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Old 03-13-2017, 08:18 PM
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Child Tax Credit eligibility

I live in Japan, and my income is not high enough to be subject to US tax on overseas income (all exempted using 2555). However, I also took early withdrawals from my retirement fund and have a 1099-R showing $16,125 of taxable income from that.

Because I live with my 15-year-old daughter (and she does hold a US passport), I believe that this should make me eligible for the Child Tax Credit, but having entered my info in an online tax site, I'm finding that the site is not giving me the credit.

My understanding was that, if I had a certain amount of taxable income, including withdrawals from my retirement account (which can't be exempted by the 2555), I would be eligible for the Child Tax Credit. Two years ago I received the CTC. Last year I didn't, because, although I took money from my retirement fund, much of it was not categorized as taxable income.

Am I actually not eligible for the credit, or have I entered something incorrectly? Can anyone tell me how much taxable income I need to have in order to be eligible for the CTC?



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Old 03-14-2017, 05:19 AM
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My understanding was that, if I had a certain amount of taxable income, including withdrawals from my retirement account (which can't be exempted by the 2555), I would be eligible for the Child Tax Credit. Two years ago I received the CTC. Last year I didn't, because, although I took money from my retirement fund, much of it was not categorized as taxable income.==========> The refundable credit cannot be received if the earnings are excluded using the Foreign
Earned Income Exclusion.however, it is possible to claim the FEIE on only one of the spouse?s earnings, thereby, making the other spouse?s earnings eligible for the additional child tax credit. (This spouse can additionally utilize the foreign tax credit to reduce US taxes due).



Am I actually not eligible for the credit, or have I entered something incorrectly? Can anyone tell me how much taxable income I need to have in order to be eligible for the CTC?====> As your modified adjusted gross income increases, the child tax credit begins to phase out. You must reduce the child tax credit If the mount listed on Form 1040, line 46 is less than the credit. If these amounts are zero, you cannot take th he credit because there is no tax to reduce.
The credit is reduced $50 for every $1k or portion of $1k-- that your modified AGI is more than:$110k if married filing jointly
$55kif married filing separatel
For 2016, the Child Tax Credit is at least partially refundable if you had an earned income of more than $3k you may follow the instructions here by visiting the website here. https://www.efile.com/do-i-qualify-f...o-is-eligible/



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Old 03-14-2017, 05:45 AM
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Quote:
Originally Posted by Wnhough View Post
The refundable credit cannot be received if the earnings are excluded using the Foreign
Earned Income Exclusion.however, it is possible to claim the FEIE on only one of the spouse?s earnings, thereby, making the other spouse?s earnings eligible for the additional child tax credit. (This spouse can additionally utilize the foreign tax credit to reduce US taxes due).
But the taxable income from the retirement fund IN THE US is not excluded. Sorry, I didn't spell out that it's a US-based retirement fund. I formerly worked for a military contractor on a US base here in Japan.

According to the efile test at the link you provided, the child is eligible. But the test doesn't ask about income.

Again, the income that I CAN'T exclude on the 2555 is $16,125.

Form 1040 line 46? "Excess advance premium tax credit repayment"? That doesn't sound right.



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Old 03-14-2017, 06:48 AM
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But the taxable income from the retirement fund IN THE US is not excluded. Sorry, I didn't spell out that it's a US-based retirement fund. I formerly worked for a military contractor on a US base here in Japan.=====>>No; income from the retirement fund IN THE US is not excluded on form 2555 since it is not (foreign )earned income uNLESSS Certain disability benefits received before you reach minimum retirement age .

According to the efile test at the link you provided, the child is eligible. But the test doesn't ask about income.Again, the income that I CAN'T exclude on the 2555 is $16,125.=====> Since you have an early withdrawal penalty being under the age of 59 1/2 at the time of the early withdrawal, then the penalty is 10% of the amount withdrawn and is entered on the tax return as a tax liability. If the total tax payments are greater than the total tax liabilities you will get a refund for the overpayment. In most cases, the CTC is nonrefundable, meaning if your credit is bigger than your tax liability, your tax bill is just reduced to zero. Any remaining unused credit is lost.




Form 1040 line 46? "Excess advance premium tax credit repayment"? That doesn't sound right.==>>>Sorry my bad misinformed.



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Old 03-14-2017, 07:58 AM
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The tax service I'm using is showing a refund of most of the withheld penalty from the early withdrawal.

But two years ago I was able to get the CTC based on the amount of taxable income that I withdrew from this retirement account. Has something changed? Are you saying there's no way I could get the CTC in a situation where my only taxable income is from my retirement account, regardless of the amount?



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Old 03-14-2017, 01:36 PM
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Originally Posted by tokyoite1965 View Post
The tax service I'm using is showing a refund of most of the withheld penalty from the early withdrawal.

But two years ago I was able to get the CTC based on the amount of taxable income that I withdrew from this retirement account. Has something changed? Are you saying there's no way I could get the CTC in a situation where my only taxable income is from my retirement account, regardless of the amount?
sorry i am not exactly sure what your situation is so i could give you only my guess i guess you need to contact the tax pro doing your taxes



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