3 stupid questions

[pk]

@Helen123 , please read and/or refer your friend(s) to this  [puib from the IRS regarding kiddie tax..  There is also some reference to this  situation  in the instructions for form 1040/1040-SR

Topic no. 553, Tax on a child's investment and other unearned income (Kiddie tax) | Internal Revenue...

What I don't understand is the reason behind setting up a US bank account in the name of the child ( a new born  & us citizen )  -- what are they trying to achieve?

Also child tax credit is for dependent child  of US persons   ( SO no unless the parents  choose top be  treated as a US person  -- not living here in the US  and not earning in the US -- does 

[Helen123]

Many thanks. The parents want to help kid to open the bank in the UK, not in the US. In the UK , there are bank account for junior, I do not know whether US has something similar. That is why they want me help ask before opening it.

In the short term, because parents need to pay NAR tax in 2023 and from 2024, they will have 0 income in the US and therefore no need to report any tax anymore in the US, therefore  they want to know whether it is possible to get some deduction for the tax. 

does it make sense to you? 

[DaveF1006 · Accepted solution]

No.  There is no credit for the NAR tax on a US tax return because there is no income to apply it to.

[Helen123]

Thanks

[pk · Accepted solution]

@Helen123 , @JHH123 ,  reading through your  post  what I get is that the parents ( NRAs) are  trying to set up bank accounts ( for the US citizen child) in reserve currency  -- US$ or UKL-- ( to protect against currency effects of national currency ? ).   Which country are they ( parents ) from? -- perhaps  the tax treaty  between home country  and  US/UK might allow  mechanisms to help in their quest.

It appears that we have answered  your query ( ies) on this subject and therefore the thread could be closed ---  if that is the case  the  you need to accept the answer(s) as "accepted".  Else  tell me what more we can do for you, please?

Generally agreeing with colleague @DaveF1006  that  child credit  may not be available because of no  US taxable income, but more germane is the fact that  the parents are filing 1040-NR for 2023  ( although I don't understand  why, unless they were here only for the birth of the child ? ) and that  the parents  will not (?) want to be treated as a resident for tax purposes for the year 2024.  The main thing is that any earnings  whether  in the name of the child or the parents and sourced/ connected to US  will be taxed per the tax treaty between the resident/home country of the parents and the US .

If there is more help needed by the parents on this or similar tax issues , please consider  having the parents start a new thread.

pk