[pnx123]

Hi,
I have two questions.

A. Earned Income Credit for qualifying Child

1. I have L1 and came to US in August 2007. My family (wife and 2 kids aged 13 and 11) joined me in Oct 2007 on L2. Prior to August 2007, I was living in India with my family.

2. I will be filing the tax return as "Married filing jointly" and since my wife and kids do not have SSN, I will be applying for ITIN for them along with the tax return.

Below are the conditions from IRS site for determining qualifying child.
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A qualifying child for this credit is someone who meets the following criteria:
• Age - Was under age 17 at the end of 2007
• Relationship - Is your son, daughter, adopted child, stepchild or eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals
• Citizenship - Is a U.S. citizen, U.S. national or resident of the U.S.
• Support - Did not provide over half of his or her own support, and
• Lived with you - Must have lived with you for more than half of 2007 (note that some exceptions to this criteria exist)
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Am I eligible for Child Tax Credit based on the above. My only doubt is, in the form 1040 line 6, it asks "Number of months child lived with you in the United States during 2007". Since my child lived with me in US only for 3 months then she can not be considered "Qualifying child" where as if I go with the rules for qualifying child as above points (from IRS site) then the child is a qualifying child

B. Foreign Tax Credit

My second question is about Foreign Tax Credit. I earned total $34000 (appx.) in US. However, a part of this amount was paid to me in India in INR and I paid taxes on that amount in India and my company has given me a certificate stating that I was paid $9000 (appx.) in India and I paid $1500 tax in India. Can I claim this amount of $1500 as Foreign Tax Credit. How do I account this money in which line of which form.

[AtlantaTaxExpert]

IRS guidance on this issue is far from clear.

The latest indications are that the IRS will NOT grant dependency exemptions, ITINs or Child Tax Credit if the child was NEVER in the U.S. in 2007.

However, it is not clear as to HOW LONG the child must be in the U.S. So my advice is to claim the Child Tax Credit and see what happens.

You claim the Foreign Tax Credit using Form 1116. However, it would probably be better if you used Form 2555 (Foreign Income Exclusion) to exclude the income earned in India.