World of Finances

Federal Income Tax form 1040 uses a multitude of sub-forms called schedules to help tax payers determine and report various aspects of taxable income. Schedule EIC is the form used to report information to the Internal Revenue Service regarding qualifying children under the Earned Income Credit Tax Credit.

Earned Income Credit is a refundable tax credit that is available for some people who work. Interestingly, the EIC may result in a refund for people who do not owe any income tax. The steps in determining qualification for the EIC are complicated, requiring tax payers to go through six steps each comprised of several questions. Claiming the EIC with qualifying children requires filing Schedule EIC along with the standard Federal Income Tax form 1040. According to the IRS, errors made by tax payers due to reckless or disregard of EIC rules can result in denial of the EIC for two years even if the tax payer qualifies in the subsequent two years.

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