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Publication 596

Chapter 6—Detailed Examples(p21)

The next few pages contain two detailed examples (with a filled-in Schedule EIC and EIC Worksheet) that may be helpful if you have questions about claiming the EIC.

Example 1—Sharon Rose(p21)

Sharon Rose is age 63 and retired. She received $7,000 in social security benefits during the year and $8,000 from a part-time job. She also received a taxable pension of $6,400. Sharon had no other income. Her AGI on line 22 of Form 1040A is $14,400 ($8,000 + $6,400).
Sharon is not married and lived alone in the United States for the entire year. She cannot be claimed as a dependent on anyone else's return. She does not have any investment income and does not have a qualifying child.
Sharon reads the steps for eligibility in her Form 1040A instructions. In Step 1 she discovers that, because her AGI ($14,400) is not less than $14,340, she cannot take the EIC. She completes the rest of her Form 1040A and files it with the IRS.

Example 2—Cynthia and Jerry Grey(p22)

Cynthia and Jerry Grey have two children, Kirk, age 8, and Susanne, age 6. The children lived with Cynthia and Jerry for all of 2013. Cynthia earned wages of $15,000 and Jerry had wages of $10,000. The Greys received $525 in interest on their savings account. They had no other income in 2013.
Cynthia and Jerry have the 2013 Form 1040A and instructions. They want to see if they qualify for the EIC, so they follow the steps in the instructions for lines 38a and 38b.

Step 1. (p22)

The amount Cynthia and Jerry entered on Form 1040A, line 22, was $25,525. They both have valid social security numbers (SSNs). They will file a joint return. Neither Cynthia nor Jerry is a nonresident alien. Therefore, the answers they give to the questions in Step 1 allow them to proceed to Step 2.

Step 2. (p22)

The only investment income the Greys have is their $525 interest income. That amount is not more than $3,300, so they answer "No" to the second question in Step 2 and go to Step 3.

Step 3. (p22)

Their children, Kirk and Susanne, meet the relationship, age, residency, and joint return tests to be Cynthia and Jerry's qualifying children, so Cynthia and Jerry answer "Yes" to the first question in Step 3. Kirk and Susanne are not qualifying children of anyone else. Both children have valid SSNs. Cynthia and Jerry are filing a joint return, so they answer "No" to the second question in Step 3. This means they can skip question 3 and Step 4 and go to Step 5.

Step 5. (p22)

Cynthia and Jerry figure their earned income to be $25,000, the amount of their combined wages. This is less than $48,378, so they go to Step 6 to figure their credit.

Step 6. (p22)

Cynthia and Jerry want to figure their EIC themselves, so they complete the EIC Worksheet in the Form 1040A instructions (shown later).

Completing the EIC Worksheet. (p22)

Cynthia and Jerry complete their worksheet as follows.
  1. Cynthia and Jerry enter their total earned income ($25,000) on line 1.
  2. To find their credit, they go to the EIC Table (shown later in this publication). The part of the EIC Table they use is included as part of this example. They find their earned income of $25,000 in the range of $25,000 to $25,050. They follow this line across to the column Two children under Married filing jointly and find $4,918. They enter $4,918 on line 2.
  3. They enter on line 3 their AGI ($25,525) and see that it is different from the amount on line 1.
  4. They look up $25,525 in the EIC Table and enter the amount of $4,813 on line 5.
  5. They enter $4,813 on line 6. This is the smaller of the line 2 amount ($4,918) and the line 5 amount ($4,813).
  6. The Greys enter $4,813 on line 38a of their Form 1040A. They will now complete Schedule EIC (shown later) and attach it to their return. They will keep the EIC Worksheet for their records.

Excerpt from EIC Table for Example 2


Filled-in EIC Worksheet — Cynthia and Jerry Grey (Page references are to the Form 1040A instructions)


Filled-in Schedule EIC—Cynthia and Jerry Grey