My spouse and I recently submitted our 2006 statement. I am a US citizen living in Canada. We filed a joint return. My husband's income slightly exceeded the FEIE threshold (mine did not). Bottom line is that we have about $6100 in US "income," though this is handled by regular deductions, meaning our tax is zero. We did not use tax credits.
We have two children, both US citizens. I know about the additional child tax credit, but I checked the numbers manually and assumed we did not qualify. You need over $11000 to qualify. And we only have the two children, so no relief there.
Today, we received some forms from the IRS (a worksheet and form 8812) and a form letter saying we may qualify. One of the forms even has our $6100 income printed in the footer. While I'm still 95% sure we're getting nothing from this, I wanted to check a couple of assumptions. First, the instructions on the 1040 note that just one person applies for the tax credits. Form 8812 asks for the "Names shown on return" on the top of the form, but then requires just one social security number. Then, at the bottom of the Earned Income Chart on the back, it shows a calculation involving Line 7 on the 1040 (wages) minus the amounts on 2555 or 2555EZ. So, I have two questions:
1. I always assumed, and have read here, that people who use the FEIE cannot apply for the credit. However, the worksheet implies that it might be possible if you exceed the threshold. Which is correct?
2. Assuming it is possible, line 7 would clearly be our joint income, but is the subtracted amount the total of BOTH incomes or just the filer of this particular form? It seems odd to think that could be possible, but the form and instructions are not specific on this point.
Form 8812
Moderator: Mark T Serbinski CA CPA
Indeed the additional child tax credit could still be obtained if one used FEIE, so long as the wages exceeded thelimit, which in your case they did. It is based on joint information, so oncoe is combined.
As an aside, many in 2006 found that if one has wages exceeding FEIE limit, means one odes not use the regular method of calculating tax, such that one will owe US tax. The fact that the remaining income is less than ones deductions has no bearing, due to the anti-satcking provisions.
Did you not run into this problem?
As an aside, many in 2006 found that if one has wages exceeding FEIE limit, means one odes not use the regular method of calculating tax, such that one will owe US tax. The fact that the remaining income is less than ones deductions has no bearing, due to the anti-satcking provisions.
Did you not run into this problem?
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As I understand it, the stacking provisions apply after application of the standard deduction and personal exemption. I have seen numerous examples of these calculations on the Web -- am I mistaken?
So, regarding the additional tax credit, we would need to subtract both of our 2555 excluded incomes. Is that correct? That makes sense to me; I just can't understand why they would have sent us these forms.
So, regarding the additional tax credit, we would need to subtract both of our 2555 excluded incomes. Is that correct? That makes sense to me; I just can't understand why they would have sent us these forms.