Help from specialists in EIC and Foreign Earned Compensation

[rkhan71]

Hi All,

Hope tax season is going well. Seems like not too many clients thus far, even though I do not have that many in the first place.

My question is if a married taxpayer - husband and wife resident aliens - husband works (with housing) 307 days in Afghanistan (no tax treaty I believe), earning about $19,000 - no W-2, I do not see this family eligible for EIC. The parents have 3 - 4 children under age 21 down to 14, have residence in USA - California, but whether the taxpayers qualify for EIC as wage earner where husband is out of country 307 days qualify for EIC. Or am I missing something and this is why I am going to the forum? Can someone direct me to specific language of why or why not please?

I am of the opinion that they may qualify for Additional Child Tax Credit, but not EIC. Any thoughts? Not totally clear in Pub 596.

Thanks in advance

Ray

[TaxGuyBill]

My first thought is that they do qualify. Which of the 10 rules do you think that they do NOT qualify for?

http://www.irs.gov/publications/p596/ar02.html

HOWEVER, that is at the near the very peak of the EIC. It is prime area for tax fraud, especially with no W-2. Get some type of documentation of their income. It can be paystubs, bank statements, etc.

[rkhan71]

Yes - have to check fraud

He does have something from human resources which shows the income for 2013 (signed, sealed and delivered if you will). My only concern is that he is out of the country and not in US; that he should be in the US for some minimum period of time for EIC purpose; wife is though.

Not all necessarily clear though.

[TaxGuyBill]

He only needs to be qualified as a "resident" for the entire year and have a Social Security number. Having a Greencard would be easiest, but he MIGHT qualify for the Substantial Presence Test. Even if he doesn't qualify directly, his wife probably qualifies as a resident, they can elect to treat him as a resident.

http://www.irs.gov/publications/p596/ar02.html#en_US_2013_publink1000297446

http://www.irs.gov/publications/p596/ar02.html#en_US_2013_publink1000297438

http://www.irs.gov/publications/p519/ch01.html#en_US_2013_publink1000222116

The children need to have been in the United States for at least half of the year.

http://www.irs.gov/publications/p596/ar02.html#en_US_2013_publink1000298590

[rkhan71]

Physical Presence Test

Hi TaxGuyBill,

I was having uncomfortable thoughts on the "resident" for entire year part of husband who is earning the money. My read is that since he is not in the USA more than 2 months out of the year, that makes him and EIC potentially ineligible. He does have a green card, but spent 307 days overseas (Afghanistan). I not comfortable with his being in the USA enough for EIC eligibility.

If anyone else has any thoughts, it would be appreciated.

Thanks for continuous comments; it is appreciated.

Ray

[TaxGuyBill]

Hi TaxGuyBill,

I was having uncomfortable thoughts on the "resident" for entire year part of husband who is earning the money. My read is that since he is not in the USA more than 2 months out of the year, that makes him and EIC potentially ineligible. He does have a green card, but spent 307 days overseas (Afghanistan). I not comfortable with his being in the USA enough for EIC eligibility.

If anyone else has any thoughts, it would be appreciated.

Thanks for continuous comments; it is appreciated.

Ray

Does the whole family have Social Security numbers? If not, no EIC. Read this link:

http://www.irs.gov/publications/p596/ar02.html#en_US_2013_publink1000297446

He has a Green Card. That makes him a resident. Read this link:

http://www.irs.gov/publications/p519/ch01.html#en_US_2013_publink1000222120

[rkhan71]

Yes

The family does have SSN's and of course he has a green card. I will check more on the pubs' readings.

Thanks.