For more than half of 2008, taxpayer shares U.S. home with girlfriend who is non-resident alien, they are engaged to be married. In the latter part of the year, girlfriend travels overseas to her hometown, and while there gives birth to their child in December 2008, and remains there with child through the end of the year.
Is the child (U.S. citizen) considered to have resided with Dad during the last few weeks of 2008 after she was born, since being overseas would be considered a temporary absence from his household?
Do events in 2009 (visits, marriage, return travel) have an impact on the situation in 2008?
I think it boils down to whether this was a temporary absence.
If mother intended it to be, and intended to move back with father as soon as child could travel and, in fact, did move back with father soon after, I would think that is a temporary absence.
But if mother stays for a long time, long enough to indicate she did not intend the absence to be temporary, she and not he gets to claim their child unless she releases dependency exemption to him on an 8332.
Thanx, using that form would certainly help document that no one else is claiming Child Tax Credit (CTC) or dependency.
Since Mom is not "a taxpayer"[*], I think the child is already a dependent of Dad based on being a qualifying relative (Dad provides over half of support for them both in 2008). Child now has social security number available and Dad wants CTC and Head of Household, if available.
[*] non-resident alien, probably not required to file, but Mom's exact tax status is not known with certainty
This is SSN and not ITIN, right? Is child a US Citizen?
Child must be a US Citizen or resident, or resident of Canada or Mexico.
Nothing you told us says child ever returned to the US and to dad's house. If child did not live with dad, except for temporary absense, more than half the child's year, there is no HoH.
CTC is pretty much linked to dependency exemption but with NRA mom, could fail to meet dependency test yet still meet CTC test, which would then call out Form 8901 to claim CTC.
I think we need to have two columns. Column one says that the unmarried mother relocated overseas permanently. Column two says she traveled overseas to be with her parents for the birth. It was temporary. She did not change her US domicile.
Column Two: This is no different than if the child was born in the US to unmarried parents. The baby is the QC of both parents. The parents can elect who claims the QC in 2008 with all of the other tax benefits that go with having a QC. Normal tie-breaking would apply if they could not agree.
Column One: We have a child of never married parents who are not living together when the child is born. We look to the special rule that applies to divorced, separated or never married parents. The unmarried mother is the custodial parent. As such the child becomes her QC. If she has no tax filing requirement and does not file a tax return to obtain a tax benefit other than a refund of all withheld taxes, then the child will not be considered her QC. This means the noncustodial parent can treat the child as a QR if all the QR tests are met.
For a QR under these circumstances, we must look at the special rule that exists for children of never married parents. This rule says that the noncustodial parent does not have to provide more than half the support. It says that both parents must have provided over half the support and it says that the custodial parent must provide the written release. So, as long as the child is a US citizen with a social security number and the mother provides the written release, the father can claim the dependency exemption and the CTC. The father can not claim any of the other tax benefits as the child is not a QC.
After I posted this reply, I realized there was a hidden assumption for Column Two. I assumed that the child was a US citizen even if born to a foreign parent in a foreign country.
That's the gist of my question: given that the child was born overseas a few weeks before the end of the tax year, is that entire time considered a temporary absence? If so, rules for children born during the year apply.
Seems there are two issues: intent during the last two weeks of the year, and subsequent events that either support or do not support the intent.
As an aside, that's the one that goes away starting with 2009 tax year, IIRC.
You say the child stayed outside of the US for the first 3 plus months of 2009 as well. That's a mighty long time for a temporary absence unless there were medical conditions or the like.
As far as HoH, it relies on the father paying more than half the costs of the residence lived in by the child and the father for most of the year (the remainder of the year following birth.)
For dependency, a QR need not live with parent. But for HoH taxpayer and dependent must share the same residence for most of the year (the child's year in this case) except for temp absence. How much of that shared housing costs did father pay? The US Home or the foreign home? I have more trouble accepting HoH in this case.
While the mother did not have US income, she was resident in the US at the time of birth and probably qualifies under the Substantial Presence Test as a resident. That is, unless her visa specifically deems her as a non-resident (which some but not all do. Example, students.) As such, she would be obligated to file a resident tax return (1040 and its ilk) reporting her world-wide income, not just her US income.
How familiar are you with resident/non-resident returns and tax treaties?
I'm not an expert, but I think I know the basics. But the mother is not my client, I've never communicated with her. She was overseas when the child was born. Even if she is a U.S. resident for 2008 tax purposes, she may not have had enough income from any source to be required to file in 2008.
This seems to be just one of several areas in the tax system where you need to know something about someone else's situation (AGI, for example, or any number of items about a spouse's MFS return), but there is no independent way to obtain or verify the information. It seems all a preparer can do is document what he's told and move forward.
Yes, I think you've exactly nailed it down. Pub 501 says,
"Temporary absences. Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: * Illness, * Education, * Business, * Vacation, or * Military service."
No mention of duration or intent. The client tells me they were engaged to be married in 2008, he has made multiple trips overseas to visit mother and child (he showed me photos and birth announcement in the overseas local newspaper), he actually got married in 2009, and he also tells me she is returning in the next few weeks and they plan to buy a house and she plans to get a green card.
A conservative approach would be to go the QR route and get a release form 8332, although I'm still not sure about the mother's tax ID -- would she need to get an ITIN just to file this form, or could the custodial parent tax ID be left blank (instructions are silent on this)?
But I'm thinking it's not unreasonable to go the QC/temporary absence route, after all the HOH status carries significant additional tax savings. I explained to the client that it might be questioned by tax authorities, he had no qualms about that at all.
As a paid preparer, should I use form 8275 (probably overkill, since "the IRS had not issued a definition for taking a position", according to one tax research service on the use of this form). California has an e-file only version of a HOH questionnaire, but since it will be an amended return, I suppose I could generate a paper version of the form and attach that. In retrospect, it probably would have been better to file an extension and wait for the SSN for the child, so the original returns could be e-filed, but too late now.
Posted below are the Regulations from Section 2 where temporary absences are discussed. (c)(1) is the relevant section for your situation. (c)(2) deals with parents. Please note the part that says "Such absence will not prevent the taxpayer from being considered as maintaining a household if (i) it is reasonable to assume that the taxpayer or such other person will return to the household, and (ii) the taxpayer continues to maintain such household or a substantially equivalent household in anticipation of such return."
The statement is quite clear that as long as the father held a reasonable assumption that his child would return to his household and he maintained that household in preparation of the child's return, you have a QC.
I would file an amended return using HOH as the filing status with the child as the QC if the father meets the above two rules.
================================================================ (c) Household. (1) In order for a taxpayer to be considered as maintaining a household by reason of any individual described in paragraph (a)(1) or (b)(3) of this section, the household must actually constitute the home of the taxpayer for his taxable year. A physical change in the location of such home will not prevent a taxpayer from qualifying as a head of a household. Such home must also constitute the principal place of abode of at least one of the persons specified in such paragraph (a)(1) or (b)(3) of this section. It is not sufficient that the taxpayer maintain the household without being its occupant. The taxpayer and such other person must occupy the household for the entire taxable year of the taxpayer. However, the fact that such other person is born or dies within the taxable year will not prevent the taxpayer from qualifying as a head of household if the household constitutes the principal place of abode of such other person for the remaining or preceding part of such taxable year. The taxpayer and such other person will be considered as occupying the household for such entire taxable year notwithstanding temporary absences from the household due to special circumstances. A nonpermanent failure to occupy the common abode by reason of illness, education, business, vacation, military service, or a custody agreement under which a child or stepchild is absent for less than 6 months in the taxable year of the taxpayer, shall be considered temporary absence due to special circumstances. Such absence will not prevent the taxpayer from being considered as maintaining a household if (i) it is reasonable to assume that the taxpayer or such other person will return to the household, and (ii) the taxpayer continues to maintain such household or a substantially equivalent household in anticipation of such return.
(2) In order for a taxpayer to be considered as maintaining a household by reason of any individual described in paragraph (b)(4) of this section, the household must actually constitute the principal place of abode of the taxpayer's dependent father or mother, or both of them. It is not, however, necessary for the purposes of such subparagraph for the taxpayer also to reside in such place of abode. A physical change in the location of such home will not prevent a taxpayer from qualifying as a head of a household. The father or mother of the taxpayer, however, must occupy the household for the entire taxable year of the taxpayer. They will be considered as occupying the household for such entire year notwithstanding temporary absences from the household due to special circumstances. For example, a nonpermanent failure to occupy the household by reason of illness or vacation shall be considered temporary absence due to special circumstances. Such absence will not prevent the taxpayer from qualifying as the head of a household if (i) it is reasonable to assume that such person will return to the household, and (ii) the taxpayer continues to maintain such household or a substantially equivalent household in anticipation of such return. However, the fact that the father or mother of the taxpayer dies within the year will not prevent the taxpayer from qualifying as a head of a household if the household constitutes the principal place of abode of the father or mother for the preceding part of such taxable year.
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