Previous Page: Publication 17 - Your Federal Income Tax - Examples Next Page: Publication 17 - Your Federal Income Tax - Other Credits Use   to find additional instances of index items.

Taxmap/pub17/p17-192.htm#TXMP315e6ddd Advance Earned Income Credit

Earned Income Credit, Advance Payment

Do you expect to be eligible for the EIC this year (2005) and to have a qualifying child? If so, you can choose to get payments of the EIC in your paycheck now instead of waiting to get your EIC all at once in 2006 when you file your tax return for the year 2005. These payments are called advance EIC payments. This chapter explains how you may be able to get them this year and how to report them on your tax return.

Taxmap/pub17/p17-192.htm#TXMP26ae0578 Who can get the advance payment of the earned income credit?

Earned Income Credit, Advance Payment

To get part of the earned income credit paid to you throughout the year in your paycheck, you must meet all the following rules.

1. You must expect that your earned income and AGI will each be less than a certain amount. The amount in 2004 was $30,338 ($31,338 if you expected to file married filing jointly). The amount for 2005 will be higher. (See the 2005 Form W-5 for the 2005 amount.)
2. You must expect to have a qualifying child.
3. You must expect to meet all the rules in Parts A, B, and D of this chapter or in the instructions for Form W-5.

Taxmap/pub17/p17-192.htm#TXMP62995f65 Persons who are not entitled to receive advance payments.

Persons who are not entitled to receive advance payments.

Under certain circumstances, even if you meet these rules, you may not be entitled to get EIC. If your wages are not subject to federal income tax, social security tax, or Medicare tax withholding, you cannot get the advance payment of the earned income credit. If you are a farm worker and are paid on a daily basis, your employer is not required to pay you the advance amount of the credit.

Taxmap/pub17/p17-192.htm#TXMP44f541ec How To Get Advance   Payments for 2005

How To Get Advance Payments for 2005

If you meet the rules stated above under Who can get the advance payment of the earned income credit, give your employer a Form W-5, Earned Income Credit Advance Payment Certificate, for 2005.

After you have read the instructions and completed Form W-5, give the lower part of the form to your employer. Keep the top part for your records.

Taxmap/pub17/p17-192.htm#TXMP787ee564 More than one employer.

More than one employer.

If you have more than one employer, give a certificate to only one of them. If you are married and both you and your spouse are employed and expect to qualify for the credit, you may give a Form W-5 to your employer and your spouse may give one to his or her employer.

If you receive advance payments of EIC in 2005, you must file a 2005 tax return (even if you would not otherwise have to file) to report the payments and claim any additional EIC. Box 9 of your Form W-2 will show the amount you received. See the instructions for Form 1040 or Form 1040A for the line number on which you report advance payments of EIC.

You cannot use Form 1040EZ to report your advance payments. You must file Form 1040 or Form 1040A.

Taxmap/pub17/p17-192.htm#TXMP066a4368 Receipt of advance payments you do not qualify for.

Receipt of advance payments you do not qualify for.

If you receive advance payments of EIC in 2005, and later find out that you are not eligible for some or all of them, you still must report them on your tax return.

Taxmap/pub17/p17-192.htm#TXMP046e5dae When to give your employer a new Form W-5.

When to give your employer a new Form W-5.

The 2005 Form W-5 you give to your employer is valid until December 31, 2005. If you expect to be eligible for EIC in 2006 and you want to receive advance payments, you must give your employer a new Form W-5 in 2006. Do this each year you expect to be eligible for the EIC.

If you no longer want to get advance payments or if your situation changes and you no longer qualify for the earned income credit, you must give your employer a new Form W-5. Check the "No" box on line 1 of the new form.

If your spouse files a Form W-5 with his or her employer, you must file a new Form W-5 with your employer. Check the "Yes" box on line 3.

Taxmap/pub17/p17-192.htm#TXMP32c0c90b Advance Payments   Received in 2004

Advance Payments Received in 2004

If you received advance payments of EIC in 2004, you must file Form 1040 or Form 1040A to report the payments. Your Form W-2, box 9, will show the amount you received. Report the amount on line 60 (Form 1040) or line 37 (Form 1040A).

You cannot use Form 1040EZ to report your advance payments.

Taxmap/pub17/p17-192.htm#TXMP2baabb32

Smith's Schedule EIC  

Taxmap/pub17/p17-192.htm#TXMP2a68d105

Smith's EIC Worksheet  

Taxmap/pub17/p17-192.htm#TXMP20f6fc0f

EIC worksheet-Kelly  

Taxmap/pub17/p17-192.htm#w10311gc3802

EIC Eligibility Checklist You may claim the EIC if you answer Yes to all the following questions.*       Yes No 1. Is your AGI less than: $11,490 ($12,490 if married filing jointly) if you do not have a qualifying child, $30,338 ($31,338 if married filing jointly) if you have one qualifying child, or $34,458 ($35,458 if married filing jointly) if you have more than one qualifying child? (See Rule 1.) 2. Do you, your spouse, and your qualifying child each have a valid SSN? (See Rule 2.) 3. Is your filing status married filing jointly, head of household, qualifying widow(er), or single? (See Rule 3.) Caution: If you are a nonresident alien, answer Yes only if your filing status is married filing jointly and you are married to a U.S. citizen or resident alien. (See Rule 4.) 4. Answer Yes if you are not filing Form 2555 or Form 2555-EZ. Otherwise, answer No. (See Rule 5.) 5. Is your investment income $2,650 or less? (See Rule 6.) 6. Is your total earned income at least $1 but less than: $11,490 ($12,490 if married filing jointly) if you do not have a qualifying child, $30,338 ($31,338 if married filing jointly) if you have one qualifying child, or $34,458 ($35,458 if married filing jointly) if you have more than one qualifying child? (See Rules 7 and 15.) 7. Answer Yes if you (and your spouse if filing a joint return) are not a qualifying child of another person. Otherwise, answer No. (See Rules 10 and 13.)   STOP: If you have a qualifying child, answer questions 8 and 9 and skip 10-12. If you do not have a qualifying child, skip questions 8 and 9 and answer 10-12.*     8. Does your child meet the age, residency, and relationship tests for a qualifying child? (See Rule 8.) 9. Is your child a qualifying child only for you? Answer Yes if your qualifying child also meets the tests to be a qualifying child of another person, but either (a) the other person is not claiming the EIC using that child, or (b) if both you and the other person claim the EIC using that child, Rule 9 will allow only you to treat the child as a qualifying child. (See Rule 9.) 10. Were you (or your spouse if filing a joint return) at least age 25 but under 65 at the end of 2004? (See Rule 11.) 11. Answer Yes if you (and your spouse if filing a joint return) cannot be claimed as a dependent on anyone else's return. Answer No if you (or your spouse if filing a joint return) can be claimed as a dependent on someone else's return. (See Rule 12.) 12. Was your main home (and your spouse's if filing a joint return) in the United States for more than half the year? (See Rule 14.) * PERSONS WITH A QUALIFYING CHILD: If you answered Yes to questions 1 through 9, you can claim the EIC. Remember to fill out Schedule EIC and attach it to your Form 1040 or Form 1040A. You cannot use Form 1040EZ.   PERSONS WITHOUT A QUALIFYING CHILD: If you answered Yes to questions 1 through 7, and 10 through 12, you can claim the EIC.   If you answered No to any question that applies to you: You cannot claim the EIC.

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