Chapter 20: The child tax credit, take it, leave it and how to take it

See the following Facebook discussion.

Kate How do you get the child credit?
Like · Reply · 18 hrs

Heitor

Heitor David You need to have income from work, it has to be
within certain limits, your child has to be a US citizen under age 17,
and you can’t use the foreign earned income exclusion. Even without the
exclusion, if you pay more income tax in your country of resi…See More
Like · Reply · 17 hrs

Kate

Kate What is the foreign income tax exclusion?

Like · Reply · 17 hrs
Heitor David

Heitor The foreign earned income exclusion is an exemption
of up to about $100,000 on income earned from work outside the US. Most
Americans abroad use this exemption to eliminate US taxable income and
thus pay no US tax. It’s claimed with form 2555.

The for…See More
Like · Reply · 17 hrs

Kate

Kate So is it more advantageous to do the second?

Like · Reply · 17 hrs
David

David If you wish to claim the refundable child credit you will
not want to elect to claim the foreign earned income exclusion. If you
have previously elected to claim the foreign earned income exclusion,
but revoke this election you cannot claim the foreign earned income
exclusion for the next 5 years.

Like · Reply · 1 · 16 hrs
Kate

Kate I am not sure I’ve properly filed income taxes the last
6 years I’ve lived here. So I suppose I’ll have to call the irs to find
out

Like · Reply · 16 hrs
Heitor

Heitor If you pay less tax to your country of residence than
the US tax, it’s better to use the exclusion, because the credit
wouldn’t fully eliminate the US tax. If you pay more tax to your country
of residence, it’s better to use the credit. But for many people it
doesn’t matter either way.

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