Example 1. Cynthia and Jerry Grey Cynthia and Jerry Grey have two children, Kirk, age 8, and Susanne,age 6. The children lived with Cynthia and Jerry for all of 1999.Cynthia earned wages of $15,000 and Jerry had wages of $10,000. TheGreys received $50 in interest on their savings account. They had noother income in 1999. Cynthia and Jerry have the 1999 Form 1040A tax package andinstructions. They want to see if they qualify for the EIC, so theyfollow the steps for lines 37a and 37b in the instructions. Step 1.In Step 1 of those instructions Cynthia and Jerry determine severalthings. They each have valid social security numbers (SSNs) thatallow them to work. (The children also have SSNs that will allow themto work.) They will file a joint return. Neither Cynthia nor Jerry is a nonresident alien. Step 2.The only investment income the Greys have is their $50 interestincome. That amount is not more than $2,350, so they go to Step 3. Step 3.In Step 3omaha hi lo regeln of the instructions for lines 37a and 37b, theGreys find out that they do not have to use Publication 596.However,they decide to get and use the publication because they want to knowmore about advance EIC. When they read Publication 596,they find thatthey have already met Rules 1 - 5 and can start withRule 6 on page 7. Rule 6.The Greys meet this rule because they have earned income (Cynthia'sand Jerry's wages). They go to Rule 7 in chapter 2becausethey believe they have qualifying children. Rule 7.Cynthia and Jerry meet this rule because both Kirk and Susanne meetthe relationship, residency, and age tests. Rule 8.The Greys meet this rule because they determine that Kirk andSusanne are not qualifying children of anyone else. Rule 9.Cynthia and Jerry meet this rule because they themselves are notqualifying children of anyone else. They meet all the rules so far sothey go to chapter 4. Rule 14.Cynthia and Jerry complete Worksheet 2 (not shown here)and figure their total earned income to be $25,000, the amount oftheir combined wages. They meet this rule. Rule 15. Cynthia and Jerry's AGI is $25,050 ($25,000 + $50), the amount online 18a of their Form 1040A. They have no tax-exempt income or partlynontaxable pensions or annuities, so their modified AGI is also$25,050. They meet Rule 15. Completing EIC Worksheet A.Cynthia and Jerry want to figure their EIC themselves, so theycomplete EIC Worksheet AMarbella find hotels (shown here). They completeEIC Worksheet A, rather than EIC Worksheet B,because they are not self-employed or filing ScheduleC or C-EZ as statutory employees. Part 5 Cynthia and Jerry enter their total earned income ($25,000)on line 1. They look up $25,000 in the EIC Table on pages 47-49 forTwo children. They enter the amount of $1,170 on line2. They enter on line 3 their modified AGI ($25,050) and seethat it is different from the amount on line 1. They look up $25,050 in the EIC Table and enter the amountof $1,159 on line 5. luxury hotels in RomeThey enter $1,159 on line 6. This is the smaller of the line2 amount ($1,170) and the line 5 amount ($1,159). The Greys do not owe alternative minimum tax (line 7) sothey enter their EIC of $1,159 on line 8. They also enter that amounton line 37a of their Form 1040A. They will now complete Schedule EIC(shown here) and attach it to their return. They will keep EICWorksheet A for their records. Earned Income Credit