Volunteer Income Tax Assistance (VITA) Certification Practice Test

Would earning income in a foreign country prevent a taxpayer from being eligible for the earned income credit (EIC)?

1. Yes

2. No

The correct answer is: No

Earning income in a foreign country does not prevent a taxpayer from being eligible for the Earned Income Credit (EIC). The EIC is primarily aimed at providing tax relief to individuals and families with low to moderate income, and it is based on earned income, which can include foreign earnings. To qualify for the EIC, a taxpayer must meet specific income qualifications and other eligibility criteria, such as filing status, number of qualifying children, and residency requirements. Under IRS rules, foreign income can be counted towards the earned income threshold, provided the taxpayer meets the overall qualifications. It's important to note that placing limitations on foreign income would not align with the EIC's purpose of helping those who earn income, regardless of where it is earned, as long as the taxpayer adheres to the general requirements outlined by the IRS for the credit. Therefore, foreign income does not disqualify a taxpayer from receiving the EIC.