Who Can Bob Claim as a Qualifying Child(Ren) for the Earned Income Credit?

Child Tax Credit & Foreign Earned Income Exclusion

Individuals who can claim a child as a dependent tin use Child Tax Credit (CTC) as long as the child meets additional conditions. The CTC provides credit upwardly to $2,000 per child under age of 17 at the end of the tax year with upwardly to $i,400 of it being refundable. It besides provides a non-refundable credit up to $500 per qualifying dependent who qualifies for the ODC (Credit for Other Dependents).

Conditions a child should see to authorize you for the CTC

1. The kid is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, one-half brother, half sister, or a descendant of any of them;
2. The child is nether age 17 at the terminate of the revenue enhancement yr;
3. The child did not provide over half of his or her own back up for the revenue enhancement yr;
4. The child lived with you lot for more than half of the tax year ;
5. You claimed the child as a dependent on your return;
6. The child does not file a joint return for the yr;
7. The child is a U.S. citizen, U.S. national, or U.Southward. resident alien.

How does the Child Revenue enhancement Credit piece of work?

To claim a CTC your modified adjusted gross income (AGI) should not be over 400,000 for married filing jointly, and not be over $200,000 for other filing statuses. In case the credit is more than taxes owed, you can get up to $ane,400 of the remainder as a refund or ACTC. ACTC stands for additional child tax credit.

How to merits Kid Tax Credit?

To claim Child Tax Credit or Credit for Other Dependents, you should meet the following requirements:

1. File Course 1040, Class 1040-SR, or Grade 1040-NR and include the proper noun and TIN of each dependent for whom you are claiming the CTC or ODC;
2. File Form 8862 if applicative;
3. Enter a timely issued TIN on your taxation return if filing jointly;
4. For each qualifying kid for whom you are claiming the CTC enter the required SSN for the child;
5. For each dependent for whom you are claiming the ODC, enter the timely issued TIN for the dependent.

The CTC and FEIE

If yous take a child under the historic period of 17 with a social security number, you may be eligible to receive up to $1,400 per eligible kid, even if you have fabricated no tax payments. However, in order to do then, you lot cannot too take advantage of the Strange Earned Income Exclusion (FEIE).

If you claimed the Foreign Earned Income Exclusion (FEIE) in the prior year, yous must revoke the exclusion for a period of v years following the year of revocation to claim the Boosted Child Revenue enhancement Credit (ACTC).

How do you lot know to revoke or non to revoke FEIE?

For the 5 years:

• You should live in a high-income revenue enhancement country;
• Yous should pay a high level of income tax to that foreign country;
• You lot should have little income from the Usa;
• You should work most of the time in the strange country;
• You must have earned income (passive income does not authorize for the ACTC);
• Recommended that kid(ren) remain nether 17 for the five years.

Pros:

• May benefit from receiving $1,400 per eligible kid.

Cons:

• Tin can't claim FEIE for the 5 succeeding tax years;
• You have fewer choices to avoid tax because you can't claim FEIE;
• Risky to revoke FEIE because it depends on unknowns like time to come income, tax, children, where yous live, etc.;
• May event in more tax due in future years than had you not revoked FEIE.

These are merely some of the factors to consider.  If you are non comfortable with the risks, then exercise not revoke.

Scenario analysis

If you believe your income may change in future years, speak with your tax advisor to run a projection so that you tin can make an educated determination. The more information you have about possible income changes (absolutely, this is not possible for many people) - the meliorate choice you can make.

Ines Zemelman, EA

Founder of TFX

lancemanswery1999.blogspot.com

Source: https://www.taxesforexpats.com/articles/financial-planning/child-tax-credit-foreign-earned-income-exclusion.html

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