I saw a few references to a query on Tax Returns and claiming dependent for B2 in this portal and others too – however could not get a satisfactory answer. The following is some information I have learnt, on which to base your judgment:
(1) To claim a person as a dependent that person has to pass the Dependency Test (explained in Publication 501 in the IRS web site)
Direct Link to the Publication:
http://www.irs.gov/publications/p501/ar02.html#d0e999
Basically it says that the person has to pass five tests to be considered a dependent (and hence take an exemption in YOUR return). These tests are:
1. Member of Household or Relationship Test; 2. Citizen or Resident Test; 3. Joint Return Test; 4. Gross Income Test; 5. Support Test
These “tests” are self explanatory if you read them in the publication. I am assuming for those of us who have parents/in-laws visiting us, the person in question will meet “tests” 1, 3, 4 and 5. Please check for your individual case. The MOST crucial question is whether they will “pass” the 2nd test (viz., Citizen or Resident Test).
(2) If the person is visiting you on a Visitor Visa (B2) then they will need to check if they qualify as a “resident alien”. This happens IF and WHEN the person in question has stayed in the US for a specific period of time in specific years. To explain further:
The person has to determine if he/she is a Resident Alien or a Non-Resident Alien using the chart in Publication 519 in the IRS web site:
http://www.irs.gov/publications/p519/15023t02.html
In the chart please change the reference of year 2003 to 2004; year 2002 to2003 and Year 2001 to 2002, to determine “your status for year 2004” (the word “your” in the chart refers to the person – father/mother/mother-in-law/father-in-law)
The most important question in the chart is “Were you physically present in the United States on at least 183 days during 2004”:
(2) (a) If the answer is “Yes” then he/she is a “Resident Alien for US Tax Purposes” – meaning YOU can claim that person as a dependent and take an exemption while filing your tax returns.
This will obviously happen only if that individual has sought and received approval to extend their stay beyond 6 months – meaning that person is LEGALLY in the US for 183 days or beyond.
(2) (b) If the answer is “No” then the next question is “Can you show that for 2004 you have a tax home in a foreign country and have a closer connection to that country than to the United States”.
In MOST (almost all) cases the answer will be “Yes” and hence that person is a “Nonresident alien for US Tax purposes” – meaning YOU CANNOT claim that person as a dependent.
(3) For seeking this clarification I had spoken to a representative in IRS (Toll Free 1-800-829-1040). The person who came on line said someone will “research” the question and come back to me. They did (within 24 hours) and I spoke to the lady who confirmed the above.
The question then remains is obtaining the TIN for that person.
For that the person in question (parents/in-laws) will need to apply on Form W-7 with required documentation (passport etc). It could take 6 weeks or so to get the TIN. Link for Form W-7
http://www.irs.gov/pub/irs-pdf/fw7.pdf
The IRS representative suggested that the person could fill in Form W-7 and you could attach it (with supporting documents for W-7) with your return while mailing the return (e-file will not be possible in this case). The number will get assigned when your return is processed.
(3) Please note that I have NOT tried to apply for a TIN (for my mother-in-law) because she did not meet the 183 days in 2004 (though she meets 183 days for 2004 and one-third days in 2003). I have READ in some forums (either on this site or elsewhere) that IRS has stopped giving TINs to people with visitor visas. I DO NOT KNOW IF IT IS TRUE – but you can always give it a shot, especially after the IRS representative commented that “it does not matter what visa he/she is on”. I think while applying for TIN – Form W-7 - you will need proof that he/she has been here for 183 days or more (legally) – by providing the copy of passport and Approval Notice for extension of stay.
Hope this has helped. Remember this is the info that I have got – you might still want to check with your CPA.
(1) To claim a person as a dependent that person has to pass the Dependency Test (explained in Publication 501 in the IRS web site)
Direct Link to the Publication:
http://www.irs.gov/publications/p501/ar02.html#d0e999
Basically it says that the person has to pass five tests to be considered a dependent (and hence take an exemption in YOUR return). These tests are:
1. Member of Household or Relationship Test; 2. Citizen or Resident Test; 3. Joint Return Test; 4. Gross Income Test; 5. Support Test
These “tests” are self explanatory if you read them in the publication. I am assuming for those of us who have parents/in-laws visiting us, the person in question will meet “tests” 1, 3, 4 and 5. Please check for your individual case. The MOST crucial question is whether they will “pass” the 2nd test (viz., Citizen or Resident Test).
(2) If the person is visiting you on a Visitor Visa (B2) then they will need to check if they qualify as a “resident alien”. This happens IF and WHEN the person in question has stayed in the US for a specific period of time in specific years. To explain further:
The person has to determine if he/she is a Resident Alien or a Non-Resident Alien using the chart in Publication 519 in the IRS web site:
http://www.irs.gov/publications/p519/15023t02.html
In the chart please change the reference of year 2003 to 2004; year 2002 to2003 and Year 2001 to 2002, to determine “your status for year 2004” (the word “your” in the chart refers to the person – father/mother/mother-in-law/father-in-law)
The most important question in the chart is “Were you physically present in the United States on at least 183 days during 2004”:
(2) (a) If the answer is “Yes” then he/she is a “Resident Alien for US Tax Purposes” – meaning YOU can claim that person as a dependent and take an exemption while filing your tax returns.
This will obviously happen only if that individual has sought and received approval to extend their stay beyond 6 months – meaning that person is LEGALLY in the US for 183 days or beyond.
(2) (b) If the answer is “No” then the next question is “Can you show that for 2004 you have a tax home in a foreign country and have a closer connection to that country than to the United States”.
In MOST (almost all) cases the answer will be “Yes” and hence that person is a “Nonresident alien for US Tax purposes” – meaning YOU CANNOT claim that person as a dependent.
(3) For seeking this clarification I had spoken to a representative in IRS (Toll Free 1-800-829-1040). The person who came on line said someone will “research” the question and come back to me. They did (within 24 hours) and I spoke to the lady who confirmed the above.
The question then remains is obtaining the TIN for that person.
For that the person in question (parents/in-laws) will need to apply on Form W-7 with required documentation (passport etc). It could take 6 weeks or so to get the TIN. Link for Form W-7
http://www.irs.gov/pub/irs-pdf/fw7.pdf
The IRS representative suggested that the person could fill in Form W-7 and you could attach it (with supporting documents for W-7) with your return while mailing the return (e-file will not be possible in this case). The number will get assigned when your return is processed.
(3) Please note that I have NOT tried to apply for a TIN (for my mother-in-law) because she did not meet the 183 days in 2004 (though she meets 183 days for 2004 and one-third days in 2003). I have READ in some forums (either on this site or elsewhere) that IRS has stopped giving TINs to people with visitor visas. I DO NOT KNOW IF IT IS TRUE – but you can always give it a shot, especially after the IRS representative commented that “it does not matter what visa he/she is on”. I think while applying for TIN – Form W-7 - you will need proof that he/she has been here for 183 days or more (legally) – by providing the copy of passport and Approval Notice for extension of stay.
Hope this has helped. Remember this is the info that I have got – you might still want to check with your CPA.