2004 Instructions for Form 1040 (ALL) - Supreme Law Firm

Form 1040—Lines 65a and 65b
Continued from page 42
3. Were you self-employed, or are you filing Schedule SE because
you were a member of the clergy or you had church
Step 5 Earned Income
employee income, or are you filing Schedule C or C-EZ as a
1. Are you filing Schedule SE because you were a member of statutory employee?
the clergy or you had church employee income of $108.28 Yes. Skip question 4 No. Continue
or more?
and Step 6; go to
Yes. See Clergy or No. Continue
Worksheet B on
Church employees,
page 46.
whichever applies, on
this page. 4. If you have:
• 2 or more qualifying children, is your earned income less
2. Figure earned income:
than $34,458 ($35,458 if married filing jointly)?
• 1 qualifying child, is your earned income less than
Form 1040, line 7
}
$30,338 ($31,338 if married filing jointly)?
Subtract, if included on line 7, any:
• No qualifying children, is your earned income less than
$11,490 ($12,490 if married filing jointly)?
• Taxable scholarship or fellowship grant
Yes. Go to Step 6. No. STOP
not reported on a Form W-2.
• Amount paid to an inmate in a penal
You cannot take the credit.
institution for work (put “PRI” and the
amount subtracted on the dotted line next
to Form 1040, line 7).
Step 6 How To Figure the Credit
• Amount received as a pension or annuity
1. Do you want the IRS to figure the credit for you?
from a nonqualified deferred –
compensation plan or a nongovernmental
Yes. See Credit fig- No. Go to Worksheet A
section 457 plan (put “DFC” and the
ured by the IRS on on page 45.
amount subtracted on the dotted line next
page 44.
to Form 1040, line 7). This amount may
be shown in Form W-2, box 11. If you
Definitions and Special Rules
received such an amount but box 11 is
(listed in alphabetical order)
blank, contact your employer for the
Adopted child.
amount received as a pension or annuity.
An adopted child is always treated as your own
child. An adopted child includes a child placed with you by an
Add all of your nontaxable combat pay if
authorized placement agency for legal adoption even if the adoption
you elect to include it in earned
is not final. An authorized placement agency includes any person or
court authorized by state law to place children for legal adoption.
income.* Also enter this amount on
Form 1040, line 65b. See Combat pay,
Church employees. Determine how much of the amount on
Nontaxable on this page. + Form 1040, line 7, was also reported on Schedule SE, line 5a.
Subtract that amount from the amount on Form 1040, line 7, and
enter the result in the first space of Step 5, line 2. Be sure to answer
“Yes” to question 3 in Step 5.
!
CAUTION
Electing to include nontaxable
Clergy. The following instructions apply to ministers, members of
combat pay may increase or decrease
religious orders who have not taken a vow of poverty, and Christian
Science practitioners. If you are filing Schedule SE and the amount
your EIC. Figure the credit with and
on line 2 of that schedule includes an amount that was also reported
without your nontaxable combat pay on Form 1040, line 7:
before making the election.
1. Put “Clergy” on the dotted line next to Form 1040, line 65a.
Earned Income =
2. Determine how much of the amount on Form 1040, line 7,
was also reported on Schedule SE, line 2.
* The election cannot be made on the return of a taxpayer 3. Subtract that amount from the amount on Form 1040,
whose tax year ended before October 5, 2004, due to his
line 7. Enter the result in the first space of Step 5, line 2.
or her death.
4. Be sure to answer “Yes” to question 3 in Step 5.
Combat pay, Nontaxable. If you were a member of the U.S.
Armed Forces who served in a combat zone, certain pay is excluded
from your income. See Combat Zone Exclusion in Pub. 3. You can
elect to include this pay in your earned income when figuring the
EIC. The amount of your nontaxable combat pay should be shown
in Form(s) W-2, box 14, with code Q.
-43- Need more information or forms? See page 7.