EITC qualification question

[Deleted]

I helped a coworker do his taxes.  He was in jail from January until September, so he ended up only making $12k for the year, which put him under the income requirement for the EITC.  Is there any regulation that you can't take it if you spent time during the in jail?

[Rocky Mtn Saver]

I don't see anything disqualifying a person for any felonies or anything. 


www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers


Who can claim the credit and if I qualify, how do I get it?

To claim EITC on your tax return, you must meet all the following rules:

• You, your spouse (if you file a joint return), and all others listed on Schedule EIC, must have a Social Security number that is valid for employment
• You must have earned income from working for someone else or running or operating a farm or business
• Your filing status cannot be married filing separately
• You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return
• You cannot be a qualifying child of another person
• You cannot file Form 2555 or Form 2555 EZ (related to foreign earned income)
• You must meet the earned income, AGI and investment income limits (income limits change each year), see EITC Income Limits for the tax year amounts
• And you must meet one of the following:
  • Have a qualifying child (see who is a qualifying child below)
  • If you do not have a qualifying child, you must:
    • be age 25 but under 65 at the end of the year,
    • live in the United States for more than half the year, and
    • not qualify as a dependent of another person.

If you qualify for EITC, you have to file a tax return with the IRS, even if you owe no tax or are not required to file.

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[Deleted]

> You must have earned income...

Any compensation he may have received while incarcerated or in work-release status is excluded from earned income for purposes of EITC.

[mwcpa]

was the 12K earned in prison?  if so, the amount earned in prison is not "earned" income.

"Earnings while an inmate. Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. This includes amounts for work performed while in a work release program or while in a halfway house."

Publication 596

[Deleted]

Who provided support for the kid from January to September? Does he have a legitimate claim o a qualifying child?

oh, you mean as a single person? 

[Rocky Mtn Saver]

With those earnings levels, I'm thinking he can qualify without a qualifying child.

[Deleted]

He didn't earn any of it while in jail.  All was earned after he got out.  He only got $100 or so do to the ETIC, it just didn't seem right to me, as I was doing it, that he was getting extra money because he could not earn much during the year, the reason being was that he was in jail.

[TheOtherMe]

Sounds like he got a decent job when he got out of jail if he made $12,000 from October through December.  If he keeps the job, this will be a one time thing.

[mwcpa]

"He only got $100 or so do to the ETIC, it just didn't seem right to me, as I was doing it, that he was getting extra money because he could not earn much during the year, the reason being was that he was in jail."

It seems, if he qualifies, take the money.... the new annual salary has no bearing on what was collected in 2012 (as long as none was "earned" in prison).

I end up having 3-4 clients annually who qualifiy for the EIC.... one actually had a salary of 100K, but, lost a significant amount in a business.... the math and the law was complied with..... he asked that we not report the EIC because he did not want welfare..... well, more than likely IRS would catch this and give it to him anyway.....