Tax Advice

[SeanC]

Apologies if this is too far off topic, but I thought it might be relevant to other users here. This is the first tax year I have had a child.

My wife has not yet received her visa. My infant daughter has a US passport. Neither have a social security number or ITIN yet.

Is it beneficial or even possible to file jointly?

If I file individually, should I or am I able to claim my wife as a dependent?

Am I able to claim my daughter as a dependent without a social security number?

Thank you for any input from anyone who has experience with this.

 

[Martin B]

Congrats on the child.

Here's the IRS page that deals with nonresident spouses: https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse

In most cases your tax burden will be lower if you choose Married Filing Jointly. I believe your wife will need the an ITIN or SSN for this to work.  But you can run every scenario in your tax software. I don't think spouses are generally claimed as dependents.

If you want claim your child as a dependent, they'll need an ITIN at a minimum. To get the child tax credit, your daughter will need an SSN. Though I'm not 100% sure what the rules are for the child tax credit if the child is living abroad, which seems to be the case in your scenario.

My suggestion is to file for an extension so you don't need to submit the return until October 15 (though you will need to pay any taxes due by April 15).

Edited February 3, 2021 by Barfus (see edit history)

[Randy W]

You can submit your return with a W7 and showing the ITIN as "applied for". I believe the directions for how to do that (there is a different mailing address to mail the W-7 WITH the tax return) are on the W-7 form.

I would expect you can do the same with your child, but I'm not sure what to tell you there.

Yes, spouses are not claimed as dependents. Neither are they claimed as "exemptions", which used to be the case in the past. That's all worked into the tax tables as they exist today.

This page from H&R Block seems to address all of your questions. Even though it's addressed to expats, I think it applies in your case also.

https://www.hrblock.com/expat-tax-preparation/resource-center/filing/credits/child-tax-credit-abroad/#

Once you file married filing jointly, you are required by law to report your world-wide income, including from foreign sources, including that earned by your wife.

Edited February 3, 2021 by Randy W (see edit history)

[Randy W]

This is from  a site that states "We are a document preparation service and are not affiliated with any government agencies."

You DO NOT need to use their online form. Submit the printed W-7 form(s) with your tax return.

They say to leave the SS # fields blank when submitting your return with the W-7's.

How do I Apply for an ITIN for a Child?

Quote

 

There are two ways to obtain an ITIN for a child.

-List child as a dependent when completing the W-7 form. 

-Apply for a child’s ITIN on a separate W-7 ITIN form.

 . . .

Steps you must take to properly apply for ITIN number online and follow ITIN W-7 instructions include the following:

-Complete ITIN W-7 form online.

-Print out completed form.

-Gather relevant identification information.

-Attach federal income tax return(s).

-Send application packet to the IRS.

 

 

Edited February 3, 2021 by Randy W (see edit history)

[newacct]

Your daughter is a US citizen, and so is eligible for an SSN, no matter where she lives. Since she is eligible for an SSN, she is not eligible for an ITIN. You should get an SSN for her through the consulate. I am assuming she was born in 2020. In order for you to be able to claim the Child Tax Credit for her, she needs to have an SSN issued before the tax filing deadline (including extensions). So if she hasn't gotten an SSN and it's close to April 15, you should file for an extension so you can still get Child Tax Credit for her if she gets her SSN by October 15.

If you are married as of December 31, you need to file as Married Filing Jointly or Married Filing Separately. You guys can do Married Filing Jointly even if your wife has never been in the US, but you will need to use Nonresident Spouse Treated as Resident, which will treat her as a resident alien tax purposes for all of 2020. That means all of her worldwide income will be subject to US taxation, but she can use the Foreign Earned Income Exclusion and/or the Foreign Tax Credit to exclude her foreign income from US tax (she would still have to report the income to use the exclusion and/or credit). To do Married Filing Jointly, she would need to use an ITIN, which she would apply for with you guys's tax return. She would either need to mail in her actual original passport or go to some IRS center that can certify passports for ITIN; I am not sure if they have those abroad.

If you do Married Filing Separately, you do not need her to have an ITIN; you would write "NRA" in the space for her SSN/ITIN. In this case, she would be a nonresident alien for tax purposes, and she would not need to file a tax return if she didn't have US income.

If applying for an ITIN is too inconvenient, another option is to file as Married Filing Separately first, and then amend it to Married Filing Jointly later when she gets an SSN later (you can amend within 3 years of the tax filing deadline).

[Martin B]

1 hour ago, newacct said:

Your daughter is a US citizen, and so is eligible for an SSN, no matter where she lives. Since she is eligible for an SSN, she is not eligible for an ITIN. You should get an SSN for her through the consulate. I am assuming she was born in 2020. In order for you to be able to claim the Child Tax Credit for her, she needs to have an SSN issued before the tax filing deadline (including extensions). So if she hasn't gotten an SSN and it's close to April 15, you should file for an extension so you can still get Child Tax Credit for her if she gets her SSN by October 15.

If you are married as of December 31, you need to file as Married Filing Jointly or Married Filing Separately. You guys can do Married Filing Jointly even if your wife has never been in the US, but you will need to use Nonresident Spouse Treated as Resident, which will treat her as a resident alien tax purposes for all of 2020. That means all of her worldwide income will be subject to US taxation, but she can use the Foreign Earned Income Exclusion and/or the Foreign Tax Credit to exclude her foreign income from US tax (she would still have to report the income to use the exclusion and/or credit). To do Married Filing Jointly, she would need to use an ITIN, which she would apply for with you guys's tax return. She would either need to mail in her actual original passport or go to some IRS center that can certify passports for ITIN; I am not sure if they have those abroad.

If you do Married Filing Separately, you do not need her to have an ITIN; you would write "NRA" in the space for her SSN/ITIN. In this case, she would be a nonresident alien for tax purposes, and she would not need to file a tax return if she didn't have US income.

If applying for an ITIN is too inconvenient, another option is to file as Married Filing Separately first, and then amend it to Married Filing Jointly later when she gets an SSN later (you can amend within 3 years of the tax filing deadline).

I don't know how accurate this is, but I was once told that for anything involving an SSN (child tax credit, filing status), the SSN is necessary at the time taxes are due. For example, in order to be eligible for the child tax credit in 2019, they must have an SSN in 2019.

Edited February 3, 2021 by Barfus (see edit history)

[Randy W]

2020 taxes are due in April, 2021. With extensions, that can extend the date to October, 2021. SS numbers can be acquired fairly quickly, but I don't think it would take much longer when applying through the Consulate.

Where an SS number is required, I believe you can file an amended return up to 3 years later to take advantage of the credit where it is required.

In other words, I'm pretty sure that the SSN is required only when filing,and not during the year you are filing for.

The nearest SS office is in Manila,but the Consulate can handle the application for you.

Edited February 4, 2021 by Randy W (see edit history)

[Randy W]

From the top front and center of the W-7 form

"For use by individuals who are not U.S. citizens or permanent residents" "Don’t submit this form if you have, or are eligible to get, a U.S. social security number (SSN)."

So, no, your daughter is NOT eligible for an ITIN, but the SSN may be easier to acquire, anyway. Contact your daughter's consulate for information.

But you might look into whether you can apply in the United States for her, if your wife can mail the passport to you. If you are submitting the application in person, they will return it immediately. Otherwise, it might be better to submit a copy certified by a Certifying Acceptance Agent.

You DO NOT need to mail your wife's passport with the W-7. A passport copy would need to be certified by a Certifying Acceptance Agent - see (IRS link) Obtaining an ITIN from Abroad.

If you have her passport in the U.S. (or can have it mailed to you), it's fairly easy to do. In China, however, she will need to go to the IRS office in Manila, or to one of the consulates (where it can be certified for use with the W-7 - this is different from notarization). THERE ARE NO OTHER ACCEPTANCE AGENTS IN CHINA (they will have no idea what you're talking about).

 

Edited February 4, 2021 by Randy W (see edit history)

[Martin B]

2 hours ago, Randy W said:

2020 taxes are due in April, 2021. With extensions, that can extend the date to October, 2021. SS numbers can be acquired fairly quickly, but I don't think it would take much longer when applying through the Consulate.

Where an SS number is required, I believe you can file an amended return up to 3 years later to take advantage of the credit where it is required.

In other words, I'm pretty sure that the SSN is required only when filing,and not during the year you are filing for.

The nearest SS office is in Manila,but the Consulate can handle the application for you.

From the IRS: https://www.irs.gov/faqs/filing-requirements-status-dependents/dependents/dependents-9

In particular: Please note that you may not claim your child as a qualifying child for the EIC on either your original or an amended return if your child doesn't have an SSN on or before the due date of your return (including extensions), even if your child later gets an SSN. Similarly, you may not claim your child as a qualifying child for the CTC/ACTC if your child doesn't have an SSN before the due date of your return (including extensions), even if your child later gets an SSN. 

Currently SSA offices are closed for in-person services, but minors can apply for an SSN via mail. It does require sending in original documentation of the kid and parent, which would make me really nervous with the SSA's track record and current mail delays. Some offices will also make appointments for "dire need" situations but my guess, based on my experience, is they would ask OP to apply via mail. Definitely call the local card office.

[Randy W]

But from your link - amended returns work just fine as far as claiming a dependent

Quote

You may file your income tax return without claiming your daughter as a dependent. After you receive her SSN, you may then amend your return on Form 1040-X, Amended U.S. Individual Income Tax Return and claim your daughter as a dependent. Generally, you have three years after the date you filed your original return or two years after the date you paid the tax, whichever is later, to amend your return.

I'm also not sure if the certified copy from a Certified Acceptance Agent would work when applying for an SS number. Seems like it should, but you may find that you need to appear in person when applying for the SS card (either at the Consulate, or at an IRS facility in the US), or to submit the original passport if applying by mail.

Their Consulate (in China) would probably be open to accept an SS application, while returning the passport immediately.

The Certified Acceptance Agents are usually touted as being used to apply for ITIN's.

Edited February 4, 2021 by Randy W (see edit history)

[Martin B]

10 hours ago, Randy W said:

But from your link - amended returns work just fine as far as claiming a dependent

I'm also not sure if the certified copy from a Certified Acceptance Agent would work when applying for an SS number. Seems like it should, but you may find that you need to appear in person when applying for the SS card (either at the Consulate, or at an IRS facility in the US), or to submit the original passport if applying by mail.

Their Consulate (in China) would probably be open to accept an SS application, while returning the passport immediately.

The Certified Acceptance Agents are usually touted as being used to apply for ITIN's.

 

Just curious - what are the benefits of claiming a child dependent if all the economic benefits (child tax credit, stimulus payments, etc.) require an SSN at the time of filing? We recently had to scramble to get an SSN for my stepdaughter to get her on our 2020 return  and eligible for the child tax credit. 

[Randy W]

9 hours ago, Barfus said:

 

Just curious - what are the benefits of claiming a child dependent if all the economic benefits (child tax credit, stimulus payments, etc.) require an SSN at the time of filing? We recently had to scramble to get an SSN for my stepdaughter to get her on our 2020 return  and eligible for the child tax credit. 

from TurboTax

Rules for Claiming a Dependent on Your Tax Return

Quote

Claiming dependents can help you save thousands of dollars on your taxes. 

Back in the not-so-old days, dependents were treated as exemptions, providing a dollar amount to subtract from your taxable income. I assume that they are still worked into the taxable income in ways that aren't so obvious to me. I've been using TurboTax for the last 2 or 3  years, so I don't dig into these things so much any more.

TurboTax is a real stress reliever. I wish I had known that earlier, but I always preferred to be on top of the tax laws.

It's up to you to claim any exemptions, dependents, and credits that you are entitled to. You may file amended returns up to 3 years later, but for any where an SS number is REQUIRED (and not allowed with an ITIN), you have 10 months in the following year to acquire that SSN (that's something I'm learning from this topic). The three years allowed for filing amended returns to claim any benefits applies to ALL those for which you have met the requirements, including the stimulus payments.

[Martin B]

34 minutes ago, Randy W said:

from TurboTax

Rules for Claiming a Dependent on Your Tax Return

Back in the not-so-old days, dependents were treated as exemptions, providing a dollar amount to subtract from your taxable income. I assume that they are still worked into the taxable income in ways that aren't so obvious to me. I've been using TurboTax for the last 2 or 3  years, so I don't dig into these things so much any more.

TurboTax is a real stress reliever. I wish I had known that earlier, but I always preferred to be on top of the tax laws.

It's up to you to claim any exemptions, dependents, and credits that you are entitled to. You may file amended returns up to 3 years later, but for any where an SS number is REQUIRED (and not allowed with an ITIN), you have 10 months in the following year to acquire that SSN (that's something I'm learning from this topic). The three years allowed for filing amended returns to claim any benefits applies to ALL those for which you have met the requirements, including the stimulus payments.

Nowadays there's a pretty standard child tax credit which is $2000/child. I've never gone off of exemptions, allowances, and whatnot. I simply start by adding up income, dividends, cap gains, subtracting off deductions (like 401k), subtracting off the standard deduction, and then using the tax tables to figure out my tax. Then subtract off any tax credits (like the child tax credit) from the tax due. I can usually get it to within a few dollars of what TurboTax calculates and I developed a spreadsheet over the years that makes it really seamless.  

Moral of the story to OP: Get that SSN for your kid ASAP and file for an extension. You may be able to claim the 2020 stimulus payments for your child on your 2021 return (SSN was required for these), as well as the child tax credit for 2020. That's a minimum of $500 + $600 + $2000 that's in play. If you don't get the SSN by October, those credits will be lost forever.  While we don't know your exact financial situation, Married Filing Jointly usually results in a lower tax burden, which requires an ITIN at a minimum for your wife (Randy provided a lot of great info on how to deal with this and your kid's SSN).

Edited February 5, 2021 by Barfus (see edit history)

[Randy W]

1 hour ago, Barfus said:

Nowadays there's a pretty standard child tax credit which is $2000/child. I've never gone off of exemptions, allowances, and whatnot. I simply start by adding up income, dividends, cap gains, subtracting off deductions (like 401k), subtracting off the standard deduction, and then using the tax tables to figure out my tax. Then subtract off any tax credits (like the child tax credit) from the tax due. I can usually get it to within a few dollars of what TurboTax calculates and I developed a spreadsheet over the years that makes it really seamless.  

Moral of the story to OP: Get that SSN for your kid ASAP and file for an extension. You may be able to claim the 2020 stimulus payments for your child on your 2021 return (SSN was required for these), as well as the child tax credit for 2020. That's a minimum of $500 + $600 + $2000 that's in play. If you don't get the SSN by October, those credits will be lost forever.  While we don't know your exact financial situation, Married Filing Jointly usually results in a lower tax burden, which requires an ITIN at a minimum for your wife.

Yes, get that SSN as soon as you can - the extension may not be necessary if you get the SSN in time to file on April 15.

What the laws say and what was actually implemented for the stimulus payments are not exactly consistent. For example, there were glitches in the first roll-out such that it was not sent to those with a spouse having an ITIN. Check the new tax instructions and returns to see if you are eligible to claim tax credits for you and your family (all 3 of you) for any stimulus payments you may have missed.

Edited February 5, 2021 by Randy W (see edit history)

[Randy W]

Yes, I see where the TurboTax article says this,

Quote

 

Beginning in 2018, exemptions have been replaced by:

• an increased standard deduction
• a larger Child Tax Credit (now worth up to $2,000 per qualifying child)
• a bigger Additional Child Tax Credit (up to $1,400 per qualifying child)
• as well as a new Credit for Other Dependents, which is worth up to $500 per qualifying dependent (not to be confused with the Child and Dependent Care Credit)

 

So the spousal exemptions have been replaced by an increased standard deduction, while the dependent exemptions have been replaced by the tax credits, as long as the dependent qualifies for the credit.