Must one get an ITIN for a dependent child?

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Jyrki21
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Joined: Fri Jun 04, 2010 9:03 am

Must one get an ITIN for a dependent child?

Post by Jyrki21 »

My daughter (born 2010) is not a U.S. citizen even though I am, and as such does not have an SSN. Because she is a Canadian national, she is a qualifying dependent, but I am not claiming the child tax credit for her.

She is listed on line 6c, and therefore I am granted an exemption for her. I don't actually need this exemption to offset anything -- with the Foreign Earned Income Exclusion and Standard Deduction, I don't have any U.S. tax liability.

I understand that I must apply for an ITIN for her because of this exemption. Her supporting ID document is a Canadian passport. The IRS states that in non-parties to the Hague Convention (and Canada is not a party), to have "the document certified by the foreign authority that issued it." I believe this entails "authentification/legalization" of her passport, and this seems to be an extremely expensive process for what it is.

Is there a way to get out of this, as I don't even need the exemption?
Jyrki21
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Post by Jyrki21 »

Or as a follow-up question -- need I claim her as a dependent at all? Is there anything wrong with simply leaving her off the form if I don't need the exemption?
nelsona
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Post by nelsona »

You are correct that a Cdn notary is not acceptable due to this convention, HOWEVER, the instructions also allow for the ISSUER to notarize the copy.

Passport canada will notarize copies of their passports, all you need to do is take the passport to a passport office (along with ITIN intructioons) and they will make a notarized copy in a few days.

That WILL work.

You may at some point, if you have US income, need such exemption, so you should get it now.

I would aslo be asking for the child credit, since IRS is very loose on the SSN requirement for this.

question for you: can you briefly outline the circumstances in which you are a US citizen and your child is not. This may prove enlightening.
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Jyrki21
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Post by Jyrki21 »

Thanks for your advice. I read that elsewhere about Passport Canada on an accounting firm's site, but couldn't find any official source on this. DFAIT's authentication seemed to be the closest analogue. I'm much happier to go to Passport Canada. You know of people having had success with this procedure? If for some reason the IRS rejects the application, does this mean my tax return doesn't get filed on time?

The reason my daughter is not a citizen -- and also therefore the reason I cannot claim the child tax credit for her (as citizenship is one of the listed requirements) -- is because my wife is not a U.S. citizen, and because I did not fulfill the minimum years of U.S. residency under paragraph 301(g) of the Immigration and Nationality Act to transmit my citizenship to her automatically. I would have had to have spent 5 years in the U.S., at least 2 of which were beyond the age of 14, before my daughter was born. (My family left the U.S. when I was an infant).

I can still apply for her naturalization pursuant to section 322, because I have a U.S. parent (my daughter's grandparent) who meets the residency requirements.
nelsona
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Post by nelsona »

Thanks for the update.

The passport canada process does work.


As to child tax credit, a Cdn citizen qualifies under the non-discriminatuion test, so the only real hurdle is SSN. As I said, IRS has been pretty lax on the SSN requirement, so, since you are already filing as a US citizen, I would include her. The worse that can happen is that your credit will be denied.


Even if, for some reason, the ITIN request is denied, this will not impact the timeliness of your filing. Besides, any of the items that need to be filed (8891, etc) are covered by autoamtic extensions until October every year.
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nelsona
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Post by nelsona »

To get the credit, you do have to use 1116 for your wages rather than 2555, just so you know.
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Jyrki21
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Post by Jyrki21 »

I thought the 1040 was still due in June unless I apply for the automatic extension?

A tax calculator suggested that I wouldn't get all that much back for the child tax credit anyway, so I think I'd rather not revoke the Foreign Earned Income Exclusion for the time being.

If ever my unearned income surpasses my deductions/exemptions, I understand I would still fill out Form 1116 (in addition to 2555) anyway to offset the difference. Does this suffice for being able to apply for the child tax credit? It seems odd to me that the method of excluding wages would matter.
nelsona
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Post by nelsona »

Your tax calculator is probably wrong; you should be using software. You would get the full $1000 under the additional child tax credit, by reporting your wages.

I understand that reticense to use 1116 instead of 2555, but that shoudn't worry you. Your income is all from canada, thus 1116s will yield no tax.

Your return is due in June, however the other forms that you really need to file (since you owe no tax) are still considered timely in October, so, whether you file in june or October doewsn't matter to you , since you owe no tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Jyrki21
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Post by Jyrki21 »

The main problem I have with 1116 -- though I don't think it would matter this year -- concerns where I have paid substantially less Canadian taxes due to RRSP contributions. I believe last year, for instance, I would have had U.S. tax liability if I had gone with a credit for this reason. By simply excluding the income, the matter of how much I offset my Canadian liability doesn't come up.

But point taken... perhaps I will revoke starting next year. (Or it's even possible to redo it retroactively to claim the credit, isn't it?) At this point I've already filled everything out with the 2555 -- and I did use Turbotax... the tax calculator was just an at-a-glance moment to see if it was worthwhile, as I thought the child tax benefit declines as income increases? -- that I just want to submit everything on time. Passport Canada is now in the process of getting me a certified copy of my daughter's passport -- thanks again for the tip.

One other question -- if I am claiming the Child Tax Credit for a non-U.S. citizen based on, as you put it, a non-discrimination test, does this mean I have to take a treaty position and submit form 8833?
nelsona
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Post by nelsona »

On your last question, just file for the credit. Technically the SSN is the requirement, not citzienship, but past experience has shown that they are lax on this.

As to your tax liability in US, I think you are overestimating what you would pay in US tax. There is no way that year after year your RRSP contribution could come close to knocking off so much tax -- especially if you were to file jointly, to result in US tax. If you contributed 40-50K in one year perhaps, but not at the current yearly level.
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nelsona
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Post by nelsona »

Besides, if you contribute to RRSP through work, the contribution is deductible on 1040 as well.
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Nishant
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Link for IRS approved notary in Canada for passport attest

Post by Nishant »

Here is a link for IRS approved agents in Canada for ITIN related or passport copy notorizing while in Canada.

http://www.irs.gov/individuals/article/ ... 39,00.html
nelsona
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Post by nelsona »

Be careful. An EA is not a notary. Cdn EAs are not acceptable notaries.
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shala
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child tax credit 1040nr

Post by shala »

Interesting topic - does the non discrimination cover cdn residents filing a 104nr?
We filed for the exemption (but itin app. as rejected) but never filed the tax credit as we thought it does not apply for non u.s children

we had to re-apply for the itin but the taxes got processed without the exemptions - we need to amend the return and I am wondering if we can apply for the tax credit as well.
nelsona
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Post by nelsona »

As I said, unless the child has an SSN (and that is not a matter of non-discrimination), IRS regs say child cedit is not to be paid.

However I have heard of many with only an ITIN getting it, so I suggest one should file for it and see.

But, to be clear, the non-discrim clause covers the definition of dependant, not eligibility for this tax credit, as it is based on SSN possesion, not rsidence or US citizenship.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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