Your foreign stepchildren may be qualifying relatives for tax purposes
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Dear Tax Talk,
My wife, who is a permanent resident, has 2 children living in Mexico. They are not residents, nor are they citizens. My wife and I support them financially. What are the rules on claiming dependents from another country? Can I claim them as dependents and, if so, how?
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If you meet all of the IRS requirements, you may be able to claim an exemption for each child that is your dependent. For 2015, the deduction for each exemption is $4,000. The amount is phased out if your income is more than a certain amount, so you may need to take that in to consideration.
Now let’s go through your situation step by step regarding the various rules.
The general rule is that in order to claim a person as a dependent, the person must be one of these:
- U.S. citizen.
- U.S. resident alien.
- U.S. national.
- Resident of Canada or Mexico.
If the children are residents of Mexico, this does not present a problem for you. So let’s move on to the next set of requirements.
A dependent must either be a “qualifying child” or “qualifying relative.”
Requirements for a qualifying child
There are 5 tests to meet in order to be a qualifying child. The rules cover how they are related to you, their age, whether or not they have lived with you more than half the year and whether or not they provided their own support. Also, they cannot have filed a “married filing joint” return unless they are only filing to get a refund of taxes withheld or estimated tax paid.
Because the children live in Mexico, they do not qualify for this category, so we will take a look at the requirements for qualifying relative.
Requirements for a qualifying relative
- Neither of your stepchildren can be a “qualifying child.” This was determined above.
- As a stepchild, each will qualify as a “relative who does not have to live with you.”
- Each child must have made less than $4,000 in gross income.
- You must have provided more than half of the children’s total support for the year.
The IRS has a Worksheet 3-1 in IRS Publication 17, Tax Guide 2015 for Individuals, to help you calculate the support.
The IRS has many exceptions to these overall rules, so be sure to take a close look at Publication 17 for further details.
One final item to take into consideration: If you determine that the children qualify as your dependents, you will need to obtain a Taxpayer Identification Number, or TIN, for each child if they do not have a Social Security number, as it is required to be listed on your tax return.
You can obtain a TIN using IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.
Thanks for the great question and all the best to you.
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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.