Does a US citizen couple qualify for 2020 earned income credit with qualifying US citizen children if the whole family lived outside the US for MORE THAN half of the year? (They do not file form 2555).
Yes, because the IRS clearly states in this publication that To claim the EITC, you and your spouse (if filing jointly) must be U.S. citizens or resident aliens. So if you file using a 1040, they are eligible. They must have earned income to file though, either foreign or US earned income. Please read that publication for more information.
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DaveF1006, thank you so much for your professional answer.
IRS Publication 596 states rules for those with no qualifying children that "you must have lived in the US MORE THAN half the year", so was not sure and confused if MFJ WITH qualifying children must also live in the US for more than half the year.
Would you please clarify my understanding that US family with qualifying children with earned income (wages) who lived outside US the entire year would qualify for EIC. Thank you!
Here is the clarification for the residency requirement for claiming EIC with a qualifying child:
The following paragraphs clarify the residency test.
United States. This means the 50 states and the District of Columbia. It doesn't include Puerto Rico or U.S. possessions such as Guam. Homeless shelter.
Your home can be any location where you regularly live.
You don't need a traditional home. For example, if your child lived with you for more than half the year in one or more homeless shelters, your child meets the residency test.
Military personnel stationed outside the United States. U.S. military personnel stationed outside the United States on extended active duty are considered to live in the United States during that duty period for purposes of the EIC.
Extended active duty. Extended active duty means you are called or ordered to duty for an indefinite period or for a period of more than 90 days. Once you begin serving your extended active duty, you are still considered to have been on extended active duty even if you don't serve more than 90 days.
Birth or death of child. A child who was born or died in 2020 is treated as having lived with you for more than half of 2020 if your home was the child's home for more than half the time he or she was alive in 2020.
Temporary absences. Count time that you or your child is away from home on a temporary absence due to a special circumstance as time the child lived with you. Examples of a special circumstance include illness, school attendance, business, vacation, military service, and detention in a juvenile facility.
Kidnapped child. A kidnapped child is treated as living with you for more than half of the year if the child lived with you for more than half the part of the year before the date of the kidnapping or following the date of the child's return. The child must be presumed by law enforcement authorities to have been kidnapped by someone who isn't a member of your family or the child's family.
This treatment applies for all years until the child is returned. However, the last year this treatment can apply is the earlier of:
1. The year there is a determination that the child is dead, or
2. The year the child would have reached age 18. If your qualifying child has been kidnapped and meets these requirements, enter “KC,” instead of a number, on line 6 of Schedule EIC.
Please refer to the following link for additional information: