Couple with two children under 17 are bona fide residents of France. He makes $85,000 US and she makes $10,000. I entrered their incomes and then excluded his income on Form 2555 and noticed that they got a making work pay credit and an additional child tax credit and had a zero tax. Is it okay to exclude his income and not hers and therby get them a refund from the two credits?
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US Earned Income?
Did they both live and work in the US?"I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur Godfrey -
No US Earned Income
All earned income is from France. I know this precludes EIC but my software seems to allow both child tax credit and making work pay credit.Comment
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I know they get the making work pay credit and don't see why the additional child credit would be any different -- there is nothing on the form or worksheet that says excluded income doesn't count -- in fact the opposite, as you must add excluded income back into AGI to figure the regular child credit to begin with.Comment
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All foreign earned income? Her's too?
If all is earned from France, then there will be no making work pay credit and probably no refundable child tax credit because all the earned income will be on the 2555, zero-ing the earned income right out.Originally posted by Kram BergGold View Post
If her income is not on the 2555 because it is US income, that is why you are getting the credits. Be sure to add his income back in for Modified AGI regarding child tax credit.
I'm sure to stand corrected, as I will see when I get back next week, but I studied a couple of different scenerios with my own clients, and looked up the pub, and that is what I concluded."I am proud to pay taxes in the United States. The only thing is I could be just as proud for half the money." Arthur GodfreyComment
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My point
As the spouse only made $10,000 my thought was to exclude his income on Form 2555 and not exclude hers. The tax on $10,000 is zero and then it appears they get the credits. This seems to good to be true.Comment
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I chose not to exclude one of my ex-pat clients' income for exactly this reason. The IRS has paid the refund, at least for now.Comment
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Excluding Foreign Earned Income is an election.Comment
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That is exactly right. Excluding might produce zero tax, but not excluding may produce a tax and the offsetting and refundable credits. Go figure.Originally posted by Davc View PostComment
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