Criteria

• The earned income credit is designed for taxpayers who have less than $48,362 in earned income. Taxpayers can qualify based solely upon their own income but the income limits vary depending upon whether or not taxpayers have at least one qualifying child. For instance, in 2010 the income limit for joint filers with no children is $18, 470 while the income limit for joint filers with three or more children is $48,362. The credit is available for all filing statuses except married filing separate.
  
  

Documentation

• Most often, the IRS requests information on your qualifying child (or children) when it examines your EIC. In order to be claimed as a qualifying child on your return, the child must meet three tests: the relationship, age and residency tests. It is these three criteria which the IRS will ask you to substantiate if your return is pulled for examination. In tax year 2010, 30 percent of audited returns claimed EIC and thus, those audited taxpayers were required to prove their eligibility to claim the credit. To prove the relationship test, the IRS may require that you send documentation such as birth certificates, letters from adoption agencies, or court records to prove the child's relationship to you. Similarly, the IRS often requests school records to prove that the child was a full time student if he or she is older than age 19. If the child is younger than 19, the IRS is usually able to authenticate the child's age based upon Social Security Administration records. To prove the residency test, the IRS requires doctors records or report cards from the child's school.
  
  

Considerations

• You are not required to attach any documentation with your return. Send documentation only if you receive a notice from the IRS requesting additional information.
  
  

Warning

• If you cannot provide the documentation required by the IRS, you will usually be disallowed from claiming the credit. If it is determined that your disallowance was due to recklessness or failure to adhere to EITC rules or guidelines, then you will be disallowed to claim the credit two years. If, however, the IRS finds that you fraudulently claimed EIC, then you will be disallowed to claim the credit for 10 years.