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Dear Tax Talk,
I obtained an Individual Taxpayer Identification Number, or ITIN, for my parents while filing 2010 taxes. In 2011, they were with me for only 20 days. When filing my 2011 taxes, will I be able to add my parents as dependents by providing their ITIN numbers? Please clarify.
Is the residency test applicable only while applying for the ITIN, or do my parents need to pass the residency test (183-day stay) every tax year?
Also, my parents are fully dependent on me as they have no income back in India, and I support them entirely.
You can claim an exemption for parents only if these three tests are met:
- Dependent taxpayer test.
- Joint return test.
- Citizen or resident test.
The key test here is if your parents can meet the resident test. You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico.
Residency for income taxes can be obtained through presence in the United States regardless of immigration status. However, residency is determined on an annual basis. To be considered an income tax resident in 2011, your parents would have to exceed 182 days based on a formula that counts 100 percent of the days present in the current year, one-third of the days in 2010 and one-sixth of the days in 2009. You also have to be in the U.S. for more than 31 days in the testing year to be considered a resident.
For example, if your parents were with you all of 2010 and 20 days in 2011, then their cumulative presence would exceed 182 days in 2011 based on the formula, but they would not qualify as residents as they were not here for more than 31 days in the year being tested.
Since your parents do not qualify as residents for 2011, you cannot claim their exemption.
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.