CASE STUDY #7: Non-Resident Alien Spouse & Alien Child
Married Couple, Al and Janice. Al is a resident alien and Janice is a nonresident alien residing in Italy with their non-U.S. citizen daughter, Susan.
Filing Status Janice – Since Janice is a nonresident alien, she does not have a U.S. filing requirement, unless she elects to file a joint return with Al as discussed under Al’s filing options below.
Filing Status Al – A resident alien has the same filing requirements as a U.S. citizen. Since Al is married, he must either file jointly with Janice or file as married separate. Al has the following filing options:
• Married separate, or
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Married Joint., However, to file married joint he and Janice must make a joint election to treat Janice as a resident alien (Code Sec. 6013(g)(1)). In so doing, both spouses must agree to subject their worldwide income for the taxable year to U.S. taxation (Code Sec. 6013(g); Code Sec. 6013(h)). One party must have been, at the close of the taxable year for which the election was made, a nonresident alien individual married to a citizen or resident of the United States (Code Sec. 6013(g)(2)). An ITIN will be required for Janice (Form W-7).
Dependency Susan – In order for Al to claim Susan as a dependent, she would need to be a qualifying relative or a qualified child. To be a qualified child, Susan must meet the residency test. To satisfy the residency test, the child must have the same principal place of abode as the taxpayer for more than one half of the tax year (Sec 152(c)(1)(B)). Therefore, Susan is not a qualified child of Al.
To be a qualifying relative she must meet the five qualifying relative tests and not be a qualifying child. Assuming Susan meets the relationship, the gross income test, the support test and the joint return test, she would still fail the citizenship or resident of the U.S test since she is not a U.S. Citizen, U.S. resident or a resident of Canada or Mexico. Thus, Susan is not a qualifying relative, and Al cannot claim her as a dependent.
“ Variation: Child is U.S. Citizen - Even if Susan were a U.S. Citizen, she would still not be a qualified child of Al’s, since she does not meet the residency test. However, she could be Al’s dependent if she meets the qualifying relative test. The qualifying relative test requires Susan to be related or a member of the household. She meets the related test. She also needs to meet the citizenship or residence test, which she passes since she is a citizen. If she also satisfies the gross income test, joint return test and Al provides over half of her support, she would qualify as Al’s dependent. ”
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