. You may also be disqualified from claiming the Earned Income Credit in future years. Always remember when claiming the Earned Income Credit that the EIC is intended to be used to keep families and especially children out of poverty. We see many taxpayers come to our offices from other tax preparation places with tax problems related to an incorrect EIC claim from a past year. EIC audits can be painful both financially and from a time and paperwork perspective. If you do need help during an EIC audit, contact Pronto today. We are experts in this area, processing thousands of Earned Income Credit claims per year. The IRS estimates that approximately $33 billion of Earned Income Credit funds are not legitimate by current rules for claiming the credit. Instead of being a part of that group, test yourself ahead of time to qualify for the EIC with these three basic tests:
|
