Line 8a: Earned Income Credit
- You are eligible to claim the Earned Income Credit if:
- Your Adjusted Gross Income on Line 4 is less than $11,490 (for Single people) or less than $12,490 (for Married people).
- You and your spouse (if married) cannot be claimed as a dependent by someone else.
- You and your spouse (if married) are between the ages of 25 and 64.
- Use the worksheet in the Instructions for Form 1040-EZ, pages 14 through 16, to calculate your Earned Income Credit.
- If you want the IRS to calculate your Earned Income Credit for you, enter the word "EIC" on Line 8a.
- Otherwise, use your "earned income" figure from the worksheet on page 15 to look up your tax credit amount on the EIC table on page 17.
- Or use the IRS' new EIC calculator
- Put the EIC figure on Line 8a.
Line 8b: Nontaxable Combat Pay Election
- This item is new for 2004.
- If you received combat pay, your non-taxable combat pay is shown on your W-2, Box 14, code Q. There will be a dollar amount next to the "Q."
- You can choose to include your combat pay for Earned Income Credit purposes, or you may choose to leave it out.
- Calculate your EIC credit amount both ways. First calculate the credit using only your "earned income" from the worksheet, and then calculate it again using your "earned income" plus your combat pay. Take whichever credit amount is higher.
- If you decide to include your combat pay, enter the amount coded as "Q" on your W-2 on Line 8b. If you are not including your combat for EIC, leave Line 8b blank.
Line 9: Total Payments
- Add the figures from Lines 7 and 8a. Put the total figure on Line 9.
- This represents the total amount of money paid in towards your income tax.
Line 10: Tax
- Look at the figure on Line 6. This is your taxable income.
- Use this figure to look up the amount of tax using the tax tables in the instruction booklet, beginning on page 24.
- Put the tax figure on Line 10.
Lines 11a or 12: Refund or Amount Due
- Using a calculator, enter the figure on Line 9 (your total payments), and subtract the figure on Line 10 (your tax).
- Look at the result.
- If the number is positive, you have a refund. Enter this figure on Line 11a.
- If the number is negative, you owe additional tax. Enter this figure on Line 12.
- If you owe additional tax, that means not enough money was withheld from your paycheck to cover your income tax. Fill out a new W-4 (Adobe PDF file) to increase your tax withholding. Trying claiming either zero or one exemptions on your new W-4.
Lines 11b, 11c, and 11d: Direct Deposit
- If you are getting a refund, the amount on Line 10 can be deposited directly to your checking or savings account. Getting direct deposit is faster and more secure than getting a refund check mailed to you.
- Get out your checkbook, and look at one of your checks. In the bottom left-hand corner you will see lots of numbers. The first series of numbers should be a 9-digit bank code. This is called the Routing Number. Copy your routing number to Line 11b.
- Next, check the appropriate box on Line 11c, depending on whether you want your refund deposited into a checking or savings account.
- Next, find your account number on your check. Enter your account number on Line 11d.
- Double check – even triple check! – your bank numbers. If you are not sure, call your bank and ask them.
