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A question I get a lot is if low income US expats can qualify for the earned income credit. Lots of confusion going around. Here's the rundown:

Updated: 4 days ago

A question I get a lot is if low income US expats can qualify for the earned income credit. Lots of confusion going around. Here's the rundown:



The earned income credit can be worth up to $7,430 per year. The taxpayer(s) must have earned income (from a job or self employment). 



There is one important clause in the law: a requirement that the "individual’s principal place of abode is in the United States for more than one-half of such taxable year".



Simply, the taxpayer must be physically in the US for 183 days of the calendar year, in order to qualify. 



I'm asked a lot if students who are temporarily abroad for most of the year can still qualify for this credit. The answer is no. While their "domicile" may still be in the US, their principle place of abode was not. 



It's important to understand the difference between abode and domicile:



In general, your domicile is:


1) the place you intend to have as your permanent home


2) where your permanent home is located


3) the place you intend to return to after being away (as on vacation, business assignments, educational leave, or military assignment)



Your abode is your current, physical home where you actually physically live.



So, while students' domicile may still be in the US, their abode is not.



Interestingly, states like NY or NJ consider taxpayers to be residents if their domicile is in the state. So students can still file as residents in those states and claim credits made only for state residents. 



These states also have their own earned income credit, but an interesting caveat is that the taxpayer must qualify for the federal eared income credit in order to claim it. So this would not be possible to claim.

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