Recovery Rebate claimed by U.S. citizen child if parents are nonresident aliens?

[Bree]

All, 

I have a tax question and would like to ask for your input. 

I have a new client, which just turned 18. He is a U.S. citizen and has a SSN, but lives in a different country. 

His parents have no ties to the US other then being on a H-visa when the client was born in the US 18 years ago. They since have returned to their home country, do not have a SSN or a residency permit in the US anymore. They did not file US taxes for the last 15ish years. 

I am wondering if my client would be able to claim the Recovery Rebate Payments. If I start a return for him it asks if he could be claimed as a dependent of another taxpayer. Since both his parents are nonresident aliens, can I assume that he cannot be claimed as a dependent of another taxpayer? And therefore can claim his own RRC 1-3 when filing a tax return for 2020 and 2021? I cannot find any guidance for this scenario. 

Thank you for your input. 

[qbteachmt]

"They did not file US taxes for the last 15ish years."

That doesn't mean they didn't need to. And you are trying to file a return for someone who is 15 and 16 in those years? Geez, it never occurred to me to consider that all those US citizen children around the world should have applied for the RRC on their own standing.

[BobKamman]

Most of us knew about this back when it happened.

https://www.cnbc.com/2021/11/09/thousands-of-americans-living-abroad-got-stimulus-checks-heres-why.h...

[qbteachmt]

That article isn't quite the same as the question of filing a tax return for a minor, though.

[sjrcpa]

Yes the US citizen child is eligible for RRC. They cannot be claimed as a dependent.

[TaxGuyBill]

Why don't you think he can be claimed as a dependent?

[sjrcpa]

On a 1040-NR you cannot claim dependents (except in a few limited circumstances involving Canada, Mexico, South Korea and India).

Jensen and I had this RRC discussion off line before and we came to the conclusion it was an unintended consequence.

[qbteachmt]

Also, the three RRC payouts each had different eligibility requirements.

[TaxGuyBill]

Interesting.

Okay, the first two credits say "under section 151 is allowable to another taxpayer".  So I agree, if the parents' don't live in one of those countries (but the OP did not say where they live), it would not be "allowable" under Section 151 for the parents to claim the child.  So yes, the child could claim the credits (again, that is only *IF* the parents are not in one of those countries that would allow claiming a dependent).

However, the third credit is different.  It says "any individual who is a dependent of another taxpayer ... For purposes of this section, the term “dependent” has the meaning given such term by section 152."

To me, Section 152 means if the child meets the dependency test, regardless if the parents are able to claim the child.  If that is the case, the child would not qualify for the third credit.

[sjrcpa]

Bill, you are probably correct.

I think I only looked at for the first round.

[BobKamman]

How do we know he lived in the same household, for Round 3? (Qualifying child.)

How do we know his gross income was below the required amount?  (Qualifying relative.)  As a US citizen, he's taxed on all worldwide income. Is that why he has contacted a US preparer?

[sjrcpa]

Good points Bob. He may qualify for the third payment for other reasons. The dependent definition under Section 152 may not be relevant.