Will being on medicaid/medical card affect the Earned Income Tax Credit?

1

Another anti-Obama rumor that is making the rounds of the internet. Either that or someone is confusing rules form 7 years ago again.

The rules required for EIC are that you have earned income (wages) *and* that you can claim the child as your dependent. The child cannot be supporting themselves. Welfare--which is what state aid falls under--is not counted as being provided by the chld to themselves, so it won't cause one to lose a child as a dependent.

Prior to 2005 (7 years ago!), the rule was that the parents had to provide more than half of the total support. Back then, the welfare could prevent the parent from claiming the child and thus the EIC.

Medicaid has always been a tax-free benefit which does not reduce the Earned Income Credit. Unless the law is changed, persons receiving Medicaid will not be disqualified from receiving the Earned Income Credit.

Have NOT heard any thing like that yet at this time either.

BUT the below does apply and has been applied in the past tax years for support purposes when need to use the worksheet that is in the instructions book of the Publication 501 for the support that is furnished for each separate taxpayer that does live in the home for this purpose.

You must provide more than half of the person's total support for the year.

Support provided by the state (welfare, food stamps, housing, etc.). Benefits provided by the state to a needy person generally are considered support provided by the state. However, payments based on the needs of the recipient will not be considered as used entirely for that person's support if it is shown that part of the payments were not used for that purpose.

Total Support

To figure if you provided more than half of a person's support, you must first determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.

Generally, the amount of an item of support is the amount of the expense incurred in providing that item. For lodging, the amount of support is the fair rental value of the lodging.

Expenses that are not directly related to any one member of a household, such as the cost of food for the household, must be divided among the members of the household.

Worksheet 1.Worksheet for Determining Support

And you will have to do this worksheet for each one that you think that you might be able to claim for the support test and make sure that you do have the needed necessary written proof in IF and when the IRS might decide that they would want you to VERIFY the information that you entered on your correctly completed income tax return during the tax filing season.

And you do have to sign the completed tax return where the below statement is included at bottom of the page of the 1040 tax form for your use at this time in your life.

Under penalties of perjury, I declare that I have examined this return, and to the best of my knowledge and belief, it is true, correct, and accurately lists all amounts and sources of income I received during the tax year.

Your signature Date Your occupation Spouse’s signature. Date Your occupation

If a joint return, both must sign.

Be sure that you do have very good detailed written records and a copy of the worksheet that you used to determine the amount of support that you and others paid for this purpose available in case the IRS should decide that they would want you to verify some of the information that you entered on your 1040 income tax return and printed a copy for your records and signed the other copy to send to the IRS for processing at that time in your life.

www.irs.gov website and use the search box for the Publication 501 for this purpose and time in your life.

http://www.irs.gov/publications/p501/index.html

http://www.irs.gov/publications/p501/ar02.html#en_...

Number 4 The child must not have provided more than half of his or her own support for the year.

Hope that you find the above enclosed information useful. 12/31/2012

what a nightmare!

if this were the case the tables for the EIC credit will be humongous and a bookkeeper's nightmare

and it would be especially expeditious if the tax programs could sort it out

and actually considering that the bill is so enormous and few people actually know all of its facets, it would not surprise me that this would be included

You heard wrong. "I was told" typically precedes a completely false assumption about 90% of the time. This is just another one of those 90%.

There is nothing in the PPACA that addresses or impacts the EIC at all.

I hadn't heard that, and it sounds VERY unlikely.