Figuring your earned income credit requires that you know a few things. Figuring your earned income credit is dependent on the following list of questions:
- Are you filing as being married and filing jointly, single, head of household, married filing separately or qualified widower? You must fall into one of these preset categories.
- Do you have any qualifying children? Whether or not you have qualifying children will play a part in the earned income credit calculation.
- What is your total earned income?
- Any self employment income?
- Do you have any scholarships, penal or retirement income?
- Do you have any investment income?
- Do you have any non-taxable combat pay?
Check your adjusted gross income, it plays a part in the calculation as well. Write the answers to these questions down on a piece of notebook paper. When you encounter an earned income credit calculator, which is what you need to determine your EIC, you’ll be fully prepared to input the data.
Your earned income is any income from wages, salaries, tips or any other taxable income. Non-taxable benefits are never included in this total. Self employment income only includes income that is subject to self employment taxes.
Investment income includes these types of income classifications: Taxable interest, tax-exempt interest, capital gains (except business property sales) and passive activity income.
If your adjusted gross income is greater than your earned income, the adjusted gross income is figured in the calculation instead. At the bottom of the calculator, near the calculate button, there are usually four check boxes. These boxes contain the following questions:
• Are you between the ages of 25 and 65?
• Can you be claimed as a dependent of someone else?
• Can you be claimed as a qualifying child of someone else?
• Have you lived in the U.S. for at least six months?
Know the answers to these questions before trying to use the calculator. If your data is incorrect for any of the above requirements, your EIC (Earned Income Credit) will be inaccurate. That’s it! That’s all there is to figuring your Earned Income Credit. Good luck!