Child required to file US return?

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andied
Posts: 55
Joined: Wed Feb 09, 2005 11:21 am

Child required to file US return?

Post by andied »

As I understand the requirement, a child (over 14, US citizen) must file a US return, if they have $800 or more of unearned income. However, as the child does not live with me (US citizen) but with her mother (Cdn citizen), she cannot be claimed as a dependant by a US filer.

Would the child still be required to file even though she is not claimed as a dependent.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

The fact that your child lives in Canad does not prevent her from being claimed as a dependant, so long as you provide most of the financial support.

Even kids that can be claimed as a dependant sometimes have to file a tax return. If your child can't be claimed, all the more reason why she must file.

I'm not sure of the minimums at which she HAS to file or not.

<i>nelsona non grata</i>
andied
Posts: 55
Joined: Wed Feb 09, 2005 11:21 am

Post by andied »

Probably didn't explain my question properly.

Daughter has minimal income, less than the normal threshold for filing (7950.00 for 2004), but more than $800 unearned income, and I would prefer to save the time and trouble of filing her return. She and her mother live in Canada. I do not claim her as a dependent.

As I read the instructions for the 1040, if a child that could be and usually would be, claimed as a dependent, earns $800 or more of unearned income, that child must file their own return - but she isn't claimed as a dependent. Or does the fact that there is a theoretical possibility of her being claimed as a dependent require her to file? There is no tax owing or to be refunded.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

I understood your question perfectly:

<i>"The fact that your child lives in Canada does not prevent her from being claimed as a dependant, so long as you provide most of the financial support."</i>

This was added information that you might find useful. In fact the further information that you gave (which I had surmised, anyways) confirms that you probably can and <i>should </i> claim her as a dependant; all your ex would have do to is sign the release form 8322. many people think that the child has to be living with then to claim as dependant, or that they have to live in US. They don't.

<i>"Even kids that can be claimed as a dependant sometimes have to file a tax return. If your child can't be claimed, all the more reason why she must file."</i>

In other words: <i>Even if</i> your daughter were or could be claimed by you as a dependant, <u>she would still have to file a return</u>. the fact neither you, nor your wife claim her as a dependant, means that <u>she still has to file</u>.

So, <u>she has to file a return</u>.

<i>nelsona non grata</i>
andied
Posts: 55
Joined: Wed Feb 09, 2005 11:21 am

Post by andied »

Pardon my ignorance, hopefully I am learning.

Hypothetically, a USC over 14 and under 19 has $1000 USD unearned income from a foreign country - no other income. As this young USC could be claimed as a dependent, by a USC parent, he/she must a file US tax return, resulting in a US tax obligation of $76. As the $1000 USD income is below the threshold to require tax payment in the foreign country, there is no foreign tax credit available.

USC parent has no US source income - only income is from foreign country and with foreign tax credits and excluded foreign earned income, there is no US tax owing. This person can claim the above mentioned dependent, but as no US tax is owing the exemption has no benefit. Or does it? Am I missing something?

Thanks for your help...and indulgence.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

That is correct.

All 15 year old USC, regardless of where they live, would owe tx in this situation.

Granted, the claiming parent would usually benefit from the extra exemption, but in your case, since you are already reducing your income tax to zero, then I guess that is that.

You could have the other parent use the deduction, I suppose...

By the way, your daughter gets an $800 standard deduction, so the US tax will be much less than $76


and remember, as discussed in the RESP thread, the RESP is NOT her money, and thus she is not responsible for the tax on it, the parent (or grandparent) is.

<i>nelsona non grata</i>
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