Claiming a dependent in Mexico, non- US Citizen with ITIN.

[garman22]

Taxpayer claims sister who lives in Mexico, is NOT a US citizen and has an ITIN. Based on what I've read and IRC 24(h)(4)(b) it looks like the $500 non-refundable credit would not be allowed?

Am I reading that correctly? 

I bring all this up as PS allows credit which makes me question what I've read. 

Thanks!

[TaxGuyBill · Accepted solution]

Correct, it would not be allowed.

However, if you enter it correctly, ProSeries does not allow the credit.  You need to be sure to check the NEW box on the information worksheet that dependent does not qualify for the credit.  If the sister is under age 17, you also need to check the non-US box.

[garman22]

Bill, I am confused now. You are correct. If I enter ITIN, Other Dependent, and 0 mo's lived with taxpayer and we know this dependent lives in Mexico.......PS will allow credit. You would "manually" have to check box for this credit to not populate.

My question still stands.....in re: to this unique situation, is she NOT entitled to the $500 credit? This "dependent's" ITIN expires this year. It would be pointless to renew if taxpayer is NOT allowed this $500 credit as dependency exemptions are $0.00.

In 2017, we were allowed to claim this dependent (assuming all qualifications are met) and we received our dependency exemption.

It seems to me the law would allow Mexican citizens (with ITIN's) to be claimed as dependents on a US citizens assuming all qualifications are met.

BUT....I cannot confirm this with any Code Sections.

[garman22]

The sister in question is an adult. 50-ish years of age.

[garman22]

The more and more I read on this, my original assumption is correct and that this dependent is not allowed 2018. I incorrectly assumed based on the info I provided, PS would automatically check that box. Mikey was wrong.

If anyone has any other info contradicting...please speak up.

[TaxGuyBill]

My original answer still stands ... the dependent does NOT qualify for the $500 credit.

Yes, you need to manually check the box.  The program does not know if the person that lives outside of the US is a US Citizen or Resident, so it can not check that box automatically.

So yes, they can be claimed as a dependent.  But the tax-benefit of claiming that dependent is much more limited (no exemption amount, no $500 credit).  Although less common, claiming the dependent CAN still have benefits.  For example, the taxpayer can claim medical expenses for the dependent and it would affect the Household Size for the Premium Tax Credit.

[sjrcpa]

There could be a state tax benefit, too.

[garman22]

God, I hadn't even thought of the added benefits. I was so tunnel visioned regarding the credit itself that it skewed my thinking.

It makes sense now for manually checking the box.

Thank you very much for the info........if you ever get to Chicago, reach out to me and cocktails are on me!!

[garman22]

Scratch, I was mixing and matching the rules between qualifying child and qualifying relative. 

[IRonMaN]

To help with that scratching, have you tried calamine lotion?

[garman22]

i've never even heard of calamine....so, my guess would be a no! Would CBD be effective?:smile:

[IRonMaN]

I don't know if it will help cure it, but you probably won't care if you itch after taking it.

[abctax55]

Calamine lotion resembles Pepto Bismol.   I strongly suggest you do not confuse the two.

[garman22]

Hahaha!!! I most cetainly don’t want to screw that up. :open_mouth:

[EA_with_Itin_clients]

So back to the issue at hand, I have a new tax client who has lived in the US since 2015 (work visa) and has a SSN.   Wife and kids have ITINs.   Wife and kids moved back to their home country in 5/2019.   My client can still file as MFJ, but the kids don't qualify him for the $500 'other dependent' credit because they lived with my client less than 6 mos.   So, I have to check that box that they don't qualify, correct?

[lilia]

Do US residents, not legally, who are citizens of Mexico and have ITIN can be claimed as dependents. And if yes how I do that with proseries?