scenario

[jimenright]

Parents of two children divorced in 2011. Father remarries in 2011. Mother moves out of country with the children in April of 2011. Mother signs 8332 for both children. Father is obviously non custodial parent but provides all support. Father claims children as dependents but children do not live in US for more than 6 months. Children are US citizens and have ssn's. Are the children eligible for the Child tax credit?

I am confused by the rules I read.

[jimenright]

Confusion

Most of the confusion is because children have been living in another country for most of the year. Can they qualify for the child tax credit?

[taxea]

What do the regs say?

[Koss]

Child Tax Credit

In reviewing Pub. 17, I don't see a requirement that the child live in the US for more than half the year, with respect to the Child Tax Credit.

Maybe you're thinking of the Earned Income Credit.

Normally, the child has to live with the taxpayer for the Child Tax Credit. But that requirement is not applicable when you're doing a noncustodial parent with Form 8332.

The Child Tax Credit also requires that the child be a US citizen, national, or resident of the United States. But the operator is OR. A child can be a US citizen even if she didn't live in the US for one day during the year in question. And a child can be a resident of the US without being a citizen.

For EIC, the rules explicitly require that the taxpayer must live in the US for more than half the year. EIC also requires that the child live with the taxpayer. But this is not the case for the Child Tax Credit.

Your situation is unusual because it involves children living abroad and a Form 8332. But the basic rules are the same.

Take the 8332 out of the equation for a minute, and abstract away from that variable.

A married couple, with children under age 17, that has lived abroad for the entire year can claim the Child Tax Credit.

Your client should be okay with the credit.

BMK

[jimenright]

Thank you

a lot for your reply. Your answer agrees with my thoughts on the matter. The rules seem ambiguous to me. I know now that a least one other preparer agrees with me. I was not sure if a child not living in the US even though a citizen was an eligible child for the child tax credit.

[S T]

Thanks for this post as I might have a similar situation arising in the next month or so.

That is what makes this Board so valuable - Posters Sharing thoughts and knowledge.

Sandy

[jimenright]

backup

When reading the pub 17 requirements again on page 225, "QUALIFYING CHILD" item 4. It says: Lived with you for more than half of 2010. In my scenario, the children were out of the country living with their mother for more than half of 2011.

The father claims that the time out of the US is temporary and that they are being educated in their culture and will be returning to the US to live with him. I don't know whether or not this qualifies as a "temporary absence for special circumstances"

The 8332 allows the father to claim them as dependents but may not qualify them for the child tax credit.

I am back to being confused.

[jimenright]

update

TTB pg 3-15 and pg 3-16 situation #2 provide the answer. form 8332 works for dependency and child tax credit.

[taxea]

When reading the pub 17 requirements again on page 225, "QUALIFYING CHILD" item 4. It says: Lived with you for more than half of 2010. In my scenario, the children were out of the country living with their mother for more than half of 2011.

The father claims that the time out of the US is temporary and that they are being educated in their culture and will be returning to the US to live with him. I don't know whether or not this qualifies as a "temporary absence for special circumstances"

The 8332 allows the father to claim them as dependents but may not qualify them for the child tax credit.

I am back to being confused.

I would either run it by the hotline or follow the more than six months...how long are they going to be gone for their "education"....until they graduate college????? My opinion, iffy at best

[Koss]

Child Tax Credit

Your client can claim the child tax credit.

You are conflating the requirement to live in the US with the requirement to live with the taxpayer.

Neither of these two requirements is applicable in this case. But in order to see that, you have to recognize that they are two separate requirements.

Living in the US is simply not required for the child tax credit. Period. It does say the child must be a US citizen, national, OR a resident of the US. That has nothing to do with where the child or the taxpayer lives. Both the child and the taxpayer may live outside the US for the entire year, and the taxpayer can still claim the child tax credit.

The other requirement, that the child live with the taxpayer, is not applicable to a noncustodial parent who is claiming the child under the rules pertaining to Form 8332. The child tax credit goes with the exemption.

BMK

[Koss]

Hotline?!?

The IRS Practitioner Priority Hotline does not take general tax questions. They only handle inquiries related to a taxpayer's account, i.e., issues associated with a tax return that has already been filed.

As for calling the IRS on any other general telephone number... I never recommend that.

The IRS call centers often give out inaccurate information. And without anything in writing to back it up, you cannot rely on their information to avoid penalties.

See my post above, time stamped 6:57 AM. This case is crystal clear. There is no "lived with you for six months" requirement when you have an 8332. The taxpayer in this case is the noncustodial parent. If the child had lived with him for more than six months, he would be the custodial parent.

BMK

[jimenright]

Koss: You are correct.

I agree with your post and thank you for it. Sometimes in the evening after thinking about taxes all day, the mind begins to whirl and can't see the forest for the trees.

[abctax]

uncalled for....

What do the regs say?

That kind of snark is just not necessary.