US Resident Living Abroad

[Yardley CPA]

I have a client who lives in Honduras. She lives with her husband (who is a resident of Honduras) and 4 children (all US Residents). Her only salary income is foreign income from the school she works at in Honduras. She has a small amount of dividend and interest from US sources. In calculating her return (including form 2555) it indicates she is entitled to the Making Work Pay of $400 and Additional Child Tax Credit of $2,103.

I don't believe she is entitled to the Making Work Pay, but is she entitled to the Additional Child Tax Credit?

Thanks!

[Pacun]

Imagine for a second that she was in honduras for 360 days and that she worked for a US company and got a W-2. She only worked in Honduras, will she qualify for the make work credit? I would say yes. Now, I don't see the difference, since she is a US citizen who works and she must report world wide income. I would say that TP qualifies for $400 credit.

[David1980]

I assume the client is a US citizen and the 4 dependents have green cards?

[Yardley CPA]

I assume the client is a US citizen and the 4 dependents have green cards?

That's correct. Client is a US Resident and the children have green cards. Husband is a resident of Honduras.

[kcjenkins]

I believe she's entitled to both. There is nothing in the code that disqualifies her, that I see.

[Yardley CPA]

I believe she's entitled to both. There is nothing in the code that disqualifies her, that I see.

Thanks to everyone for responding. Her 2555 eliminates all of her income as her return is showing taxable income of zero. Her refund of $2,503 consists solely of the Making Work Pay amount of $400 and her Additional Child Tax Credit of $2,103.

[kcjenkins]

Our tax code sometimes leads to strange results, doesn't it?

[Yardley CPA]

Our tax code sometimes leads to strange results, doesn't it?

KC...my initial reaction was how could this be. But, after thinking about it, we are talking about the IRS and the Federal Government that comes up with these provisions. <_<