The taxpayer's Earned Income is calculated based on the IRS specification, which is the total amount of wages, salaries, tips, etc. minus the following:

• Taxable scholarship or fellowship grant not reported on a Form W-2.
• Amount paid to an inmate in a penal institution for work
• Amount received as a pension or annuity from a non qualified deferred compensation plan or a nongovernmental section 457 plan. This amount may be shown in box 11 of Form W-2. If the taxpayer received such an amount but box 11 is blank, contact the employer for the amount received as a pension or annuity.

Earned Income Specification
Under rules that are new for 2005, the Earned Income must be less than:

• $35,263 ($37,263 for married filing jointly) if the taxpayer has more than one qualifying child,
• $31,030 ($33,030 for married filing jointly) if the taxpayer has one qualifying child, or
• $11,750 ($13,750 for married filing jointly) if the taxpayer does not have a qualifying child.

If the Earned Income does not meet the above specification, the taxpayer cannot claim the EIC.