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Financial Planning / Tax Strategies
|Subject: Getting a refund without paying taxes||Date: 2/10/2002 10:19 AM|
|Author: JPLenny||Number: 58686 of 120460|
Ok I just did my taxes and I'm getting a refund. No big deal, right? It's not like other people don't get a refund.
The difference is that I do not have taxes withheld from my employer in the US, since I am able to claim the foreign earned income exclusion (form 2555). In the past at the end of the year, I never paid taxes or got anything back. It was just a matter of doing the paperwork to file every year.
Well, this year I am getting a $546 refund, even though I did not send one penny to the IRS this year. It seems that I am getting a child tax credit. Reading the IRS and TurboTax documentation, "This credit is refundable, meaning that it is treated the same as income taxes withheld and is refunded to you if you have no tax liability."
OK, this sounds too weird to be true, but according TurboTax and everything I am reading, I am getting a refund. I am still doing some checking, since this seems to strange to be true. The 8812 (Additional Child Tax Credit) Form and worksheet does take the 2555 foreign earned income exclusion into account for some of the caculations, so I am guessing that the IRS knew this would happen.
Using the 2555 form I already get up to a $78,000 income exclusion, along with partial housing cost deduction from the IRS. This drops my taxable earned income to almost nothing. Once you factor in the standard deduction and such, I ended up owing no taxes.
This time they are trying to give me money when I didn't have anything withheld. Does anyone else find this strange? Did TurboTax really screw this up and I am missing something? Is the IRS really going to send me a check for $546 even though I didn't pay any taxes and earn a good salary overseas.
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