Why won’t the IRS let me claim an earned income credit, just because I am over 65?

Even if you made 20 dollars less or so, you would only get a pittance in EIC.

When your ex-husband files his tax return, make sure he has copies of your children’s Social Security Card and Form 8332 signed and dated. Form 8332 can be downloaded from the IRS Website and may have to be signed and dated by a notary of public.

I would suggest sitting down with a tax preparer prior to filling out Form 8332 before completing Form 8332.

You are the custodial parent, therefore you are eligible to claim the children for the EIC, head of household filing status (their are specific rules to claim this filing status), the credit for child and dependent care expenses, and the exclusion for dependent care benefits.

Your ex-husband is able to claim the children for the dependency exemption and child tax credit. Your ex-husband would have to attach a Form 8332 to his tax return.

There are special rules for divorced parents. I have included part of the Publication for you to read and a web-site explaining the Earned Income Credit.

The child(ren) received over half of his/her support for the year from the parents.

The child is in the custody of one or both parents for more than half of the year.

Either of the following statement is true.

The custodial parent signs Form 8332 or a substantialy similar statement that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches the form or statement to his or her reutn. If the divorce decress or separation agreement went into effect after 1984, the noncustodial parent can attach certain pages from the decree or agreement instead of Form 8332.

If a child is treated as the qualifying child of the noncustodial parent under the special rule for children of divorced or separated parents, only the noncustodial parent can claim an exemption and the child tax credit of the child. However, the noncustodial parent cannot claim the child as a qualifing child for the other tax benefits listed. Only the custodial parent or other eligible taxpayer can claim the child as qualifying child for those thax benefits.

Rules for the Earned Income Credit

Your adjusted gross income cannot be more than the limit.
You must have a valid social security number.
Your filing status cannot by “Married filing separtely”.
You must be a U.S. citizen or resident alien all year.
You cannot file Form 2555 or Form 2555-EZ.
Your investment income must be $ 2,800 or less.
You must have Earned Income from a job or self-employment.

Rules if you have a Qualifying Child
Your child(ren) must meet the relationship, age, and residency tests.
Your qualifying child cannot be used by more than one person to claim the EIC.
You cannot be a qualifying child of another person.

Your Adjusted Gross Income must be less than:

$ 36,348 if you have more than one qualifying child
$ 32,001 if you have one qualifying child

This credit is called the “earned income” credit because, to qualify, you must work and have earned income. If you are married an file a joint return, you meet this rule if at least one spouse works and has eanred income. If you are an emplyee, earned income includes all the taxable income you get from your employer.

You can choose which person will claim the EIC. If you and someone else have the same qualifying child, you ant the other person(s) can decide which or you, if otherwise eligible, will take all of the following tax benefits based on the qualifying child.

The child’s exemption.
The child tax credit.
head of household filing status (their are specific rules to claim this filing status)
The credit for child and dependent care expenses.
The exclusion for dependent care benefits.
The EIC.

The other person cannot take any of these six tax benefits unless he or she has a different qualifying child.

Only the custodial parent can claim the Earned Income Credit regardless of who claimed the children on the tax return.

See page 46 of the 1040 instructions.

http://www.irs.gov/pub/irs-pdf/i1040.pdf

$ 37783 Single/Head of Household
$ 39783 Married filing Jointly

Now AGI is different than your Gross Income (includes all income such as wages, tips and interest income ..) If you have certain expenses such as educator’s, health savings account’s, moving, student loan, IRA deduction and self employment tax payments, you can adjust your gross income, reduce to below the above limits, you may be able to qualify for EIC.

If you do not qualify for the EIC, do not mess up with it, the chances are, you will end up disqualify for the EIC for 10 years.

You would have to max out your 401k or similar plan, plus put the maximum deductible amounts into your IRA, plus do the same for your spouse.

If you can get your adjusted gross income below about $ 38,000 then you will get some EIC if you meet the other requirements.