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Section 32(a)(2) limits the credit allowed. Section 32(b)
prescribes different credit and “phaseout” percentages used to
calculate the credit based on whether the eligible individual has
no qualifying children, one qualifying child, or two or more
qualifying children.
To be eligible to claim an earned income credit with respect
to a qualifying child, a taxpayer must establish, inter alia,
that the child bears a relationship to the taxpayer prescribed by
section 32(c)(3)(B), that the child meets the age requirements of
section 32(c)(3)(C), and that the child shares the same principal
place of abode as the taxpayer for more than one-half of the
taxable year as prescribed by section 32(c)(3)(A)(ii).
Petitioner may be an “eligible individual” able to claim an
earned income credit under section 32(c)(1)(A). The phaseout
percentages, however, must first be considered. The “completed
phaseout amount” is the amount of adjusted gross income (or if
greater, earned income) at or above which no credit is allowed.
See Rev. Proc. 2002-70, sec. 3.06, 2002-2 C.B. 845, 847. For
2003, a taxpayer may claim the earned income credit for two
qualifying children only if his adjusted gross income was less
than $33,692. Id. The phaseout amount is lower for a taxpayer
with one qualifying child or with no qualifying children. Id.
Petitioner’s adjusted gross income, taking into consideration the
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Last modified: November 10, 2007