CUSTOMER SERVICE MEMO - CSTP0002
SUBJECT: Required entries for Earned Income Credit (EIC)
What's new? We have added several new entries to ensure your qualification
for the credits. However, some customers have overlooked the new entries
and question why the credit is not computed for them. All of the information
supplied here is contained in the current Tax Forms Guide, but this memo
highlights the new entries that MUST be completed in order for the
credits to be computed.
General qualifications. Whether you claim the credit based on qualifying
children or not, several new entries affect your qualification for the credit.
Therefore, you should review all information highlighted on page 1-7
of our current Tax Forms Guide to make sure you have supplied all information
that affects the calculation of the credit. We highlight here only
the new entries on the Dependents' Worksheet, which determine whether
or not you may qualify for the higher credit based on qualifying children.
Qualifying children. This year the Earned Income Credit based on
qualifying children is claimed by answering several new questions on our
Dependents' Worksheet, which supports line 6c of Form 1040. It is no longer
necessary to supply additional information on Schedule EIC. The software
takes care of all calculations and printing without your intervention. Critical
entries on the worksheet include:
-
Year born. If you answer Yes to "Permanently/totally disabled in tax
year?" on the second screen of the worksheet, any age is accepted for the
credit. If you answer Yes to "Student at least 5 months of year?" then the
age must be under 24 to qualify, so your entry here must be 1976 or earlier.
If you cannot answer Yes to either of these questions, however, the age must
be under 19 to qualify, so your entry here must be 1981 or
earlier.
-
2 Dependent's social security no. You now must enter a valid
social security number for the child even if born at the end of 1999.
The software will consider you qualified for the credit ONLY if you
enter at least 9 characters here for the social security number. The only
IRS-allowed exception is if the child died during the year, in which case
the entry DIED is accepted here.
-
3 Relation to you. The software will consider you qualified for the
credit ONLY if your entry on this line is one of the following: son,
daughter, adopted, grandchild, stepchild, or foster child.
-
# months lived in your home. Your entry here is used in conjunction
with your entry for "# months in your home NOT in U.S." on the second screen
of the worksheet. The child must live with you in the United States more
than half of the year to qualify. Therefore your entry here less your entry
for "# months in your home NOT in U.S." must be more than 6. If
the child is a foster child, however, the child must live with you in the
U.S. the entire year, so 12 is required here and zero on the second entry
cited. (You can enter decimal amounts on these lines, so 6.03 would indicate
one month and one day and would qualify.)
-
Student at least 5 months of the tax year. See above discussion for
"Year born."
-
Gave exemption right to other parent. See below discussion for "Dependent
married?"
-
# months in your home NOT in U.S. See above discussion for "# months
lived in your home."
-
Permanently/totally disabled in tax year? See above discussion for
"Year born."
-
Dependent married? If you must answer Yes, the software will consider
you qualified only if the child is also your dependent, or would be your
dependent except that you gave the claiming right to the other parent. You
must therefore generally meet the Support Test for a married child, and the
child must be a U.S. citizen or resident alien, or reside in Canada or Mexico.
-
EIC-qualified to other taxpayer(s)? If Yes, see the next question.
-
Any of them with higher modified AGI? If you answered Yes to the preceding
question, you must also answer Yes to this question for the software to consider
you qualified.
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