US Citizen living abroad - Not getting child tax credit

[Mayankkish]

My family and I are US citizens living in India for past 7-8 years. I have been using Turbotax premier all these years to file my US tax return online. The software automatically decides that I should take Foreign income exclusion. I just read somewhere that when we take Foreign tax exclusion, we aren’t eligible for Child Tax credit. However if we take Foreign Tax Credit instead, we get the child tax credit. Why does has the software not give me the option to take Foreign Tax credit ?

[ErnieS0]

TurboTax does give you the option to opt-out of the foreign earned income exclusion (FEIE) and instead claim a foreign tax credit or deduction.

FEIE and the credit are in two separate sections.

To claim a foreign tax credit or deduction, first tell TurboTax that you do NOT want to claim the FEIE in Foreign Income.

After you opt-out of FEIE:

1. Type "foreign tax credit" in Search in the upper right
2. Select "Jump to foreign tax credit"
3. Select Continue on Foreign taxes
4. Select None of these apply on Tell Us About Your Foreign Taxes
5. Select Continue on Foreign Taxes
6. Select Take a Credit on Do You Want the Deduction or the Credit?

[Mayankkish]

Thanks. I will try this today. 
Can you also please suggest if one is not eligible for Dependent Child Tax credit if he lived outside the US with kids for the entire year ?

Also, when should one go for FEIE versus Foreign Tax credit ?

[DMarkM1]

As long as you and your child meet the other qualifications (see extract below), you could claim a child tax credit.  Not having a home in the US determines if the credit if fully refundable or not.  Here is an IRS FAQ with more information.

Since you did not have a main home in the US for at least 1/2 the year, your child tax credit is not fully refundable.  The maximum child tax credit is either $3600 (child age 6 or under) or $3000 (over age 6 to age 17) but that amount is further limited by your tax liability.  If your tax liability is zero then your non-refundable credit will be zero for example.

There is also a refundable additional child tax credit.  However, when your Child Tax Credit is more than your tax liability, your ability to claim any Additional Child Tax Credit more than your tax liability is limited in two ways.

• You must have earned income in 2021. The Additional Child Tax Credit increases when your earned income is higher.
• The Additional Child Tax Credit cannot be more than $1,400 per qualifying child.

TurboTax will calculate these credits based on your entries.

If you have child under age 18 who has a valid social security number and is a US citizen and meets the criteria below you would be eligible for the Child Tax Credit.

1. The individual is the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, or half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
2. The individual did not provide more than one-half of his or her own support during 2021.
3. The individual lived with the taxpayer for more than one-half of tax year 2021. For exceptions to this requirement, see Residency Test in IRS Publication 501, Dependents, Standard Deduction, and Filing Information.
4. The individual is properly claimed as the taxpayer’s dependent. For more information about how to properly claim an individual as a dependent, see IRS Publication 501, Dependents, Standard Deduction, and Filing Information PDF.
5. The individual does not file a joint return with the individual’s spouse for tax year 2021 or files it only to claim a refund of withheld income tax or estimated tax paid.
6. The individual was a U.S. citizen, U.S. national, or U.S. resident alien. For more information on this condition, see IRS Publication 519, U.S. Tax Guide for Aliens PDF.

Next,  you would choose the Foreign Tax Credit over the Foreign Income Exclusion when you live in a high tax area.  The top tax rate in the US is 37%.  So if the tax rate in India is over that then the tax credit would be beneficial.  The best way to know for sure is to try both ways to see which is more beneficial in your situation.

[Mayankkish]

Thanks for your prompt reply. I have one last question (hopefully:)). Based on the eligibility criteria, I have a qualifying child. Between July and Dec I got advance child tax credit payments from IRS for half of the total amount. I was reading somewhere that if I didn’t live in the US for 6 months or more in 2021, I ain’t eligible for this and should refund this money back to IRS. Is that true ? 

[DianeW777]

It depends. Review the answers to your questions to be sure you answered them the way you should. If I understand your first post, you and your children are US citizens. The question that is part of the qualifiers is as follows:

• 1. 'Was the child a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico?'
  • You would be able to answer 'Yes' to this question, then move forward. See page 18, Form 1040 instructions for qualifying dependents
• Continue to Step 3 for the same question when qualifying for the Child Tax Credit.

@Mayankkish

[Jalylah315]

Hi my name is [PII removed]. I filled my taxes thru turbo tax. I accidently put my wrong account number to my back for my taxes to be deposited into that account. My social security number is [removed]. D.O.B is [PII removed]

The amount that's is supposed to go on my back is  $1,400. 

My correct routing number is [removed]

My account number is [phone number removed]

Could you please help me correct this mistake that I made? I had to of pushed a setting number somewhere when filling it out. Hope to hear back from you soon. My email address is [email address removed]. Thank you so much for your time. Have a great day 

[TeresaM]

If your return has been accepted, it is too late to change your bank account for direct deposit or any other tax information while the IRS is processing the return.
 

• If the information you entered is for a closed or invalid account, the bank will not accept it and the IRS will automatically mail you a refund check.
• If the information you entered is someone else's account, most banks will not deposit tax refunds into accounts where names do not match up.

The best way for you to track your federal refund is to track your refund at the IRS  Where's My Refund site. You'll need your Social Security number or ITIN, filing status, and the exact amount of your refund to check your status.

If your recently filed return is in pending status, wait until it is either accepted or rejected.

• If rejected, you can update your account and any issues that caused the rejection.   Open your return in TurboTax and go through the File section again to update your bank account before re-submitting your return.
• If accepted, you will get your refund check in the mail.