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Special Filing Requirement for Dependents and EIC
1. Special Filing Requirement for Dependents
Page A-2
Pub 4012
Under age 65
and not blind: #3
for Single; #4 for
Married
A better explanation would be the
following
A Dependent must file a return if
EITHER of the following apply:
#1 Gross income is greater than
$12,200.
#2 Gross income is greater than
$1,100 AND unearned income is
greater than $350
2. Refundable vs Nonrefundable Credits
Refundable Credits -- lower the taxpayer’s income tax
obligation, AND…it can increase a refund.
Nonrefundable Credits -- can lower the income tax obligation to
zero.
However, they do not lower tax obligations for self-employment,
or tax on early withdrawal from a 401(k) or an IRA nor can it
increase a refund.
3. Earned Income Credit
Publication 4012:Tab I
Key Points:
• Available only to taxpayers with income from
work
• If credit amount exceeds tax liability, the
balance is refunded to the taxpayer
(Refundable)
5. EIC Eligibility
Pub 4012: I-2
Must Have:
• Social Security number
• U.S. Citizenship or resident
alien status
• Earned income
• Investment income <
$3,500
Must Not:
• File as MFS
• Not file Form 2555/2555-EZ
• Not be qualifying child of
another person
6. EIC Eligibility (Continued)
• Child must meet relationship,
age and residency tests
• Child does not have to be the
taxpayer’s dependent
• Cannot be a qualifying child
of another person
• Qualifying Child must have a
Social Security number.
• Must be between age 25
and 64 for the tax year
• Must have lived in the US
more than half the year
• Can’t be a dependent of
qualifying child of another
person
Taxpayer without Qualifying ChildTaxpayer with a Qualifying Child
7. EIC Calculation
TaxSlayer does all the work!
• Sch. EIC attaches if there are up to 3 children (no
additional benefit for more than 3 kids)
• Credit amount is based on filing status, number of
qualifying children, earned income and AGI
• Max Credit for 2019 is $6,557
8. Due Diligence Report should NOT be used!
Under Deductions
and then Credits
Do not use
this!!
9. If you see this screen run fast and run hard! Do not fill it out!!!
10. EIC Essentials
• Avoid Common Errors:
• Claiming a child who doesn’t
meet residency & relationship
requirements
• Married taxpayers using incorrect
filing status
• Incorrectly reporting income,
especially from self-employment
• Incorrect social security numbers
(watch for typos!)
• Filling in the Due Diligence
checklist wrong. We are not
required to use this!
• Alert the Taxpayer: BY
LAW, refunds for taxpayers
with EIC and/or refundable
Child Tax Credit will be held
until mid-February. This is a
fraud prevention effort.
