Can I declare my nonresident alien children as my dependents and claim child tax credit & claim for the stimulus fund credit

[varshil_shh]

I am on L1 visa & my wife & child are on L2 visa. As per the Substantial Presence Test me and my wife are resident alien considering our presence in the previous years(2019, 2018, 2017), but our child travelled to the US for the very first time on 19th Sept,2020 (born in 2020). I have a couple of questions : 

1) Will i be able to claim my child as dependent for child tax credit ? As per the definition of "first year choice" in pub 519, I believe I can claim dependent once my child pass the SPT in 2021 which will be on 26th May,2021. So I'll have to apply for a filing extension and file for my taxes post 26th May,2021. Can you please confirm ?

2) My child still do not have an ITIN (I am planning to apply one along with my returns with w7). Will i be able to claim for the stimulus fund credit(recovery rebate credit) for my child ?

[AmeliesUncle]

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@varshil_shh wrote:

1) Will i be able to claim my child as dependent for child tax credit ? As per the definition of "first year choice" in pub 519, I believe I can claim dependent once my child pass the SPT in 2021 which will be on 26th May,2021. So I'll have to apply for a filing extension and file for my taxes post 26th May,2021. Can you please confirm ?

2) My child still do not have an ITIN (I am planning to apply one along with my returns with w7). Will i be able to claim for the stimulus fund credit(recovery rebate credit) for my child ?

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1)  Yes, I believe so.  I don't see anything that restricts a child or dependent from making the First Year Choice.  However because your child will have a ITIN rather than a Social Security Number, the Child Tax Credit is limited to $500.

2) No.  A person must have a Social Security Number to qualify for the Stimulus/Recovery Rebate credit.

TurboTax is not set up for dealing with a dependent that does not yet have an Identification Number.   Between that and needing to file the W-7, you may consider a tax professional.  A "Certified Acceptance Agent" may be able to file the W-7 without you needing to mail in your child's important documents.

[Opus 17 · Accepted solution]

You can claim your child as a dependent if the child lived with you more than half the nights of the year since it was born.  The child does not need to pass the substantial presence test as long as the parents passed the substantial presence test, and the child lived with the parents for more than half the year, or more than half the nights that the child was alive if the child was born in 2020.

However, the child will only qualify for a $500 “other dependent“ tax credit. The child does not qualify for the $2000 child tax credit or the stimulus payment/recovery rebate unless it has a Social Security number. If the child is not eligible to apply for a Social Security number, you cannot get these tax benefits.

[Opus 17]

You said “children” in your question, is there more than one child?  A child not born in 2020 could not be claimed as your dependent unless the child lived with you for more than half the year.

[AmeliesUncle]

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@Opus 17 wrote:

The child does not need to pass the substantial presence test as long as the parents passed the substantial presence test

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I've never heard of that.  Why do you say that?  Any citations for that?

[Opus 17]

Publication 501 says that a child has the residency of the parents.  It could be superseded by something else in publication 551, I suppose. But how would the substantial presence test ever apply to a newborn anyway?

[AmeliesUncle]

I guess I don't see Publication 501 reading that way.  The only thing I see that would pertain is "Children usually are citizens or residents of the country of their parents", but to me the word "usually" means it is definitely not a an automatic rule.

There is IRS documentation that shows that if the parents are making the First Year Choice, they have the OPTION to have the child make the First Year Choice.  To me, that means the child's residency is NOT automatically whatever the parents' are.

But you do have a good point about newborns. 

Perhaps @pk  may have some insight on the matter.

[pk]

@AmeliesUncle , @Opus 17 , having gone through the  above very excellent exchange, the  point I wish to make is  that in this particular case the  child is here on a dependent visa ( L-2) and thus  is co-opted to the primary visa holder's status --- i.e. no individual substantial Presence is required, the child  status is the same as that of the primary visa holder.

Stay safe

[varshil_shh]

Thank you @pk / @AmeliesUncle  / @Opus 17 

This is helpful.

I just have one more follow up question, @pk  would you know if I can apply for a SSN for my new born or can I only apply for an ITIN ?

I reviewed a couple of posts online and couldn't conclude as people have mixed opinions. Awaiting any insights you have on this.

Thanks

Varshil

[MaryM428]

No you cannot apply for a social security number for the newborn on L2 visa.  A spouse on L2 can obtain a social security number.

[pk]

@varshil_shh , as a resident for tax purposes i.e. neither a US citizen NOR a permanent Resident of US, the immigration of your children  is dependent on your own   since they are on dependent visa.  However, if  you have a child whom is  born on US soil  then the situation changes.  Current law still assumes  US citizenship  on all US born individuals and therefore eligible for SSN.  All US hospitals where a child is born offers  to apply for SSN ( for the child) -- all they need is the parents' identification  ( Driver's license and Tax id -- generally SSN ).

Is this what you are asking about or am I in the left field ?

@MaryM428 

[wilhoff]

A related question to this great discussion: We arrived in the US September 3, 2021, and we and our children received Social Security cards and Employment Authorization Documents. We could make a first-year choice for 2021 in May 2022 (the 183 days between 2022 and 1/3 of 2021). But would that qualify for the child tax credit and enhanced benefits for 2021, or only if we had been here more than 6 months in 2021?  Thanks for any advice.

[DMarkM1]

It appears you would qualify for the child tax credit however it may not be fully refundable.  That means the $3000/3600 per child maximum will be limited by your tax liability on your return.  See question B7 in this IRS FAQ. 

Also per the FAQ you may qualify for the difference, if limited, as a refundable Additional child tax credit, but that too will be limited to $1400 per child.  

[Illia]

Hi,

I have a similar situation.

My spouse and son came to the US on J1 and J2 visas in March 2023 and stayed troughout 2024.

I have arrived to the US in September 2023 as a J2 dependent of my spouse and subsequently changed my status to L1 on 18Jan2024.

We were all non-resident aliens in 2023 and in the beginning of 2024 as we were exempt individuals for substantial presence test.

I became a resident alien as of 18JAN2024 by meeting the substantial presence test.

At the end of the year I am a resident alien and my spouse and son on J visas are non-resident aliens.

We choose to treat my non-resident spouse as a resident for the whole 2024 and file a joint resident tax return for the whole 2024.

My question is - can our son also be considered a resident alien since both his parents are filing a 2024 tax return as residents even though only I met the substanutial presence test?

My plan is to apply for ITIN for him at the time of filing of the tax return. He 13 y.o. and does not have an EAD or SSN.

Am I right to assume that I can claim him as a dependent and get $500 tax creadit for other dependents?

Is he not eligible for $2000 dependent child tax credit?

[Vanessa A]

Yes, you can claim him as a dependent on your return.  How he is treated on your return will depend on his TIN.  If he has an ITIN, he would not qualify for certain credits on your return.  If he has a social security number that is valid for employment and met residency requirements, that is when he would qualify for all tax credits as if he was a US Citizen. 

No, you cannot claim the Child Tax Credit for him as one of the criteria for this credit is that they must have a valid social security number.

Yes, you can claim the $500 Other Dependent Credit since you will have an ITIN for him.

Claiming a Non-Citizen Spouse and Children on Your Taxes