# Earned Income Credit - 1/2 year rule?



## Wanderer5 (May 14, 2020)

Hello group. We typically spend less than half the year outside the US. Now we are sheltering in place, and won’t get back to the US in 2020. The EIC is a sizable part of our yearly income. Is there a waiver this year for the 1/2 year stipulation? Thanks!


----------



## Moulard (Feb 3, 2017)

I am not aware of any half year limit related to the EIC... except indirectly via the residency requirements in determining residency

One of the eligibility criteria is that you and you spouse must be a U.S. citizen or resident alien all year, a nonresident alien married to a U.S. citizen or a resident alien and filing a joint return.

If you are a US citizen then you are taxed on your global income regardless where you live, and therefore being outside the US is of no consequence.

If you are a greencard holder, then the same applies... so long as you do not file an I-407 you are considered a tax resident of the US even if you were unable to re-enter the country.

If you are a resident alien not on a green card, things can get a bit tricky. That said, just being outside the US for more than 183 days during the year does not automatically make you a non-resident for part of the year (and thus ineligible). 

Things to consider...

If you maintain a closer connection to the US, and were in the US for at least part of the year, then you would not automatically be considered a non-resident alien for part of the year simply because you had been outside the US for more than half the year.

If were a non-resident alien by virtue of being out out of the US for the full year, and your spouse is either a US citizen or a greencard holder you could consider an election to be treated a a resident by making an election under §6013(g) to be treated as a resident and file a joint return to meet that particular requirement.


----------



## Wanderer5 (May 14, 2020)

Thank you so much for the informative response, Moulard. We are both US citizens, and we may be out of the country for the entire year. The IRS site says, “You must have lived in the United States more than half of the year.“ This is also stated as a requirement for dependent children. I’m wondering if this is the case for us, as we continue to shelter in place.


----------



## Moulard (Feb 3, 2017)

I am sorry.. I latched on to the wrong part of what you said, and as a result didn't answer your question, and even worse made a wrong assumption on the wording of the legislation..


As it happens, the wording on the requirement is actually inconsistent across IRS documents.

In some documents (including the one I referred to to check my assumptions) it states actually states that the requirement is "for your main home to be in the United States for more than half the year." 

Which is what lead me to an assumption that the wording of the actual legislation was akin to "tax home" .. but it is not.

s.32(C) of the IRC, the requirement (among many) is ...



> such individual’s principal place of abode is in the United States for more than one-half of such taxable year


Setting aside the nebulous nature of the definition of abode .. I suspect it could easily be argued that if you are dwelling outside the US for more than half the year you would not meet the eligibility definition.

But going back to your original question.. "Is there a waiver...? or at least "will there be a waiver?"

Not that I am aware of, but then again, it is probably way too early to tell what things will be like by the time the 2020 filing season comes round. 

Personally, I would not rely on there being a waiver in place by then.


----------



## Wanderer5 (May 14, 2020)

*Bahamas NIB — Foreign Tax Credit?*

Hello,
Does anyone know if NIB qualifies as a tax on foreign income for the Foreign Tax Credit?
Thanks!


----------



## Wanderer5 (May 14, 2020)

You are certainly knowledgeable on this! Thanks for the references. I can see why you’re a 5 ⭐ member!

I won’t count on any EIC this year— makes it a good time to cash in on capital gains I guess... no need to stay under $3600. We’ll see how the rest of this crazy year plays out.

Thanks again, and be well!


----------



## Moulard (Feb 3, 2017)

Wanderer5 said:


> Hello,
> Does anyone know if NIB qualifies as a tax on foreign income for the Foreign Tax Credit?
> Thanks!


What is NIB?

For it to be an income tax it doesn't have to be called an income tax...

But there are a number of requirements that have to be met..

Take a look here..
https://www.irs.gov/pub/irs-pdf/p514.pdf


----------

