Q. My son turned 18 in January. Can I claim it in my tax return for the earned income credit? He's still in high school, grade 11. Thanks for your help.
– Tanya out Cleveland
We believe you are wondering if an 18 year old is a qualified child for Earned Income Credit purposes. The answer to this question is "yes" according to the IRS website.
To be a qualified child for the EIC, your child must be:
• Under 19 years of age at the end of the year.
• Under 24 years old at the end of the year and full-time student for at least 5 months of the year.
However, this assumes that you otherwise qualify for the EIC and he otherwise qualifies as your dependent. To qualify as a dependent according to the IRS website:
• The child must have lived with you for at least six months.
• The child / dependent must be related to you as a son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or descendant of one of these persons.
Note: You must provide more than half of the child / dependent child support.
As you will see, the additional rules to qualify for the EIC are complicated.
The basic qualification rules from the IRS website:
To qualify for the EIC, you must:
• Provide proof of earned income.
• Have investment income less than $ 3,650 for the tax year in which you apply for credit.
• Have a valid social security number.
• Request a specific login status.
• Must be a US citizen or resident alien year round.
Earned Income Credit is one of our favorites because it 1. Rewards and recognizes the rigor that goes into making a living; 2. is a REFUNDABLE CREDIT, which means it can generate a refund by itself; 3. Offers a tax-free "raise" as an integral part of the calculation is the compensation earned through work; and 4. targets a recent pandemic change in tax law.
The change allows a taxpayer to choose based on their 2019 income to determine the 2020 EIC if a 2019 taxpayer's income is higher than the 2020 taxpayer's income. The EIC worksheet (available at www.irs.gov) contains instructions for this calculation. An example shows the good news that emerges from this electoral provision. A person whose earned income dropped to $ 9,000 in 2020 after reporting an earned income of $ 19,000 in 2019 will find that the maximum EIC for 2020 of $ 6,660 is nearly $ 2,600 -Dollars is higher than the EIC calculated from the $ 9,000 figure. Remember, this is an electoral provision. If you benefit from the choices described, enter the letters “PYEI” and the 2019 income number in the dotted line next to line 27 on Form 1040.
Ken Milani is Professor of Accounting at Notre Dame University, where he served as Faculty Coordinator for the Notre Dame Tax Assistance Program. Contact him at [email protected]. Joe Zavisca is a professional tax specialist in private practice. Previously, he was the manager of the International Tax Assistance Program at Notre Dame. You can contact him at [email protected] or visit his website at joezavisca1040.com. Email either to send a question.