Keith R. and Christine M. Vogt - Page 8

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          credit is not available for taxpayers with income in excess of              
               Whereas the credit was once limited to taxpayers who earned            
          less than $11,610, that limitation has since been raised.  Rev.             
          Proc. 2001-13, sec. 3, 2001-1 C.B. 337, 339.  For tax years                 
          beginning in 2001, the “threshold phaseout amount” for a taxpayer           
          with two dependents is $13,090.  Id.  Taxpayers who have an                 
          adjusted gross income of more than $13,090 in the taxable year              
          may only claim a portion of the earned income credit.  The                  
          portion a taxpayer may claim is found in the tables published in            
          the instructions for the Form 1040 series.  Furthermore, a                  
          taxpayer with two dependents whose adjusted gross income equals             
          $32,121 has reached the “completed phaseout amount”, and the                
          taxpayer may not claim the earned income credit.  Id.                       
               Because the payments to Mr. Vogt from IHSS constituted gross           
          income, petitioners earned in excess of $13,090 during 2001.                
          Therefore, petitioners have reached the “threshold phaseout                 
          amount” and are only eligible to claim a portion of the earned              
          income credit for 2001.  They are not, however, precluded from              
          claiming the entire credit because they have two qualifying                 
          children and their adjusted gross income was less than $32,121              
          for the tax year 2001.  Petitioners, therefore, are entitled to a           
          portion of the earned income credit on their 2001 tax return, as            
          determined by the instructions in the Form 1040 series.                     

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