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The 1999 Earned Income Tax Credit (EITC)
Q's and A's ...
on $$$ in your pocket
if you qualify...

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Questions and Answers about EITC

Q 1. What is earned income?

A 1. Earned income is income you get from employment or self-employment—even if it is not taxable.

Taxable earned income includes:

• wages, salaries, tips
• union strike benefits
• long-term disability benefits received prior to minimum retirement age
• net earnings from self-employment

Nontaxable earned income includes:

• salary deferrals [Example:401 (k)]
• pay earned in a combat zone
• basic housing and subsistence allowances and in-kind housing and subsistence for the U.S. military
• value of meals and lodging provided by an employer for the convenience of the employer
• housing allowance or rental value of a parsonage for the clergy
• excluded dependent care benefits furnished by an employer
• salary reductions, such as under a cafeteria plan

Q2. What is the Earned Income Tax Credit (EITC)?

A 2. The EITC is a tax credit for some workers whose earned income is less than a certain amount. The credit is subtracted from the amount of tax you owe on your federal tax return, so you pay less tax. Even if you do not owe any tax, you could get a refund.

Q3. Who can claim the EITC?

A3. You must meet the following requirements to claim the EITC:

• You have earned income from employment or from self-employment.
• Your earned income and modified adjusted gross income are less than:
  – $30,095 with two or more qualifying children*, or
  – $26,473 with one qualifying child*, or
  – $10,030 with no qualifying children**.
  *Qualifying children are sons, daughters, adopted children, grandchildren, step-children, or foster children who are:
    – 18 years of age or under, or 23 years of age or under and a full-time student, or
    – any age if permanently and totally disabled.
  The qualifying child does not have to be a dependent, but must live with you in your home in the United States for more than half the year (a whole year for a foster child).
  **If you do not have a qualifying child, both you and your spouse, if filing jointly, must live in the United States more than half the year, and not be another person's dependent. In addition, either
  you or your spouse must be age 25 to 64.
• Your investment income is $2,300 or less.
• Your filing status is any filing status EXCEPT married filing a separate return.
• You (and your spouse, if filing jointly) cannot be a qualifying child of another person.
• You, your spouse (if filing jointly), and your qualifying child must have social security numbers (SSNs) issued by the Social Security Administration (SSA). You cannot get the EITC if:
  — the words "NOT VALID FOR EMPLOYMENT" appear on any of your social security cards, or
  — any of you have an individual taxpayer identification number (ITIN), which is issued to a non-citizen who cannot get an SSN, or
  — your child has an adoption taxpayer identification number (ATIN), which is issued to a child of adopting parents who cannot get an SSN (for the child) until the adoption is final, or
  — the SSN was issued solely for use in applying for or receiving federally funded benefits.

NOTE: An SSN is issued by the Social Security Administration to a U.S. citizen or to a person who has permission from the Immigration and Naturalization Service to work in the United States.

Q4. Where can I get help to figure my EITC?

A4. Once you know that you qualify for the EITC, you have a couple of options to figure the amount of your credit:

• You can call the IRS for assistance at 1-800-829-1040. First, get Publication 596, Earned Income Credit, by calling the IRS at 1-800-829-3676. This publication explains the rules for eligibility and for claiming the EITC and the Advance EITC.
• You can figure the credit yourself. Use the Earned Income Credit Worksheet (EIC Worksheet) in the instruction booklet for Forms 1040, 1040A, and 1040EZ, and the Earned Income Credit Table in the same instruction booklet. Publication 596 also has a section on "How to Figure the Credit Yourself."

Q5. How can I get IRS forms and publications on the EITC?

A5. The IRS provides tax materials over the phone, through the mail, at local IRS offices, and electronically via the IRS Web site, through IRS Tax Fax, and on CD-ROM.

• TeleTax is the IRS toll-free telephone service that provides recorded tax information. Call 1-800-829-4477 and key in topic #123 for a directory of topics.
• Order free forms and publications by calling the IRS at 1 -800-829-3676.
• Visit your local IRS office for free forms and publications. Through the IRS Banks, Post Office, and Library (BPOL) Program, some banks, post offices, and libraries across the country carry IRS tax forms and some publications.
• Download IRS forms and publications through the IRS home page at www.irs.ustreas.gov.
• Get an index of nearly 100 IRS tax forms faxed to you by dialing 1-703-368-9694 from a fax machine. Stay on the line, follow voice prompts, and your order will be faxed back to you.
• Publication 1796, Federal Tax Products on CD-ROM, of current and prior year tax publications and forms, can be purchased from the National Technical Information Service (NTIS). To order, call toll-free 1-877-233-6767 (cost is $25) or via the Internet at www.irs.ustreas.gov/cdorders (cost is $18).

Publication 910, Guide to Free Tax Services, lists over 100 IRS publications, with a brief description of each, to help you with your taxes. In addition, Publication 910 provides information on a number of IRS education and assistance programs available year-round to assist you. To order this consumer guide of IRS tax materials and services that also tells you how, when, and where to get IRS information, call the IRS at 1-800-829-3676.

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