Earned Income Tax Credit: Rule 5
You cannot exclude foreign income if you want to claim the Earned Income Tax Credit. This means that you can’t file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Doing so would exclude any monies earned outside of the Unite States to be excluded from your gross income. Additionally, you can use these forms to omit money from foreign housing. It’s important to remember that U.S. Possessions are not classified as foreign countries, so income earned in these places are automatically added to your gross income.
The Earned Income Tax Credit is only available to U.S. Citizens or resident aliens. You must have citizenship or residency for the entire tax year, as those who have nonresident alien status for any portion of the year are not able to claim the EITC, unless they file jointly with their spouse. However, one spouse must be a U.S. citizen. In these circumstances, the couple is taxed on their entire international income.
You need to determine if your resident status allows you to claim the EITC. If you (or either person in a married couple) is not a resident or citizen of the United States, and you chose not to file a joint return if you’re married, you will not be eligible to claim the EITC.
Earned Income Tax Credit: Rule 3
In order to claim the Earned Income Tax Credit (EITC) as a married couple, you generally are required to file a joint return. Therefore, you can’t use the “married, filing separately” status if you want to claim the EITC.
In some cases, your spouse may have lived separately from you for the final six months of the year, which can qualify you to use the Head of Household filing status. In this situation, you may be eligible to claim the EITC. It’s important that your spouse was not occupying your home at any point during the last six months of the tax year.
For more information on how to qualify for Head of Household filing status, contact your tax preparer or financial assistant, who can also point you in the right direction for determining your EITC eligibility.