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Do State Taxes

Do state taxes Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Do state taxes Text message. Do state taxes Credit card. Do state taxes Pay-by-phone account. Do state taxes Stock certificate. Do state taxes Promissory note. Do state taxes Option. Do state taxes Borrowed funds. Do state taxes Conditional gift. Do state taxes Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Do state taxes Total deduction over $500. Do state taxes Deduction over $5,000 for one item. Do state taxes Vehicle donations. Do state taxes Clothing and household items not in good used condition. Do state taxes Easement on building in historic district. Do state taxes Deduction over $500,000. Do state taxes How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Do state taxes Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Do state taxes How to check whether an organization can receive deductible charitable contributions. Do state taxes   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Do state taxes Or go to IRS. Do state taxes gov. Do state taxes Click on “Tools” and then on “Exempt Organizations Select Check” (www. Do state taxes irs. Do state taxes gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Do state taxes This online tool will enable you to search for qualified organizations. Do state taxes You can also call the IRS to find out if an organization is qualified. Do state taxes Call 1-877-829-5500. Do state taxes People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Do state taxes Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Do state taxes gsa. Do state taxes gov/fedrelay. Do state taxes Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Do state taxes A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Do state taxes It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Do state taxes Certain organizations that foster national or international amateur sports competition also qualify. Do state taxes War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Do state taxes Domestic fraternal societies, orders, and associations operating under the lodge system. Do state taxes (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Do state taxes ) Certain nonprofit cemetery companies or corporations. Do state taxes (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Do state taxes ) The United States or any state, the District of Columbia, a U. Do state taxes S. Do state taxes possession (including Puerto Rico), a political subdivision of a state or U. Do state taxes S. Do state taxes possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Do state taxes (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Do state taxes ) Example 1. Do state taxes You contribute cash to your city's police department to be used as a reward for information about a crime. Do state taxes The city police department is a qualified organization, and your contribution is for a public purpose. Do state taxes You can deduct your contribution. Do state taxes Example 2. Do state taxes You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Do state taxes Because the trust fund is part of the U. Do state taxes S. Do state taxes Government, you contributed to a qualified organization. Do state taxes You can deduct your contribution. Do state taxes Examples. Do state taxes   The following list gives some examples of qualified organizations. Do state taxes Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Do state taxes Most nonprofit charitable organizations such as the American Red Cross and the United Way. Do state taxes Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Do state taxes This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Do state taxes However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Do state taxes Nonprofit hospitals and medical research organizations. Do state taxes Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Do state taxes Nonprofit volunteer fire companies. Do state taxes Nonprofit organizations that develop and maintain public parks and recreation facilities. Do state taxes Civil defense organizations. Do state taxes Canadian charities. Do state taxes   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Do state taxes To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Do state taxes See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Do state taxes Mexican charities. Do state taxes   Under the U. Do state taxes S. Do state taxes -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Do state taxes S. Do state taxes law. Do state taxes To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Do state taxes The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Do state taxes Israeli charities. Do state taxes   Under the U. Do state taxes S. Do state taxes -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Do state taxes S. Do state taxes law. Do state taxes To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Do state taxes The limits described in Limits on Deductions , later, apply. Do state taxes The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Do state taxes Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Do state taxes A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Do state taxes The contributions must be made to a qualified organization and not set aside for use by a specific person. Do state taxes If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Do state taxes See Contributions of Property , later. Do state taxes Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Do state taxes In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Do state taxes See Limits on Deductions , later. Do state taxes Table 1 in this publication gives examples of contributions you can and cannot deduct. Do state taxes Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Do state taxes Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Do state taxes If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Do state taxes For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Do state taxes Example 1. Do state taxes You pay $65 for a ticket to a dinner-dance at a church. Do state taxes Your entire $65 payment goes to the church. Do state taxes The ticket to the dinner-dance has a fair market value of $25. Do state taxes When you buy your ticket, you know its value is less than your payment. Do state taxes To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Do state taxes You can deduct $40 as a charitable contribution to the church. Do state taxes Example 2. Do state taxes At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Do state taxes The amount you pay is no more than the fair rental value. Do state taxes You have not made a deductible charitable contribution. Do state taxes Athletic events. Do state taxes   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Do state taxes   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Do state taxes Subtract the price of the tickets from your payment. Do state taxes You can deduct 80% of the remaining amount as a charitable contribution. Do state taxes Example 1. Do state taxes You pay $300 a year for membership in a university's athletic scholarship program. Do state taxes The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Do state taxes You can deduct $240 (80% of $300) as a charitable contribution. Do state taxes Example 2. Do state taxes The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Do state taxes You must subtract the usual price of a ticket ($120) from your $300 payment. Do state taxes The result is $180. Do state taxes Your deductible charitable contribution is $144 (80% of $180). Do state taxes Charity benefit events. Do state taxes   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Do state taxes   If there is an established charge for the event, that charge is the value of your benefit. Do state taxes If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Do state taxes Whether you use the tickets or other privileges has no effect on the amount you can deduct. Do state taxes However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Do state taxes    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Do state taxes If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Do state taxes Example. Do state taxes You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Do state taxes Printed on the ticket is “Contribution–$40. Do state taxes ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Do state taxes Membership fees or dues. Do state taxes   You may be able to deduct membership fees or dues you pay to a qualified organization. Do state taxes However, you can deduct only the amount that is more than the value of the benefits you receive. Do state taxes   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Do state taxes They are not qualified organizations. Do state taxes Certain membership benefits can be disregarded. Do state taxes   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Do state taxes Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Do state taxes Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Do state taxes 20. Do state taxes Token items. Do state taxes   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Do state taxes You receive only a small item or other benefit of token value. Do state taxes The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Do state taxes The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Do state taxes Written statement. Do state taxes   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Do state taxes The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Do state taxes It must also give you a good faith estimate of the value of those goods or services. Do state taxes   The organization can give you the statement either when it solicits or when it receives the payment from you. Do state taxes Exception. Do state taxes   An organization will not have to give you this statement if one of the following is true. Do state taxes The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Do state taxes You receive only items whose value is not substantial as described under Token items , earlier. Do state taxes You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Do state taxes Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Do state taxes You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Do state taxes You can deduct up to $50 a month for each full calendar month the student lives with you. Do state taxes Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Do state taxes Qualified organization. Do state taxes   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Do state taxes For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Do state taxes But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Do state taxes Relative. Do state taxes   The term “relative” means any of the following persons. Do state taxes Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Do state taxes A legally adopted child is considered your child. Do state taxes Your brother, sister, half brother, half sister, stepbrother, or stepsister. Do state taxes Your father, mother, grandparent, or other direct ancestor. Do state taxes Your stepfather or stepmother. Do state taxes A son or daughter of your brother or sister. Do state taxes A brother or sister of your father or mother. Do state taxes Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Do state taxes Dependent. Do state taxes   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Do state taxes    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Do state taxes S. Do state taxes residents and cannot be claimed as dependents. Do state taxes Qualifying expenses. Do state taxes   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Do state taxes Expenses that do not qualify. Do state taxes   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Do state taxes Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Do state taxes Reimbursed expenses. Do state taxes   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Do state taxes However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Do state taxes Mutual exchange program. Do state taxes   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Do state taxes Reporting expenses. Do state taxes   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Do state taxes Out-of-Pocket Expenses in Giving Services Table 2. Do state taxes Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Do state taxes All of the rules explained in this publication also apply. Do state taxes See, in particular, Out-of-Pocket Expenses in Giving Services . Do state taxes Question Answer I volunteer 6 hours a week in the office of a qualified organization. Do state taxes The receptionist is paid $10 an hour for the same work. Do state taxes Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Do state taxes  The office is 30 miles from my home. Do state taxes Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Do state taxes If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Do state taxes I volunteer as a Red Cross nurse's aide at a hospital. Do state taxes Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Do state taxes I pay a babysitter to watch my children while I volunteer for a qualified organization. Do state taxes Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Do state taxes (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Do state taxes ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Do state taxes The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Do state taxes Table 2 contains questions and answers that apply to some individuals who volunteer their services. Do state taxes Underprivileged youths selected by charity. Do state taxes   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Do state taxes The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Do state taxes Your own similar expenses in accompanying the youths are not deductible. Do state taxes Conventions. Do state taxes   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Do state taxes However, see Travel , later. Do state taxes   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Do state taxes You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Do state taxes   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Do state taxes You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Do state taxes Uniforms. Do state taxes   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Do state taxes Foster parents. Do state taxes   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Do state taxes A qualified organization must select the individuals you take into your home for foster care. Do state taxes   You can deduct expenses that meet both of the following requirements. Do state taxes They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Do state taxes They are incurred primarily to benefit the qualified organization. Do state taxes   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Do state taxes For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Do state taxes Example. Do state taxes You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Do state taxes Your unreimbursed expenses are not deductible as charitable contributions. Do state taxes Church deacon. Do state taxes   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Do state taxes These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Do state taxes Car expenses. Do state taxes   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Do state taxes You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Do state taxes   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Do state taxes   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Do state taxes   You must keep reliable written records of your car expenses. Do state taxes For more information, see Car expenses under Records To Keep, later. Do state taxes Travel. Do state taxes   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Do state taxes This applies whether you pay the expenses directly or indirectly. Do state taxes You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Do state taxes   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Do state taxes Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Do state taxes However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Do state taxes Example 1. Do state taxes You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Do state taxes You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Do state taxes You participate in the activities of the group and enjoy your time with them. Do state taxes You oversee the breaking of camp and you transport the group home. Do state taxes You can deduct your travel expenses. Do state taxes Example 2. Do state taxes You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Do state taxes The project is sponsored by a charitable organization. Do state taxes In most circumstances, you cannot deduct your expenses. Do state taxes Example 3. Do state taxes You work for several hours each morning on an archeological dig sponsored by a charitable organization. Do state taxes The rest of the day is free for recreation and sightseeing. Do state taxes You cannot take a charitable contribution deduction even though you work very hard during those few hours. Do state taxes Example 4. Do state taxes You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Do state taxes In the evening you go to the theater. Do state taxes You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Do state taxes Daily allowance (per diem). Do state taxes   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Do state taxes You may be able to deduct any necessary travel expenses that are more than the allowance. Do state taxes Deductible travel expenses. Do state taxes   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Do state taxes Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Do state taxes For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Do state taxes Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Do state taxes The deduction is limited to $10,000 a year. Do state taxes To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Do state taxes Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Do state taxes Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Do state taxes You must keep records showing the time, place, date, amount, and nature of the expenses. Do state taxes For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Do state taxes irs. Do state taxes gov/pub/irs-irbs/irb06-47. Do state taxes pdf. Do state taxes Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Do state taxes You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Do state taxes Detailed discussions of these items follow. Do state taxes Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Do state taxes Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Do state taxes Contributions to individuals who are needy or worthy. Do state taxes You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Do state taxes But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Do state taxes Example. Do state taxes You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Do state taxes However, you cannot deduct contributions earmarked for relief of a particular individual or family. Do state taxes Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Do state taxes Expenses you paid for another person who provided services to a qualified organization. Do state taxes Example. Do state taxes Your son does missionary work. Do state taxes You pay his expenses. Do state taxes You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Do state taxes Payments to a hospital that are for a specific patient's care or for services for a specific patient. Do state taxes You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Do state taxes Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Do state taxes Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Do state taxes Chambers of commerce and other business leagues or organizations. Do state taxes Civic leagues and associations. Do state taxes Communist organizations. Do state taxes Country clubs and other social clubs. Do state taxes Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Do state taxes (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Do state taxes ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Do state taxes However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Do state taxes For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Do state taxes The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Do state taxes Homeowners' associations. Do state taxes Labor unions. Do state taxes But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Do state taxes See Publication 529, Miscellaneous Deductions. Do state taxes Political organizations and candidates. Do state taxes Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Do state taxes See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Do state taxes These contributions include the following. Do state taxes Contributions for lobbying. Do state taxes This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Do state taxes Contributions to a retirement home for room, board, maintenance, or admittance. Do state taxes Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Do state taxes Costs of raffles, bingo, lottery, etc. Do state taxes You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Do state taxes For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Do state taxes Dues to fraternal orders and similar groups. Do state taxes However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Do state taxes Tuition, or amounts you pay instead of tuition. Do state taxes You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Do state taxes You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Do state taxes ” Contributions connected with split-dollar insurance arrangements. Do state taxes You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Do state taxes Example. Do state taxes You donate money to a charitable organization. Do state taxes The charity uses the money to purchase a cash value life insurance policy. Do state taxes The beneficiaries under the insurance policy include members of your family. Do state taxes Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Do state taxes Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Do state taxes You must have been at least age 70½ when the distribution was made. Do state taxes Your total QCDs for the year cannot be more than $100,000. Do state taxes If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Do state taxes See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Do state taxes Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Do state taxes Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Do state taxes The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Do state taxes Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Do state taxes However, you may be able to claim a tax credit for these expenses. Do state taxes Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Do state taxes See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Do state taxes You also may be able to claim an exemption for the child. Do state taxes See Exemptions for Dependents in Publication 501 for more information. Do state taxes Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Do state taxes But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Do state taxes See Deductions Subject to the 2% Limit in Publication 529 for more information. Do state taxes Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Do state taxes There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Do state taxes Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Do state taxes For details, see Internal Revenue Code section 170(f)(18). Do state taxes Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Do state taxes For details, see Partial Interest in Property under Contributions of Property, later. Do state taxes Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Do state taxes However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Do state taxes See Giving Property That Has Increased in Value , later. Do state taxes For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Do state taxes Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Do state taxes These special rules are described next. Do state taxes Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Do state taxes Exception. Do state taxes   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Do state taxes Household items. Do state taxes   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Do state taxes   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Do state taxes Fair market value. Do state taxes   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Do state taxes Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Do state taxes A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Do state taxes Deduction more than $500. Do state taxes   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Do state taxes If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Do state taxes Form 1098-C. Do state taxes   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Do state taxes The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Do state taxes   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Do state taxes S. Do state taxes Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Do state taxes   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Do state taxes    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Do state taxes But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Do state taxes Filing deadline approaching and still no Form 1098-C. Do state taxes   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Do state taxes Request an automatic 6-month extension of time to file your return. Do state taxes You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Do state taxes S. Do state taxes Individual Income Tax Return. Do state taxes For more information, see the instructions for Form 4868. Do state taxes File the return on time without claiming the deduction for the qualified vehicle. Do state taxes After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Do state taxes S. Do state taxes Individual Income Tax Return, claiming the deduction. Do state taxes Attach Copy B of Form 1098-C (or other statement) to the amended return. Do state taxes Exceptions. Do state taxes   There are two exceptions to the rules just described for deductions of more than $500. Do state taxes Exception 1—vehicle used or improved by organization. Do state taxes   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Do state taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Do state taxes The Form 1098-C (or other statement) will show whether this exception applies. Do state taxes    Exception 2—vehicle given or sold to needy individual. Do state taxes   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Do state taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Do state taxes The Form 1098-C (or other statement) will show whether this exception applies. Do state taxes   This exception does not apply if the organization sells the vehicle at auction. Do state taxes In that case, you cannot deduct the vehicle's fair market value. Do state taxes Example. Do state taxes Anita donates a used car to a qualified organization. Do state taxes She bought it 3 years ago for $9,000. Do state taxes A used car guide shows the fair market value for this type of car is $6,000. Do state taxes However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Do state taxes Neither exception 1 nor exception 2 applies. Do state taxes If Anita itemizes her deductions, she can deduct $2,900 for her donation. Do state taxes She must attach Form 1098-C and Form 8283 to her return. Do state taxes Deduction $500 or less. Do state taxes   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Do state taxes But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Do state taxes   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Do state taxes The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Do state taxes Fair market value. Do state taxes   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Do state taxes Donations of inventory. Do state taxes   The vehicle donation rules just described do not apply to donations of inventory. Do state taxes For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Do state taxes See Inventory , later. Do state taxes Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Do state taxes This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Do state taxes Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Do state taxes Your basis does not include transportation or travel costs. Do state taxes It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Do state taxes In addition, it does not include the value of your time. Do state taxes Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Do state taxes Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Do state taxes This prevents you from deducting the same amount as both investment interest and a charitable contribution. Do state taxes If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Do state taxes The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Do state taxes For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Do state taxes Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Do state taxes Right to use property. Do state taxes   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Do state taxes Example 1. Do state taxes You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Do state taxes Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Do state taxes Example 2. Do state taxes Mandy White owns a vacation home at the beach that she sometimes rents to others. Do state taxes For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Do state taxes At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Do state taxes Mandy cannot claim a deduction because of the partial interest rule. Do state taxes Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Do state taxes See Contributions From Which You Benefit , earlier. Do state taxes Exceptions. Do state taxes   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Do state taxes A remainder interest in your personal home or farm. Do state taxes A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Do state taxes Example. Do state taxes You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Do state taxes You can deduct the value of the remainder interest. Do state taxes An undivided part of your entire interest. Do state taxes This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Do state taxes But see Fractional Interest in Tangible Personal Property , later. Do state taxes Example. Do state taxes You contribute voting stock to a qualified organization but keep the right to vote the stock. Do state taxes The right to vote is a substantial right in the stock. Do state taxes You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Do state taxes A partial interest that would be deductible if transferred to certain types of trusts. Do state taxes A qualified conservation contribution (defined later). Do state taxes For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Do state taxes Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Do state taxes If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Do state taxes Tangible personal property is defined later under Future Interest in Tangible Personal Property . Do state taxes A fractional interest in property is an undivided portion of your entire interest in the property. Do state taxes Example. Do state taxes An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Do state taxes Recapture of deduction. Do state taxes   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Do state taxes You contributed a fractional interest in tangible personal property after August 17, 2006. Do state taxes You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Do state taxes   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Do state taxes Additional tax. Do state taxes   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Do state taxes Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Do state taxes Qualified organization. Do state taxes   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Do state taxes The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Do state taxes   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Do state taxes Qualified real property interest. Do state taxes   This is any of the following interests in real property. Do state taxes Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Do state taxes A remainder interest. Do state taxes A restriction (granted in perpetuity) on the use that may be made of the real property. Do state taxes Conservation purposes. Do state taxes   Your contribution must be made only for one of the following conservation purposes. Do state taxes Preserving land areas for outdoor recreation by, or for the education of, the general public. Do state taxes Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Do state taxes Preserving open space, including farmland and forest land, if it yields a significant public benefit. Do state taxes The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Do state taxes Preserving a historically important land area or a certified historic structure. Do state taxes Building in registered historic district. Do state taxes   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Do state taxes The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Do state taxes You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Do state taxes You must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Do state taxes   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Do state taxes For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Do state taxes   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Do state taxes See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Do state taxes You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Do state taxes See Deductions Subject to the 2% Limit in Publication 529 for more information. Do state taxes More information. Do state taxes   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Do state taxes For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Do state taxes For more information about qualified conservation contributions, see Regulations section 1. Do state taxes 170A-14. Do state taxes Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Do state taxes But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Do state taxes Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Do state taxes Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Do state taxes Tangible personal property. Do state taxes   This is any property, other than land or buildings, that can be seen or touched. Do state taxes It includes furniture, books, jewelry, paintings, and cars. Do state taxes Future interest. Do state taxes   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Do state taxes Example. Do state taxes You own an antique car that you contribute to a museum. Do state taxes You give up ownership, but retain the right to keep the car in your garage with your personal collection. Do state taxes Because you keep an interest in the property, you cannot deduct the contribution. Do state taxes If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Do state taxes Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Do state taxes The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Do state taxes You must remove the amount of your charitable contribution deduction from your opening inventory. Do state taxes It is not part of the cost of goods sold. Do state taxes If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Do state taxes Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Do state taxes For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Do state taxes A special rule applies to certain donations of food inventory. Do state taxes See Food Inventory, later. Do state taxes Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Do state taxes Intellectual property means any of the following: Patents. Do state taxes Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Do state taxes Trademarks. Do state taxes Trade names. Do state taxes Trade secrets. Do state taxes Know-how. Do state taxes Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Do state taxes Other similar property or applications or registrations of such property. Do state taxes Additional deduction based on income. Do state taxes   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Do state taxes   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Do state taxes In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Do state taxes However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Do state taxes   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Do state taxes The additional deductions cannot be taken for intellectual property donated to certain private foundations. Do state taxes Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Do state taxes   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Do state taxes   The organization is required to file an information return showing the income from the property, with a copy to you. Do state taxes This is done on Form 8899, Notice of Income From Donated Intellectual Property. Do state taxes Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Do state taxes Publication 561 contains a more complete discussion. Do state taxes Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Do state taxes Used clothing. Do state taxes   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Do state taxes There are no fixed formulas or methods for finding the value of items of clothing. Do state taxes   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Do state taxes      Also see Clothing and Household Items , earlier. Do state taxes Example. Do state taxes    Kristin donated a coat to a thrift store operated by her church. Do state taxes She paid $300 for the coat 3 years ago. Do state taxes Similar coats in the thrift store sell for $50. Do state taxes The fair market value of the coat is $50. Do state taxes Kristin's donation is limited to $50. Do state taxes Household items. Do state taxes   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Do state taxes These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Do state taxes For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Do state taxes   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Do state taxes Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Do state taxes Do not include any of this evidence with your tax return. Do state taxes   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Do state taxes   Also see Clothing and Household Items , earlier. Do state taxes Cars, boats, and airplanes. Do state taxes   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Do state taxes Boats. Do state taxes   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Do state taxes Cars. Do state taxes   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Do state taxes The guides may be published monthly or seasonally, and for different regions of the country. Do state taxes These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Do state taxes The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Do state taxes But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Do state taxes   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Do state taxes You can also find used car pricing information on the Internet. Do state taxes   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Do state taxes However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Do state taxes The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car. Do state taxes Example. Do state taxes You donate a used car in poor condition to a local high school for use by students studying car repair. Do state taxes A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Do state taxes However, the guide shows the price for a private party sale of the car is only $750. Do state taxes The fair market value of the car is considered to be $750. Do state taxes Large quantities. Do state taxes   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Do state taxes Example. Do state taxes You purchase 500 bibles for $1,000. Do state taxes The person who sells them to you says the retail value of these bibles is $3,000. Do state taxes If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Do state taxes Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer
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Do state taxes Publication 596 - Main Content Table of Contents Chapter 1—Rules for EveryoneRule 1—Adjusted Gross Income (AGI) Limits Rule 2—You Must Have a Valid Social Security Number (SSN) Rule 3—Your Filing Status Cannot Be Married Filing Separately Rule 4—You Must Be a U. Do state taxes S. Do state taxes Citizen or Resident Alien All Year Rule 5—You Cannot File Form 2555 or Form 2555-EZ Rule 6—Your Investment Income Must Be $3,300 or Less Rule 7—You Must Have Earned Income Chapter 2—Rules If You Have a Qualifying ChildRule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer Chapter 3—Rules If You Do Not Have a Qualifying ChildRule 11—You Must Be at Least Age 25 but Under Age 65 Rule 12—You Cannot Be the Dependent of Another Person Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer Rule 14—You Must Have Lived in the United States More Than Half of the Year Chapter 4—Figuring and Claiming the EICRule 15—Earned Income Limits IRS Will Figure the EIC for You How To Figure the EIC Yourself Schedule EIC Chapter 5—Disallowance of the EICForm 8862 Are You Prohibited From Claiming the EIC for a Period of Years? Chapter 6—Detailed ExamplesExample 1—Sharon Rose Example 2—Cynthia and Jerry Grey Chapter 1—Rules for Everyone This chapter discusses Rules 1 through 7. Do state taxes You must meet all seven rules to qualify for the earned income credit. Do state taxes If you do not meet all seven rules, you cannot get the credit and you do not need to read the rest of the publication. Do state taxes If you meet all seven rules in this chapter, then read either chapter 2 or chapter 3 (whichever applies) for more rules you must meet. Do state taxes Rule 1—Adjusted Gross Income (AGI) Limits Your adjusted gross income (AGI) must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Do state taxes Adjusted gross income (AGI). Do state taxes   AGI is the amount on line 4 of Form 1040EZ, line 22 of Form 1040A, or line 38 of Form 1040. Do state taxes   If your AGI is equal to or more than the applicable limit listed above, you cannot claim the EIC. Do state taxes You do not need to read the rest of this publication. Do state taxes Example—AGI is more than limit. Do state taxes Your AGI is $38,550, you are single, and you have one qualifying child. Do state taxes You cannot claim the EIC because your AGI is not less than $37,870. Do state taxes However, if your filing status was married filing jointly, you might be able to claim the EIC because your AGI is less than $43,210. Do state taxes Community property. Do state taxes   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your AGI includes that portion of both your and your spouse's wages that you are required to include in gross income. Do state taxes This is different from the community property rules that apply under Rule 7. Do state taxes Rule 2—You Must Have a Valid Social Security Number (SSN) To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA). Do state taxes Any qualifying child listed on Schedule EIC also must have a valid SSN. Do state taxes (See Rule 8 if you have a qualifying child. Do state taxes ) If your social security card (or your spouse's, if filing a joint return) says “Not valid for employment” and your SSN was issued so that you (or your spouse) could get a federally funded benefit, you cannot get the EIC. Do state taxes An example of a federally funded benefit is Medicaid. Do state taxes If you have a card with the legend “Not valid for employment” and your immigration status has changed so that you are now a U. Do state taxes S. Do state taxes citizen or permanent resident, ask the SSA for a new social security card without the legend. Do state taxes If you get the new card after you have already filed your return, you can file an amended return on Form 1040X, Amended U. Do state taxes S. Do state taxes Individual Income Tax Return, to claim the EIC. Do state taxes U. Do state taxes S. Do state taxes citizen. Do state taxes   If you were a U. Do state taxes S. Do state taxes citizen when you received your SSN, you have a valid SSN. Do state taxes Valid for work only with INS authorization or DHS authorization. Do state taxes   If your social security card reads “Valid for work only with INS authorization” or “Valid for work only with DHS authorization,” you have a valid SSN, but only if that authorization is still valid. Do state taxes SSN missing or incorrect. Do state taxes   If an SSN for you or your spouse is missing from your tax return or is incorrect, you may not get the EIC. Do state taxes Other taxpayer identification number. Do state taxes   You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). Do state taxes ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN. Do state taxes No SSN. Do state taxes   If you do not have a valid SSN, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Do state taxes You cannot claim the EIC. Do state taxes Getting an SSN. Do state taxes   If you (or your spouse, if filing a joint return) do not have an SSN, you can apply for one by filing Form SS-5 with the SSA. Do state taxes You can get Form SS-5 online at www. Do state taxes socialsecurity. Do state taxes gov, from your local SSA office, or by calling the SSA at 1-800-772-1213. Do state taxes Filing deadline approaching and still no SSN. Do state taxes   If the filing deadline is approaching and you still do not have an SSN, you have two choices. Do state taxes Request an automatic 6-month extension of time to file your return. Do state taxes You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U. Do state taxes S. Do state taxes Individual Income Tax Return. Do state taxes For more information, see the instructions for Form 4868. Do state taxes File the return on time without claiming the EIC. Do state taxes After receiving the SSN, file an amended return, Form 1040X, claiming the EIC. Do state taxes Attach a filled-in Schedule EIC, Earned Income Credit, if you have a qualifying child. Do state taxes Rule 3—Your Filing Status Cannot Be “Married Filing Separately” If you are married, you usually must file a joint return to claim the EIC. Do state taxes Your filing status cannot be “Married filing separately. Do state taxes ” Spouse did not live with you. Do state taxes   If you are married and your spouse did not live in your home at any time during the last 6 months of the year, you may be able to file as head of household, instead of married filing separately. Do state taxes In that case, you may be able to claim the EIC. Do state taxes For detailed information about filing as head of household, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Do state taxes Rule 4—You Must Be a U. Do state taxes S. Do state taxes Citizen or Resident Alien All Year If you (or your spouse, if married) were a nonresident alien for any part of the year, you cannot claim the earned income credit unless your filing status is married filing jointly. Do state taxes You can use that filing status only if one spouse is a U. Do state taxes S. Do state taxes citizen or resident alien and you choose to treat the nonresident spouse as a U. Do state taxes S. Do state taxes resident. Do state taxes If you make this choice, you and your spouse are taxed on your worldwide income. Do state taxes If you need more information on making this choice, get Publication 519, U. Do state taxes S. Do state taxes Tax Guide for Aliens. Do state taxes If you (or your spouse, if married) were a nonresident alien for any part of the year and your filing status is not married filing jointly, enter “No” on the dotted line next to line 64a (Form 1040) or in the space to the left of line 38a (Form 1040A). Do state taxes Rule 5—You Cannot File Form 2555 or Form 2555-EZ You cannot claim the earned income credit if you file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Do state taxes You file these forms to exclude income earned in foreign countries from your gross income, or to deduct or exclude a foreign housing amount. Do state taxes U. Do state taxes S. Do state taxes possessions are not foreign countries. Do state taxes See Publication 54, Tax Guide for U. Do state taxes S. Do state taxes Citizens and Resident Aliens Abroad, for more detailed information. Do state taxes Rule 6—Your Investment Income Must Be $3,300 or Less You cannot claim the earned income credit unless your investment income is $3,300 or less. Do state taxes If your investment income is more than $3,300, you cannot claim the credit. Do state taxes Form 1040EZ. Do state taxes   If you file Form 1040EZ, your investment income is the total of the amount on line 2 and the amount of any tax-exempt interest you wrote to the right of the words “Form 1040EZ” on line 2. Do state taxes Form 1040A. Do state taxes   If you file Form 1040A, your investment income is the total of the amounts on lines 8a (taxable interest), 8b (tax-exempt interest), 9a (ordinary dividends), and 10 (capital gain distributions) on that form. Do state taxes Form 1040. Do state taxes   If you file Form 1040, use Worksheet 1 in this chapter to figure your investment income. Do state taxes    Worksheet 1. Do state taxes Investment Income If You Are Filing Form 1040 Use this worksheet to figure investment income for the earned income credit when you file Form 1040. Do state taxes Interest and Dividends         1. Do state taxes Enter any amount from Form 1040, line 8a 1. Do state taxes   2. Do state taxes Enter any amount from Form 1040, line 8b, plus any amount on Form 8814, line 1b 2. Do state taxes   3. Do state taxes Enter any amount from Form 1040, line 9a 3. Do state taxes   4. Do state taxes Enter the amount from Form 1040, line 21, that is from Form 8814 if you are filing that form to report your child's interest and dividend income on your return. Do state taxes (If your child received an Alaska Permanent Fund dividend, use Worksheet 2 in this chapter to figure the amount to enter on this line. Do state taxes ) 4. Do state taxes   Capital Gain Net Income         5. Do state taxes Enter the amount from Form 1040, line 13. Do state taxes If the amount on that line is a loss, enter -0- 5. Do state taxes       6. Do state taxes Enter any gain from Form 4797, Sales of Business Property, line 7. Do state taxes If the amount on that line is a loss, enter -0-. Do state taxes (But, if you completed lines 8 and 9 of Form 4797, enter the amount from line 9 instead. Do state taxes ) 6. Do state taxes       7. Do state taxes Substract line 6 of this worksheet from line 5 of this worksheet. Do state taxes (If the result is less than zero, enter -0-. Do state taxes ) 7. Do state taxes   Royalties and Rental Income From Personal Property         8. Do state taxes Enter any royalty income from Schedule E, line 23b, plus any income from the rental of personal property shown on Form 1040, line 21 8. Do state taxes       9. Do state taxes Enter any expenses from Schedule E, line 20, related to royalty income, plus any expenses from the rental of personal property deducted on Form 1040, line 36 9. Do state taxes       10. Do state taxes Subtract the amount on line 9 of this worksheet from the amount on line 8. Do state taxes (If the result is less than zero, enter -0-. Do state taxes ) 10. Do state taxes   Passive Activities         11. Do state taxes Enter the total of any net income from passive activities (such as income included on Schedule E, line 26, 29a (col. Do state taxes (g)), 34a (col. Do state taxes (d)), or 40). Do state taxes (See instructions below for lines 11 and 12. Do state taxes ) 11. Do state taxes       12. Do state taxes Enter the total of any losses from passive activities (such as losses included on Schedule E, line 26, 29b (col. Do state taxes (f)), 34b (col. Do state taxes (c)), or 40). Do state taxes (See instructions below for lines 11 and 12. Do state taxes ) 12. Do state taxes       13. Do state taxes Combine the amounts on lines 11 and 12 of this worksheet. Do state taxes (If the result is less than zero, enter -0-. Do state taxes ) 13. Do state taxes   14. Do state taxes Add the amounts on lines 1, 2, 3, 4, 7, 10, and 13. Do state taxes Enter the total. Do state taxes This is your investment income 14. Do state taxes   15. Do state taxes Is the amount on line 14 more than $3,300? ❑ Yes. Do state taxes You cannot take the credit. Do state taxes  ❑ No. Do state taxes Go to Step 3 of the Form 1040 instructions for lines 64a and 64b to find out if you can take the credit (unless you are using this publication to find out if you can take the credit; in that case, go to Rule 7, next). Do state taxes       Instructions for lines 11 and 12. Do state taxes In figuring the amount to enter on lines 11 and 12, do not take into account any royalty income (or loss) included on line 26 of Schedule E or any amount included in your earned income. Do state taxes To find out if the income on line 26 or line 40 of Schedule E is from a passive activity, see the Schedule E instructions. Do state taxes If any of the rental real estate income (or loss) included on Schedule E, line 26, is not from a passive activity, print “NPA” and the amount of that income (or loss) on the dotted line next to line 26. Do state taxes Worksheet 2. Do state taxes Worksheet for Line 4 of Worksheet 1 Complete this worksheet only if Form 8814 includes an Alaska Permanent Fund dividend. Do state taxes Note. Do state taxes Fill out a separate Worksheet 2 for each Form 8814. Do state taxes     1. Do state taxes Enter the amount from Form 8814, line 2a 1. Do state taxes   2. Do state taxes Enter the amount from Form 8814, line 2b 2. Do state taxes   3. Do state taxes Subtract line 2 from line 1 3. Do state taxes   4. Do state taxes Enter the amount from Form 8814, line 1a 4. Do state taxes   5. Do state taxes Add lines 3 and 4 5. Do state taxes   6. Do state taxes Enter the amount of the child's Alaska Permanent Fund dividend 6. Do state taxes   7. Do state taxes Divide line 6 by line 5. Do state taxes Enter the result as a decimal (rounded to at least three places) 7. Do state taxes   8. Do state taxes Enter the amount from Form 8814, line 12 8. Do state taxes   9. Do state taxes Multiply line 7 by line 8 9. Do state taxes   10. Do state taxes Subtract line 9 from line 8. Do state taxes Enter the result on line 4 of Worksheet 1 10. Do state taxes     (If filing more than one Form 8814, enter on line 4 of Worksheet 1 the total of the amounts on line 10 of all Worksheets 2. Do state taxes )     Example—completing Worksheet 2. Do state taxes Your 10-year-old child has taxable interest income of $400, an Alaska Permanent Fund dividend of $1,000, and ordinary dividends of $1,100, of which $500 are qualified dividends. Do state taxes You choose to report this income on your return. Do state taxes You enter $400 on line 1a of Form 8814, $2,100 ($1,000 + $1,100) on line 2a, and $500 on line 2b. Do state taxes After completing lines 4 through 11, you enter $400 on line 12 of Form 8814 and line 21 of Form 1040. Do state taxes On Worksheet 2, you enter $2,100 on line 1, $500 on line 2, $1,600 on line 3, $400 on line 4, $2,000 on line 5, $1,000 on line 6, 0. Do state taxes 500 on line 7, $400 on line 8, $200 on line 9, and $200 on line 10. Do state taxes You then enter $200 on line 4 of Worksheet 1. Do state taxes Rule 7—You Must Have Earned Income This credit is called the “earned income” credit because, to qualify, you must work and have earned income. Do state taxes If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income. Do state taxes If you are an employee, earned income includes all the taxable income you get from your employer. Do state taxes Rule 15 has information that will help you figure the amount of your earned income. Do state taxes If you are self-employed or a statutory employee, you will figure your earned income on EIC Worksheet B in the Form 1040 instructions. Do state taxes Earned Income Earned income includes all of the following types of income. Do state taxes Wages, salaries, tips, and other taxable employee pay. Do state taxes Employee pay is earned income only if it is taxable. Do state taxes Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Do state taxes But there is an exception for nontaxable combat pay, which you can choose to include in earned income, as explained later in this chapter. Do state taxes Net earnings from self-employment. Do state taxes Gross income received as a statutory employee. Do state taxes Wages, salaries, and tips. Do state taxes    Wages, salaries, and tips you receive for working are reported to you on Form W-2, in box 1. Do state taxes You should report these on line 1 (Form 1040EZ) or line 7 (Forms 1040A and 1040). Do state taxes Nontaxable combat pay election. Do state taxes   You can elect to include your nontaxable combat pay in earned income for the earned income credit. Do state taxes The amount of your nontaxable combat pay should be shown on your Form W-2, in box 12, with code Q. Do state taxes Electing to include nontaxable combat pay in earned income may increase or decrease your EIC. Do state taxes For details, see Nontaxable combat pay in chapter 4. Do state taxes Net earnings from self-employment. Do state taxes   You may have net earnings from self-employment if: You own your own business, or You are a minister or member of a religious order. Do state taxes Minister's housing. Do state taxes   The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. Do state taxes For that reason, it is included in earned income for the EIC (except in the cases described in Approved Form 4361 or Form 4029 , below). Do state taxes Statutory employee. Do state taxes   You are a statutory employee if you receive a Form W-2 on which the “Statutory employee” box (box 13) is checked. Do state taxes You report your income and expenses as a statutory employee on Schedule C or C-EZ (Form 1040). Do state taxes Strike benefits. Do state taxes   Strike benefits paid by a union to its members are earned income. Do state taxes Approved Form 4361 or Form 4029 This section is for persons who have an approved: Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Do state taxes Each approved form exempts certain income from social security taxes. Do state taxes Each form is discussed here in terms of what is or is not earned income for the EIC. Do state taxes Form 4361. Do state taxes   Whether or not you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. Do state taxes This includes wages, salaries, tips, and other taxable employee compensation. Do state taxes A nontaxable housing allowance or the nontaxable rental value of a home is not earned income. Do state taxes Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Do state taxes Examples include fees for performing marriages and honoraria for delivering speeches. Do state taxes Form 4029. Do state taxes   Whether or not you have an approved Form 4029, all wages, salaries, tips, and other taxable employee compensation count as earned income. Do state taxes However, amounts you received as a self-employed individual do not count as earned income. Do state taxes Also, in figuring earned income, do not subtract losses on Schedule C, C-EZ, or F from wages on line 7 of Form 1040. Do state taxes Disability Benefits If you retired on disability, taxable benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. Do state taxes Minimum retirement age generally is the earliest age at which you could have received a pension or annuity if you were not disabled. Do state taxes You must report your taxable disability payments on line 7 of either Form 1040 or Form 1040A until you reach minimum retirement age. Do state taxes Beginning on the day after you reach minimum retirement age, payments you receive are taxable as a pension and are not considered earned income. Do state taxes Report taxable pension payments on Form 1040, lines 16a and 16b, or Form 1040A, lines 12a and 12b. Do state taxes Disability insurance payments. Do state taxes   Payments you received from a disability insurance policy that you paid the premiums for are not earned income. Do state taxes It does not matter whether you have reached minimum retirement age. Do state taxes If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J. Do state taxes ” Income That Is Not Earned Income Examples of items that are not earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers' compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans' benefits, including VA rehabilitation payments. Do state taxes Do not include any of these items in your earned income. Do state taxes Earnings while an inmate. Do state taxes   Amounts received for work performed while an inmate in a penal institution are not earned income when figuring the earned income credit. Do state taxes This includes amounts for work performed while in a work release program or while in a halfway house. Do state taxes Workfare payments. Do state taxes   Nontaxable workfare payments are not earned income for the EIC. Do state taxes These are cash payments certain people receive from a state or local agency that administers public assistance programs funded under the federal Temporary Assistance for Needy Families (TANF) program in return for certain work activities such as (1) work experience activities (including remodeling or repairing public housing) if sufficient private sector employment is not available, or (2) community service program activities. Do state taxes Community property. Do state taxes   If you are married, but qualify to file as head of household under special rules for married taxpayers living apart (see Rule 3), and live in a state that has community property laws, your earned income for the EIC does not include any amount earned by your spouse that is treated as belonging to you under those laws. Do state taxes That amount is not earned income for the EIC, even though you must include it in your gross income on your income tax return. Do state taxes Your earned income includes the entire amount you earned, even if part of it is treated as belonging to your spouse under your state's community property laws. Do state taxes Nevada, Washington, and California domestic partners. Do state taxes   If you are a registered domestic partner in Nevada, Washington, or California, the same rules apply. Do state taxes Your earned income for the EIC does not include any amount earned by your partner. Do state taxes Your earned income includes the entire amount you earned. Do state taxes For details, see Publication 555. Do state taxes Conservation Reserve Program (CRP) payments. Do state taxes   If you were receiving social security retirement benefits or social security disability benefits at the time you received any CRP payments, your CRP payments are not earned income for the EIC. Do state taxes Nontaxable military pay. Do state taxes   Nontaxable pay for members of the Armed Forces is not considered earned income for the EIC. Do state taxes Examples of nontaxable military pay are combat pay, the Basic Allowance for Housing (BAH), and the Basic Allowance for Subsistence (BAS). Do state taxes See Publication 3, Armed Forces' Tax Guide, for more information. Do state taxes    Combat pay. Do state taxes You can elect to include your nontaxable combat pay in earned income for the EIC. Do state taxes See Nontaxable combat pay in chapter 4. Do state taxes Chapter 2—Rules If You Have a Qualifying Child If you have met all the rules in chapter 1, use this chapter to see if you have a qualifying child. Do state taxes This chapter discusses Rules 8 through 10. Do state taxes You must meet all three of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit with a qualifying child. Do state taxes You must file Form 1040 or Form 1040A to claim the EIC with a qualifying child. Do state taxes (You cannot file Form 1040EZ. Do state taxes ) You also must complete Schedule EIC and attach it to your return. Do state taxes If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Do state taxes No qualifying child. Do state taxes   If you do not meet Rule 8, you do not have a qualifying child. Do state taxes Read chapter 3 to find out if you can get the earned income credit without a qualifying child. Do state taxes Rule 8—Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Your child is a qualifying child if your child meets four tests. Do state taxes The fours tests are: Relationship, Age, Residency, and Joint return. Do state taxes The four tests are illustrated in Figure 1. Do state taxes The paragraphs that follow contain more information about each test. Do state taxes Relationship Test To be your qualifying child, a child must be your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), or Brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them (for example, your niece or nephew). Do state taxes The following definitions clarify the relationship test. Do state taxes Adopted child. Do state taxes   An adopted child is always treated as your own child. Do state taxes The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Do state taxes Foster child. Do state taxes   For the EIC, a person is your foster child if the child is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. Do state taxes (An authorized placement agency includes a state or local government agency. Do state taxes It also includes a tax-exempt organization licensed by a state. Do state taxes In addition, it includes an Indian tribal government or an organization authorized by an Indian tribal government to place Indian children. Do state taxes ) Example. Do state taxes Debbie, who is 12 years old, was placed in your care 2 years ago by an authorized agency responsible for placing children in foster homes. Do state taxes Debbie is your foster child. Do state taxes Figure 1. Do state taxes Tests for Qualifying Child Please click here for the text description of the image. Do state taxes Conditions for Qualifying Child Age Test Your child must be: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a student, and younger than you (or your spouse, if filing jointly, or Permanently and totally disabled at any time during 2013, regardless of age. Do state taxes The following examples and definitions clarify the age test. Do state taxes Example 1—child not under age 19. Do state taxes Your son turned 19 on December 10. Do state taxes Unless he was permanently and totally disabled or a student, he is not a qualifying child because, at the end of the year, he was not under age 19. Do state taxes Example 2—child not younger than you or your spouse. Do state taxes Your 23-year-old brother, who is a full-time student and unmarried, lives with you and your spouse. Do state taxes He is not disabled. Do state taxes Both you and your spouse are 21 years old, and you file a joint return. Do state taxes Your brother is not your qualifying child because he is not younger than you or your spouse. Do state taxes Example 3—child younger than your spouse but not younger than you. Do state taxes The facts are the same as in Example 2 except that your spouse is 25 years old. Do state taxes Because your brother is younger than your spouse, he is your qualifying child, even though he is not younger than you. Do state taxes Student defined. Do state taxes   To qualify as a student, your child must be, during some part of each of any 5 calendar months during the calendar year: A full-time student at a school that has a regular teaching staff, course of study, and regular student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or a state, county, or local government. Do state taxes   The 5 calendar months need not be consecutive. Do state taxes   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. Do state taxes School defined. Do state taxes   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. Do state taxes However, on-the-job training courses, correspondence schools, and schools offering courses only through the Internet do not count as schools for the EIC. Do state taxes Vocational high school students. Do state taxes   Students who work in co-op jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. Do state taxes Permanently and totally disabled. Do state taxes   Your child is permanently and totally disabled if both of the following apply. Do state taxes He or she cannot engage in any substantial gainful activity because of a physical or mental condition. Do state taxes A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. Do state taxes Residency Test Your child must have lived with you in the United States for more than half of 2013. Do state taxes The following definitions clarify the residency test. Do state taxes United States. Do state taxes   This means the 50 states and the District of Columbia. Do state taxes It does not include Puerto Rico or U. Do state taxes S. Do state taxes possessions such as Guam. Do state taxes Homeless shelter. Do state taxes   Your home can be any location where you regularly live. Do state taxes You do not need a traditional home. Do state taxes For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test. Do state taxes Military personnel stationed outside the United States. Do state taxes   U. Do state taxes S. Do state taxes military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC. Do state taxes Extended active duty. Do state taxes   Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Do state taxes Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you do not serve more than 90 days. Do state taxes Birth or death of child. Do state taxes    child who was born or died in 2013 is treated as having lived with you for more than half of 2013 if your home was the child's home for more than half the time he or she was alive in 2013. Do state taxes Temporary absences. Do state taxes   Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Do state taxes Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility. Do state taxes Kidnapped child. Do state taxes   A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping. Do state taxes The child must be presumed by law enforcement authorities to have been kidnapped by someone who is not a member of your family or the child's family. Do state taxes This treatment applies for all years until the child is returned. Do state taxes However, the last year this treatment can apply is the earlier of: The year there is a determination that the child is dead, or The year the child would have reached age 18. Do state taxes   If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC. Do state taxes Joint Return Test To meet this test, the child cannot file a joint return for the year. Do state taxes Exception. Do state taxes   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. Do state taxes Example 1—child files joint return. Do state taxes You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. Do state taxes He earned $25,000 for the year. Do state taxes The couple files a joint return. Do state taxes Because your daughter and her husband file a joint return, she is not your qualifying child. Do state taxes Example 2—child files joint return to get refund of tax withheld. Do state taxes Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. Do state taxes They do not have a child. Do state taxes Neither is required to file a tax return. Do state taxes Taxes were taken out of their pay, so they file a joint return only to get a refund of the withheld taxes. Do state taxes The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. Do state taxes Example 3—child files joint return to claim American opportunity credit. Do state taxes The facts are the same as in Example 2 except no taxes were taken out of your son's pay. Do state taxes He and his wife are not required to file a tax return, but they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Do state taxes Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to claim a refund of income tax withheld or estimated tax paid. Do state taxes The exception to the joint return test does not apply, so your son is not your qualifying child. Do state taxes Married child. Do state taxes   Even if your child does not file a joint return, if your child was married at the end of the year, he or she cannot be your qualifying child unless: You can claim an exemption for the child, or The reason you cannot claim an exemption for the child is that you let the child's other parent claim the exemption under the Special rule for divorced or separated parents (or parents who live apart) described later. Do state taxes    Social security number. Do state taxes Your qualifying child must have a valid social security number (SSN), unless the child was born and died in 2013 and you attach to your return a copy of the child's birth certificate, death certificate, or hospital records showing a live birth. Do state taxes You cannot claim the EIC on the basis of a qualifying child if: The qualifying child's SSN is missing from your tax return or is incorrect, The qualifying child's social security card says “Not valid for employment” and was issued for use in getting a federally funded benefit, or Instead of an SSN, the qualifying child has: An individual taxpayer identification number (ITIN), which is issued to a noncitizen who cannot get an SSN, or An adoption taxpayer identification number (ATIN), issued to adopting parents who cannot get an SSN for the child being adopted until the adoption is final. Do state taxes   If you have more than one qualifying child and only one has a valid SSN, you can use only that child to claim the EIC. Do state taxes For more information about SSNs, see Rule 2. Do state taxes Rule 9—Your Qualifying Child Cannot Be Used by More Than One Person To Claim the EIC Sometimes a child meets the tests to be a qualifying child of more than one person. Do state taxes However, only one of these persons can actually treat the child as a qualifying child. Do state taxes Only that person can use the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). Do state taxes The exemption for the child. Do state taxes The child tax credit. Do state taxes Head of household filing status. Do state taxes The credit for child and dependent care expenses. Do state taxes The exclusion for dependent care benefits. Do state taxes The EIC. Do state taxes The other person cannot take any of these benefits based on this qualifying child. Do state taxes In other words, you and the other person cannot agree to divide these tax benefits between you. Do state taxes The other person cannot take any of these tax benefits unless he or she has a different qualifying child. Do state taxes The tiebreaker rules, which follow, explain who, if anyone, can claim the EIC when more than one person has the same qualifying child. Do state taxes However, the tiebreaker rules do not apply if the other person is your spouse and you file a joint return. Do state taxes Tiebreaker rules. Do state taxes   To determine which person can treat the child as a qualifying child to claim the six tax benefits just listed, the following tiebreaker rules apply. Do state taxes If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. Do state taxes If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. Do state taxes If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. Do state taxes If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. Do state taxes If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. Do state taxes If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. Do state taxes If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them. Do state taxes See Example 8. Do state taxes   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. Do state taxes See Examples 1 through 13. Do state taxes   If you cannot claim the EIC because your qualifying child is treated under the tiebreaker rules as the qualifying child of another person for 2013, you may be able to take the EIC using a different qualifying child, but you cannot take the EIC using the rules in chapter 3 for people who do not have a qualifying child. Do state taxes If the other person cannot claim the EIC. Do state taxes   If you and someone else have the same qualifying child but the other person cannot claim the EIC because he or she is not eligible or his or her earned income or AGI is too high, you may be able to treat the child as a qualifying child. Do state taxes See Examples 6 and 7. Do state taxes But you cannot treat the child as a qualifying child to claim the EIC if the other person uses the child to claim any of the other six tax benefits listed earlier in this chapter. Do state taxes Examples. Do state taxes    The following examples may help you in determining whether you can claim the EIC when you and someone else have the same qualifying child. Do state taxes Example 1—child lived with parent and grandparent. Do state taxes You and your 2-year-old son Jimmy lived with your mother all year. Do state taxes You are 25 years old, unmarried, and your AGI is $9,000. Do state taxes Your only income was $9,000 from a part-time job. Do state taxes Your mother's only income was $20,000 from her job, and her AGI is $20,000. Do state taxes Jimmy's father did not live with you or Jimmy. Do state taxes The special rule explained later for divorced or separated parents (or parents who live apart) does not apply. Do state taxes Jimmy is a qualifying child of both you and your mother because he meets the relationship, age, residency, and joint return tests for both you and your mother. Do state taxes However, only one of you can treat him as a qualifying child to claim the EIC (and the other tax benefits listed earlier in this chapter for which that person qualifies). Do state taxes He is not a qualifying child of anyone else, including his father. Do state taxes If you do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can treat him as a qualifying child to claim the EIC (and any of the other tax benefits listed earlier for which she qualifies). Do state taxes Example 2—parent has higher AGI than grandparent. Do state taxes The facts are the same as in Example 1 except your AGI is $25,000. Do state taxes Because your mother's AGI is not higher than yours, she cannot claim Jimmy as a qualifying child. Do state taxes Only you can claim him. Do state taxes Example 3—two persons claim same child. Do state taxes The facts are the same as in Example 1 except that you and your mother both claim Jimmy as a qualifying child. Do state taxes In this case, you as the child's parent will be the only one allowed to claim Jimmy as a qualifying child for the EIC and the other tax benefits listed earlier for which you qualify. Do state taxes The IRS will disallow your mother's claim to the EIC and any of the other tax benefits listed earlier unless she has another qualifying child. Do state taxes Example 4—qualifying children split between two persons. Do state taxes The facts are the same as in Example 1 except that you also have two other young children who are qualifying children of both you and your mother. Do state taxes Only one of you can claim each child. Do state taxes However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. Do state taxes For example, if you claim one child, your mother can claim the other two. Do state taxes Example 5—taxpayer who is a qualifying child. Do state taxes The facts are the same as in Example 1 except that you are only 18 years old. Do state taxes This means you are a qualifying child of your mother. Do state taxes Because of Rule 10, discussed next, you cannot claim the EIC and cannot claim your son as a qualifying child. Do state taxes Only your mother may be able to treat Jimmy as a qualifying child to claim the EIC. Do state taxes If your mother meets all the other requirements for claiming the EIC and you do not claim Jimmy as a qualifying child for any of the other tax benefits listed earlier, your mother can claim both you and Jimmy as qualifying children for the EIC. Do state taxes Example 6—grandparent with too much earned income to claim EIC. Do state taxes The facts are the same as in Example 1 except that your mother earned $50,000 from her job. Do state taxes Because your mother's earned income is too high for her to claim the EIC, only you can claim the EIC using your son. Do state taxes Example 7—parent with too much earned income to claim EIC. Do state taxes The facts are the same as in Example 1 except that you earned $50,000 from your job and your AGI is $50,500. Do state taxes Your earned income is too high for you to claim the EIC. Do state taxes But your mother cannot claim the EIC either, because her AGI is not higher than yours. Do state taxes Example 8—child lived with both parents and grandparent. Do state taxes The facts are the same as in Example 1 except that you and Jimmy's father are married to each other, live with Jimmy and your mother, and have AGI of $30,000 on a joint return. Do state taxes If you and your husband do not claim Jimmy as a qualifying child for the EIC or any of the other tax benefits listed earlier, your mother can claim him instead. Do state taxes Even though the AGI on your joint return, $30,000, is more than your mother's AGI of $20,000, for this purpose half of the joint AGI can be treated as yours and half as your husband's. Do state taxes In other words, each parent's AGI can be treated as $15,000. Do state taxes Example 9—separated parents. Do state taxes You, your husband, and your 10-year-old son Joey lived together until August 1, 2013, when your husband moved out of the household. Do state taxes In August and September, Joey lived with you. Do state taxes For the rest of the year, Joey lived with your husband, who is Joey's father. Do state taxes Joey is a qualifying child of both you and your husband because he lived with each of you for more than half the year and because he met the relationship, age, and joint return tests for both of you. Do state taxes At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the Special rule for divorced or separated parents (or parents who live apart) does not apply. Do state taxes You and your husband will file separate returns. Do state taxes Your husband agrees to let you treat Joey as a qualifying child. Do state taxes This means, if your husband does not claim Joey as a qualifying child for any of the tax benefits listed earlier, you can claim him as a qualifying child for any tax benefit listed earlier for which you qualify. Do state taxes However, your filing status is married filing separately, so you cannot claim the EIC or the credit for child and dependent care expenses. Do state taxes See Rule 3. Do state taxes Example 10—separated parents claim same child. Do state taxes The facts are the same as in Example 9 except that you and your husband both claim Joey as a qualifying child. Do state taxes In this case, only your husband will be allowed to treat Joey as a qualifying child. Do state taxes This is because, during 2013, the boy lived with him longer than with you. Do state taxes You cannot claim the EIC (either with or without a qualifying child). Do state taxes However, your husband's filing status is married filing separately, so he cannot claim the EIC or the credit for child and dependent care expenses. Do state taxes See Rule 3. Do state taxes Example 11—unmarried parents. Do state taxes You, your 5-year-old son, and your son's father lived together all year. Do state taxes You and your son's father are not married. Do state taxes Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, and joint return tests for both you and his father. Do state taxes Your earned income and AGI are $12,000, and your son's father's earned income and AGI are $14,000. Do state taxes Neither of you had any other income. Do state taxes Your son's father agrees to let you treat the child as a qualifying child. Do state taxes This means, if your son's father does not claim your son as a qualifying child for the EIC or any of the other tax benefits listed earlier, you can claim him as a qualifying child for the EIC and any of the other tax benefits listed earlier for which you qualify. Do state taxes Example 12—unmarried parents claim same child. Do state taxes The facts are the same as in Example 11 except that you and your son's father both claim your son as a qualifying child. Do state taxes In this case, only your son's father will be allowed to treat your son as a qualifying child. Do state taxes This is because his AGI, $14,000, is more than your AGI, $12,000. Do state taxes You cannot claim the EIC (either with or without a qualifying child). Do state taxes Example 13—child did not live with a parent. Do state taxes You and your 7-year-old niece, your sister's child, lived with your mother all year. Do state taxes You are 25 years old, and your AGI is $9,300. Do state taxes Your only income was from a part-time job. Do state taxes Your mother's AGI is $15,000. Do state taxes Her only income was from her job. Do state taxes Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. Do state taxes Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, and joint return tests for both you and your mother. Do state taxes However, only your mother can treat her as a qualifying child. Do state taxes This is because your mother's AGI, $15,000, is more than your AGI, $9,300. Do state taxes Special rule for divorced or separated parents (or parents who live apart). Do state taxes   A child will be treated as the qualifying child of his or her noncustodial parent (for purposes of claiming an exemption and the child tax credit, but not for the EIC) if all of the following statements are true. Do state taxes The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all time during the last 6 months of 2013, whether or not they are or were married. Do state taxes The child received over half of his or her support for the year from the parents. Do state taxes The child is in the custody of one or both parents for more than half of 2013. Do state taxes Either of the following statements is true. Do state taxes The custodial parent signs Form 8332 or a substantially 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 return. Do state taxes If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. Do state taxes A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 provides that the noncustodial parent can claim the child as a dependent, and the noncustodial parent provides at least $600 for support of the child during 2013. Do state taxes For details, see Publication 501. Do state taxes Also see Applying Rule 9 to divorced or separated parents (or parents who live apart), next. Do state taxes Applying Rule 9 to divorced or separated parents (or parents who live apart). Do state taxes   If a child is treated as the qualifying child of the noncustodial parent under the special rule just described for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. Do state taxes However, the custodial parent, if eligible, or another eligible taxpayer can claim the child as a qualifying child for the EIC and other tax benefits listed earlier in this chapter. Do state taxes If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules determine which person can treat the child as a qualifying child. Do state taxes Example 1. Do state taxes You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Do state taxes Your AGI is $10,000. Do state taxes Your mother’s AGI is $25,000. Do state taxes Your son's father did not live with you or your son. Do state taxes Under the Special rule for divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child. Do state taxes However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the EIC. Do state taxes You and your mother did not have any child care expenses or dependent care benefits. Do state taxes If you do not claim your son as a qualifying child, your mother can claim him as a qualifying child for the EIC and head of household filing status, if she qualifies for these tax benefits. Do state taxes Example 2. Do state taxes The facts are the same as in Example 1 except that your AGI is $25,000 and your mother's AGI is $21,000. Do state taxes Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. Do state taxes Example 3. Do state taxes The facts are the same as in Example 1 except that you and your mother both claim your son as a qualifying child for the EIC. Do state taxes Your mother also claims him as a qualifying child for head of household filing status. Do state taxes You as the child's parent will be the only one allowed to claim your son as a qualifying child for the EIC. Do state taxes The IRS will disallow your mother's claim to the EIC and head of household filing status unless she has another qualifying child. Do state taxes Rule 10—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Do state taxes ) if all of the following statements are true. Do state taxes You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Do state taxes Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Do state taxes You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Do state taxes You lived with that person in the United States for more than half of the year. Do state taxes You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Do state taxes For more details about the tests to be a qualifying child, see Rule 8. Do state taxes If you are a qualifying child of another taxpayer, you cannot claim the EIC. Do state taxes This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Do state taxes Put “No” beside line 64a (Form 1040) or line 38a (Form 1040A). Do state taxes Example. Do state taxes You and your daughter lived with your mother all year. Do state taxes You are 22 years old, unmarried, and attended a trade school full time. Do state taxes You had a part-time job and earned $5,700. Do state taxes You had no other income. Do state taxes Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother. Do state taxes She can claim the EIC if she meets all the other requirements. Do state taxes Because you are your mother's qualifying child, you cannot claim the EIC. Do state taxes This is so even if your mother cannot or does not claim the EIC. Do state taxes Child of person not required to file a return. Do state taxes   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you met the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Do state taxes Example 1—return not required. Do state taxes The facts are the same as in the last example except your mother had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Do state taxes As a result, you are not your mother's qualifying child. Do state taxes You can claim the EIC if you meet all the other requirements to do so. Do state taxes Example 2—return filed to get refund of tax withheld. Do state taxes The facts are the same as in Example 1 except your mother had wages of $1,500 and had income tax withheld from her wages. Do state taxes She files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Do state taxes As a result, you are not your mother's qualifying child. Do state taxes You can claim the EIC if you meet all the other requirements to do so. Do state taxes Example 3—return filed to get EIC. Do state taxes The facts are the same as in Example 2 except your mother claimed the EIC on her return. Do state taxes Since she filed the return to get the EIC, she is not filing it only to get a refund of income tax withheld. Do state taxes As a result, you are your mother's qualifying child. Do state taxes You cannot claim the EIC. Do state taxes Chapter 3—Rules If You Do Not Have a Qualifying Child Use this chapter if you do not have a qualifying child and have met all the rules in chapter 1. Do state taxes This chapter discusses Rules 11 through 14. Do state taxes You must meet all four of those rules, in addition to the rules in chapters 1 and 4, to qualify for the earned income credit without a qualifying child. Do state taxes You can file Form 1040, Form 1040A, or Form 1040EZ to claim the EIC without a qualifying child. Do state taxes If you meet all the rules in chapter 1 and this chapter, read chapter 4 to find out what to do next. Do state taxes If you have a qualifying child. Do state taxes   If you meet Rule 8, you have a qualifying child. Do state taxes If you meet Rule 8 and do not claim the EIC with a qualifying child, you cannot claim the EIC without a qualifying child. Do state taxes Rule 11—You Must Be at Least Age 25 but Under Age 65 You must be at least age 25 but under age 65 at the end of 2013. Do state taxes If you are married filing a joint return, either you or your spouse must be at least age 25 but under age 65 at the end of 2013. Do state taxes It does not matter which spouse meets the age test, as long as one of the spouses does. Do state taxes You meet the age test if you were born after December 31, 1948, and before January 2, 1989. Do state taxes If you are married filing a joint return, you meet the age test if either you or your spouse was born after December 31, 1948, and before January 2, 1989. Do state taxes If neither you nor your spouse meets the age test, you cannot claim the EIC. Do state taxes Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Do state taxes Death of spouse. Do state taxes   If you are filing a joint return with your spouse who died in 2013, you meet the age test if your spouse was at least age 25 but under age 65 at the time of death. Do state taxes Example 1. Do state taxes You are age 28 and unmarried. Do state taxes You meet the age test. Do state taxes Example 2—spouse meets age test. Do state taxes You are married and filing a joint return. Do state taxes You are age 23 and your spouse is age 27. Do state taxes You meet the age test because your spouse is at least age 25 but under age 65. Do state taxes Example 3—spouse dies in 2013. Do state taxes You are married and filing a joint return with your spouse who died in August 2013. Do state taxes You are age 67. Do state taxes Your spouse would have become age 65 in November 2013. Do state taxes Because your spouse was under age 65 when she died, you meet the age test. Do state taxes Rule 12—You Cannot Be the Dependent of Another Person If you are not filing a joint return, you meet this rule if: You checked box 6a on Form 1040 or 1040A, or You did not check the “You” box on line 5 of Form 1040EZ, and you entered $10,000 on that line. Do state taxes If you are filing a joint return, you meet this rule if: You checked both box 6a and box 6b on Form 1040 or 1040A, or You and your spouse did not check either the “You” box or the “Spouse” box on line 5 of Form 1040EZ, and you entered $20,000 on that line. Do state taxes If you are not sure whether someone else can claim you as a dependent, get Publication 501 and read the rules for claiming a dependent. Do state taxes If someone else can claim you as a dependent on his or her return, but does not, you still cannot claim the credit. Do state taxes Example 1. Do state taxes In 2013, you were age 25, single, and living at home with your parents. Do state taxes You worked and were not a student. Do state taxes You earned $7,500. Do state taxes Your parents cannot claim you as a dependent. Do state taxes When you file your return, you claim an exemption for yourself by not checking the You box on line 5 of your Form 1040EZ and by entering $10,000 on that line. Do state taxes You meet this rule. Do state taxes You can claim the EIC if you meet all the other requirements. Do state taxes Example 2. Do state taxes The facts are the same as in Example 1, except that you earned $2,000. Do state taxes Your parents can claim you as a dependent but decide not to. Do state taxes You do not meet this rule. Do state taxes You cannot claim the credit because your parents could have claimed you as a dependent. Do state taxes Joint returns. Do state taxes   You generally cannot be claimed as a dependent by another person if you are married and file a joint return. Do state taxes   However, another person may be able to claim you as a dependent if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Do state taxes But neither you nor your spouse can be claimed as a dependent by another person if you claim the EIC on your joint return. Do state taxes Example 1—return filed to get refund of tax withheld. Do state taxes You are 26 years old. Do state taxes You and your wife live with your parents and had $800 of wages from part-time jobs and no other income. Do state taxes Neither you nor your wife is required to file a tax return. Do state taxes You do not have a child. Do state taxes Taxes were taken out of your pay so you file a joint return only to get a refund of the withheld taxes. Do state taxes Your parents are not disqualified from claiming an exemption for you just because you filed a joint return. Do state taxes They can claim exemptions for you and your wife if all the other tests to do so are met. Do state taxes Example 2—return filed to get EIC. Do state taxes The facts are the same as in Example 1except no taxes were taken out of your pay. Do state taxes Also, you and your wife are not required to file a tax return, but you file a joint return to claim an EIC of $63 and get a refund of that amount. Do state taxes Because claiming the EIC is your reason for filing the return, you are not filing it only to claim a refund of income tax withheld or estimated tax paid. Do state taxes Your parents cannot claim an exemption for either you or your wife. Do state taxes Rule 13—You Cannot Be a Qualifying Child of Another Taxpayer You are a qualifying child of another taxpayer (your parent, guardian, foster parent, etc. Do state taxes ) if all of the following statements are true. Do state taxes You are that person's son, daughter, stepchild, foster child, or a descendant of any of them. Do state taxes Or, you are that person's brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Do state taxes You were: Under age 19 at the end of the year and younger than that person (or that person's spouse, if the person files jointly), Under age 24 at the end of the year, a student, and younger than that person (or that person's spouse, if the person files jointly), or Permanently and totally disabled, regardless of age. Do state taxes You lived with that person in the United States for more than half of the year. Do state taxes You are not filing a joint return for the year (or are filing a joint return only to claim a refund of withheld income tax or estimated tax paid). Do state taxes For more details about the tests to be a qualifying child, see Rule 8. Do state taxes If you are a qualifying child of another taxpayer, you cannot claim the EIC. Do state taxes This is true even if the person for whom you are a qualifying child does not claim the EIC or meet all of the rules to claim the EIC. Do state taxes Put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Do state taxes Example. Do state taxes You lived with your mother all year. Do state taxes You are age 26, unmarried, and permanently and totally disabled. Do state taxes Your only income was from a community center where you went three days a week to answer telephones. Do state taxes You earned $5,000 for the year and provided more than half of your own support. Do state taxes Because you meet the relationship, age, residency, and joint return tests, you are a qualifying child of your mother for the EIC. Do state taxes She can claim the EIC if she meets all the other requirements. Do state taxes Because you are a qualifying child of your mother, you cannot claim the EIC. Do state taxes This is so even if your mother cannot or does not claim the EIC. Do state taxes Joint returns. Do state taxes   You generally cannot be a qualifying child of another taxpayer if you are married and file a joint return. Do state taxes   However, you may be a qualifying child of another taxpayer if you and your spouse file a joint return merely to claim a refund of income tax withheld or estimated tax paid. Do state taxes But neither you nor your spouse can be a qualifying child of another taxpayer if you claim the EIC on your joint return. Do state taxes Child of person not required to file a return. Do state taxes   You are not the qualifying child of another taxpayer (and so may qualify to claim the EIC) if the person for whom you meet the relationship, age, residency, and joint return tests is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. Do state taxes Example 1—return not required. Do state taxes You lived all year with your father. Do state taxes You are 27 years old, unmarried, permanently and totally disabled, and earned $13,000. Do state taxes You have no other income, no children, and provided more than half of your own support. Do state taxes Your father had no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. Do state taxes As a result, you are not your father's qualifying child. Do state taxes You can claim the EIC if you meet all the other requirements to do so. Do state taxes Example 2—return filed to get refund of tax withheld. Do state taxes The facts are the same as in Example 1 except your father had wages of $1,500 and had income tax withheld from his wages. Do state taxes He files a return only to get a refund of the income tax withheld and does not claim the EIC or any other tax credits or deductions. Do state taxes As a result, you are not your father's qualifying child. Do state taxes You can claim the EIC if you meet all the other requirements to do so. Do state taxes Example 3—return filed to get EIC. Do state taxes The facts are the same as in Example 2 except your father claimed the EIC on his return. Do state taxes Since he filed the return to get the EIC, he is not filing it only to get a refund of income tax withheld. Do state taxes As a result, you are your father's qualifying child. Do state taxes You cannot claim the EIC. Do state taxes Rule 14—You Must Have Lived in the United States More Than Half of the Year Your home (and your spouse's, if filing a joint return) must have been in the United States for more than half the year. Do state taxes If it was not, put “No” next to line 64a (Form 1040), line 38a (Form 1040A), or line 8a (Form 1040EZ). Do state taxes United States. Do state taxes   This means the 50 states and the District of Columbia. Do state taxes It does not include Puerto Rico or U. Do state taxes S. Do state taxes possessions such as Guam. Do state taxes Homeless shelter. Do state taxes   Your home can be any location where you regularly live. Do state taxes You do not need a traditional home. Do state taxes If you lived in one or more homeless shelters in the United States for more than half the year, you meet this rule. Do state taxes Military personnel stationed outside the United States. Do state taxes   U. Do state taxes S. Do state taxes military personnel stationed outside the United States on extended active duty (defined in chapter 2) are considered to live in the United States during that duty period for purposes of the EIC. Do state taxes Chapter 4—Figuring and Claiming the EIC You must meet one more rule to claim the EIC. Do state taxes You need to know the amount of your earned income to see if you meet the rule in this chapter. Do state taxes You also need to know that amount to figure your EIC. Do state taxes Rule 15—Earned Income Limits Your earned income must be less than: $46,227 ($51,567 for married filing jointly) if you have three or more qualifying children, $43,038 ($48,378 for married filing jointly) if you have two qualifying children, $37,870 ($43,210 for married filing jointly) if you have one qualifying child, or $14,340 ($19,680 for married filing jointly) if you do not have a qualifying child. Do state taxes Earned Income Earned income generally means wages, salaries, tips, other taxable employee pay, and net earnings from self-employment. Do state taxes Employee pay is earned income only if it is taxable. Do state taxes Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income. Do state taxes But there is an exception for nontaxable combat pay, which you can choose to include in earned income. Do state taxes Earned income is explained in detail in Rule 7 in chapter 1. Do state taxes Figuring earned income. Do state taxes   If you are self-employed, a statutory employee, or a member of the clergy or a church employee who files Schedule SE (Form 1040), you will figure your earned income when you fill out Part 4 of EIC Worksheet B in the Form 1040 instructions. Do state taxes   Otherwise, figure your earned income by using the worksheet in Step 5 of the Form 1040 instructions for lines 64a and 64b or the Form 1040A instructions for lines 38a and 38b, or the worksheet in Step 2 of the Form 1040EZ instructions for lines 8a and 8b. Do state taxes   When using one of those worksheets to figure your earned income, you will start with the amount on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ). Do state taxes You will then reduce that amount by any amount included on that line and described in the following list. Do state taxes Scholarship or fellowship grants not reported on a Form W-2. Do state taxes A scholarship or fellowship grant that was not reported to you on a Form W-2 is not considered earned income for the earned income credit. Do state taxes Inmate's income. Do state taxes Amounts received for work performed while an inmate in a penal institution are not earned income for the earned income credit. Do state taxes This includes amounts received for work performed while in a work release program or while in a halfway house. Do state taxes If you received any amount for work done while an inmate in a penal institution and that amount is included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “PRI” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Do state taxes Pension or annuity from deferred compensation plans. Do state taxes A pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan is not considered earned income for the earned income credit. Do state taxes If you received such an amount and it was included in the total on line 7 (Form 1040 or Form 1040A) or line 1 (Form 1040EZ), put “DFC” and the amount on the dotted line next to line 7 (Form 1040), in the space to the left of the entry space for line 7 (Form 1040A), or in the space to the left of line 1 (Form 1040EZ). Do state taxes This amount may be reported in box 11 of your Form W-2. Do state taxes If you received such an amount but box 11 is blank, contact your employer for the amount received as a pension or an annuity. Do state taxes Clergy. Do state taxes   If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also re