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 Dear Tax Talk:
I wanted to know if I am not working (child support is my only income) and I have two children that qualify for EIC, or earned income credit, can I file my taxes?
-- Vickie
 Dear
Vickie,
The earned income credit is a form of wage subsidy for low-income workers. The credit is called the "earned income" credit because, to qualify, you must work and have earned income. If you are married and file a joint return, you meet this rule if at least one spouse works and has earned income.
If you are an employee, earned income includes all the taxable income you get from your employer. Child support is not income nor is it considered earned income. If you are unmarried and did not earn any income for the year, you are not eligible for the EIC.
Because you cannot claim the credit,
you may want to consider if the children would
qualify as the dependent of another for purposes
of claiming the credit. For example, if you lived
with your parents who work, they may be eligible
to claim the children as dependents and possibly
qualify for the EIC. Because you have no taxable
income and are not eligible for the credit, you
would not be required to file an income tax return.
The EIC is an area ripe for abuse by unscrupulous tax preparers who target low-income families who don't know any better. You should be cautious of any tax refund offer that sounds too good to be true. The IRS examines many EIC claims to verify that the refunds are appropriate.
A tax preparer who offers to get you a large refund and charges you a percentage of that refund is violating IRS rules that govern preparers. Some inappropriate tactics would be shifting the dependents to ineligible taxpayers or inventing earned income that doesn't exist.
If you are examined for an inappropriate claim, not only will you end up taking a hit for the back taxes, you'll also be out the fees you paid to the preparer and probably won't be able to find him or her.
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