First-year choice and kids - tax year 2023
Moderator: Mark T Serbinski CA CPA
Re: First-year choice and kids - tax year 2023
It would be much simpler, and more correct -- in order to get ITINs -- to merely add them as dependents on your return. Your filing of a 1040 will result in them getting ITINs and all the benefits you (or they) are entitled to.
IRS has become very wary and stingy with issuing ITINs over the past decade and will see through this. There needs to be a good reason to get an ITIN.
You love the fancy footwork, Anna, but I prefer the KISS method. You are going WAY overboard on what are very simple processes.
IRS has become very wary and stingy with issuing ITINs over the past decade and will see through this. There needs to be a good reason to get an ITIN.
You love the fancy footwork, Anna, but I prefer the KISS method. You are going WAY overboard on what are very simple processes.
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Re: First-year choice and kids - tax year 2023
Yes, I'd love to keep it simple but sometimes simple can fail and for this situation, I'm trying to find things that will work 100% or almost.
While using tax software and adding my kids as dependents, I get a very reassuring answer: Congratulations, you have a qualifying dependent! So, I will definitely add them to my regular 1040 return without ITIN + W7 to get their ITIN. Am I eligible to get a "dependent benefit" for 2023? No. Are they going to give me ITINs for children with my 2023 return? I have doubts because if, by adding my children as dependents, I'm not eligible to get any benefit/allowance/deduction, there's no reason to give them ITIN.
If I choose the fancy, does IRS have the right to refuse a $0 return? I don't know. Any adult can file $0 return. If IRS has no right to refuse, ITIN will be issued. It means that 2023 tax year will be the end of fancy returns.
For W7 (ITIN application), even if I have several reasons to ask for ITIN, I have to choose one and to hope that this reason will work out. If ITIN is not issued for 2023, I'll have to wait to ask for this number with 2024 tax return and so on.
Now, I'm trying to figure out what way will give me the best outcome.
Thank you very much for information, I really appreciate,
While using tax software and adding my kids as dependents, I get a very reassuring answer: Congratulations, you have a qualifying dependent! So, I will definitely add them to my regular 1040 return without ITIN + W7 to get their ITIN. Am I eligible to get a "dependent benefit" for 2023? No. Are they going to give me ITINs for children with my 2023 return? I have doubts because if, by adding my children as dependents, I'm not eligible to get any benefit/allowance/deduction, there's no reason to give them ITIN.
If I choose the fancy, does IRS have the right to refuse a $0 return? I don't know. Any adult can file $0 return. If IRS has no right to refuse, ITIN will be issued. It means that 2023 tax year will be the end of fancy returns.
For W7 (ITIN application), even if I have several reasons to ask for ITIN, I have to choose one and to hope that this reason will work out. If ITIN is not issued for 2023, I'll have to wait to ask for this number with 2024 tax return and so on.
Now, I'm trying to figure out what way will give me the best outcome.
Thank you very much for information, I really appreciate,
Re: First-year choice and kids - tax year 2023
Why do you feel you will get no benefits by including them on your return? You are applying for for the child tax credit. Once again, KISS
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Re: First-year choice and kids - tax year 2023
In my opinion, filing a zero return for the kids will NOT get them an ITIN, since they would not be applying for any benefit -- YOU apply for benefits through YOUR return. Merely filing a return (without the reasons (and proof) required for that exception), won;t work. Proving they are your kids will.
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Re: First-year choice and kids - tax year 2023
TN/TD holders are not eligible for child tax credits as their kids - TD holders - have no SSN. TD/TN holders whose kids are Canadian and Mexican citizens will receive ODC - other dependents credits - for their kids if their kids satisfy two conditions : ITIN+US residency. So, we're able to add our kids to 1040 return as dependents because they are Canadian citizens but if they haven't met PPT - physical presence test - during 2023, we cannot get even other dependents credits for them. The instructions to form W 7 states: Spouses and dependents are not eligible for an ITIN unless they are claimed for an allowable tax benefit or they file their own tax return. It means that being considered eligible dependents by IRS (maybe for other tax benefits) due to their citizenship, they are not eligible to get ODC - other dependents credit - due to their non US resident status for 2023. In 2024, all the conditions for credits will be met but who wants to spend 2 tax seasons in search of ITINs - first year for a spouse, second year for kids...
It seems that the only way to get ITINs now is to file their own return and to check the box b on W 7 application. Do I (or any US citizen) need to be eligible for any credit/refund to have the right to file a return when no obligation exists? I don't know. If yes, a "protective" return/ pro forma return may still be allowed as the reason for its filing is precisely "just in case whatever the case may be" and if it's accepted, there must be some kind of IRS number to register this blank return, so ITIN will probably be issued.
We can also read about a possibility to open some financial product where a bank will have certain requirements for reporting and will ask you for ITIN but my scarce knowledge of finance doesn't allow me to go this way.
I didn't plan to file the return for my kids so no separate extension to file, with their names on it, has ever been sent. I suppose it's not a problem since no allowable credit is in jeopardy for 2023. I also hope that no problem will arise by adding a non-resident spouse for MFJ return as no separate extension has even been filed for a non-resident spouse.
It seems that the only way to get ITINs now is to file their own return and to check the box b on W 7 application. Do I (or any US citizen) need to be eligible for any credit/refund to have the right to file a return when no obligation exists? I don't know. If yes, a "protective" return/ pro forma return may still be allowed as the reason for its filing is precisely "just in case whatever the case may be" and if it's accepted, there must be some kind of IRS number to register this blank return, so ITIN will probably be issued.
We can also read about a possibility to open some financial product where a bank will have certain requirements for reporting and will ask you for ITIN but my scarce knowledge of finance doesn't allow me to go this way.
I didn't plan to file the return for my kids so no separate extension to file, with their names on it, has ever been sent. I suppose it's not a problem since no allowable credit is in jeopardy for 2023. I also hope that no problem will arise by adding a non-resident spouse for MFJ return as no separate extension has even been filed for a non-resident spouse.
Re: First-year choice and kids - tax year 2023
And ITIN for a spouse:
In W 7 application for ITIN, there're several boxes to check.
The box - e - /Spouse of U.S. citizen/resident alien/ seems the best option if you want to file by making the election to file a U.S. federal tax return jointly with a spouse who is a U.S. citizen or resident alien - only internal law.
Are there any changes that have to be made in form W 7, if you choose to take a treaty position? I'm thinking about box - b - /Nonresident alien filing a U.S. federal tax return/ - A nonresident alien who is filing a U.S. federal tax return only to get a refund - as your non-resident spouse files jointly with you to get a better deduction so to get a refund?
I don't know if I'm clear or may be both boxes are OK.
In W 7 application for ITIN, there're several boxes to check.
The box - e - /Spouse of U.S. citizen/resident alien/ seems the best option if you want to file by making the election to file a U.S. federal tax return jointly with a spouse who is a U.S. citizen or resident alien - only internal law.
Are there any changes that have to be made in form W 7, if you choose to take a treaty position? I'm thinking about box - b - /Nonresident alien filing a U.S. federal tax return/ - A nonresident alien who is filing a U.S. federal tax return only to get a refund - as your non-resident spouse files jointly with you to get a better deduction so to get a refund?
I don't know if I'm clear or may be both boxes are OK.
Re: First-year choice and kids - tax year 2023
You have a spouse - he will get an ITIN using the spouse box
You have kids -- they will get ITINs using the kids box.
Why were you digging any further than that!?
You have kids -- they will get ITINs using the kids box.
Why were you digging any further than that!?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: First-year choice and kids - tax year 2023
ITIN application takes from several weeks to several months to be processed and that may become a problem if you make a mistake and are left without ITIN by the due date of your return/extension. For example, to get credits for other dependents, one of the conditions is to have an ITIN by the due date, so if your application is rejected for unperfect form filling, you'll lose your right for this credit.
I just try to avoid mistakes,
Thank you very much for your help,
I just try to avoid mistakes,
Thank you very much for your help,
Re: First-year choice and kids - tax year 2023
Your kids have US residency by treaty, like you.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: First-year choice and kids - tax year 2023
... and as I said earlier, your kids request for ITIN by filing their own 1040 is MUCH more likely to be denied (since they are not claiming any of the the listed reasons to file a 1040)
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Re: First-year choice and kids - tax year 2023
A very interesting point!
It would really simplify my 2023 tax return.
As I understand it, the treaty doesn't change your residency. It exists to resolve conflicts when you're, by internal laws, a resident of both countries. It can also allow you to file as a resident but it doesn't give you residency.
I tried to find yesterday at least something that would allow me to claim residency for my kids. The only thing discovered was a possibility to make a first year choice for kids as well for those who qualify.
It would really simplify my 2023 tax return.
As I understand it, the treaty doesn't change your residency. It exists to resolve conflicts when you're, by internal laws, a resident of both countries. It can also allow you to file as a resident but it doesn't give you residency.
I tried to find yesterday at least something that would allow me to claim residency for my kids. The only thing discovered was a possibility to make a first year choice for kids as well for those who qualify.
Re: First-year choice and kids - tax year 2023
Yes, you're right,
I don't think that 1040 return with 0 income will work even if you use a treaty position. And it looks heavy and unnecessary to file 3 empty returns. Moreover, a treaty non-discrimination position for absolute non-residents (without spouse), even if you add a German treaty, looks more as a favour and not a right. I suppose it's usually accepted because the US receives an extra taxpayer but 0 return just eats the resources.
I looked at the US-German treaty and found provisions erasing the interest of this treaty for Canadians if the US decided so: 22. With reference to paragraph 1 of Article 24 (Nondiscrimination) Paragraph 1 of Article 24 does not obligate the United States to subject an individual who is a German national not resident in the United States to the same taxing regime as that applied to a citizen of the United States not resident in the United States.
So, a first-year choice according to the internal laws + (married election or non-discrimination XXV-1) looks a more certain path than just a treaty position XXV-2 + German treaty. I may be wrong but it's just my impression.
I don't think that 1040 return with 0 income will work even if you use a treaty position. And it looks heavy and unnecessary to file 3 empty returns. Moreover, a treaty non-discrimination position for absolute non-residents (without spouse), even if you add a German treaty, looks more as a favour and not a right. I suppose it's usually accepted because the US receives an extra taxpayer but 0 return just eats the resources.
I looked at the US-German treaty and found provisions erasing the interest of this treaty for Canadians if the US decided so: 22. With reference to paragraph 1 of Article 24 (Nondiscrimination) Paragraph 1 of Article 24 does not obligate the United States to subject an individual who is a German national not resident in the United States to the same taxing regime as that applied to a citizen of the United States not resident in the United States.
So, a first-year choice according to the internal laws + (married election or non-discrimination XXV-1) looks a more certain path than just a treaty position XXV-2 + German treaty. I may be wrong but it's just my impression.