Information required on Joint Election under 6013 (h)

[manuez35]

Hi,

I, my spouse, and my son (18 yrs) came to the US on 23rd July 2022 on L1A, L2S, and L2A respectively.  We both are working and my son is studying at University on the L2A visa. We paid for his 1st semister tuition approx $15,000  and other expenses. He lives with us. He doesn't have SSN nor ITIN. I have done some research about 6013 (h) but need some proper advice if anyone have claimed standard deduction and American Opportunity Credit / Education expense deduction for dependent.

I have the following questions:

1) Can we do the joint election and file together as married filing jointly to claim standard deduction?

2) Can we also claim the $2500 credit towards the tuition fees by applying for my son's ITIN? He is non-resident?

3) Do we have to wait till we meet substantial presence test in US which will be met around (1/3 * 162 days of 2022 = 54 days + 130 days of 2023) i.e on 10th May 2023 ?

[Anonymous_]

Stay tuned. I will page Champ @pk.

[pk · Accepted solution]

@manuez35 , since you and your family were admitted on  July 23rd of 2022, you start counting days present  from the next day i.e. July 24th, 2022.  Thus

1. For the substantial Presence Test ( SPT ), you need 183 days ( counting  all the days present in the current year 2022 + 1/3 rd the days present in year before 2021 + 1/6th  days  present in the year before  the last 2020 ).  If you were not present  on any days  -- for any purposes -- then you have ONLY 160 days.  Thus you are Non-Resident Alien for the year and therefore must file using form 1040-NR ( not supported by TubroTax -- suggested SprinTax). You must file Married  -- essentially single , your spouse also must file as married on form 1040-NR.  You must itemized deduction just as if you were filing Married Filing Separate.

2. However, you can choose to file  Married Filing Joint , if and only if , you both agree to be taxed as a Resident for Tax purposes -- First Year Choice.  If you do want to include your child as a dependent, ( under 24 and going to school full time and you paying at least half of his/her living expenses ) , he will need an ITIN -- you can include the application for that along with your Return -- W-7 along with the documents required for processing.   Here is  details on how to apply for first year choice ->

https://www.irs.gov/individuals/international-taxpayers/tax-residency-status-first-year-choice

3. If you choose to exercise the first year choice for 2022, you must wait till you have passed the SPT

4. On American  Opportunity and similar educational credits , suggest you try this interactive assistant from the IRS ----- this is a very good source:

https://www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit

Is there more I can do for you ?

[manuez35]

Thanks for the information. 

I can wait till the SPT and we both would like to make the First Year Choice.

Will it allow us to be treated as Resident for tax purpose for full year 2022 and claim the Standard Deduction?

Since we combined paid around $6300 Federal taxes and $2100 State taxes in 2022 on total income of $43000 so if we get to claim the standard deduction then we will owe zero and all of the $6300 Federal withheld taxes will be refunded.

[manuez35]

Basically, I am talking about this rule in 2021 Publication 519 (irs.gov) on Page 8. It is complicated but I think we can claim standard deduction under the below rule. Please can you revalidate and confirm if my understanding is correct?

Choosing Resident Alien Status
If you are a dual-status alien, you can choose to be treated as a U.S. resident for the entire year if all of the following apply.
• You were a nonresident alien at the beginning of the year.
• You are a resident alien or U.S. citizen at the end of the year.
• You are married to a U.S. citizen or resident alien at the end of the year.
• Your spouse joins you in making the choice.
This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year.
Note. If you are single at the end of the year, you cannot make this choice.
If you make this choice, the following rules apply.
• You and your spouse are treated as U.S. residents for the entire year for income tax purposes.
• You and your spouse are taxed on worldwide income.
• You and your spouse must file a joint return for the year of the choice.
• Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced, or remarried.
• The special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you.

[LindaS5247]

Yes, you can file together as married filing jointly as per the following:

The election is for a nonresident alien who is married to a U.S. Citizen or resident alien, and who becomes a U.S. resident before the end of the tax year, to be treated as a U.S. resident for the entire tax year.

By making this election, it allows the individual and his spouse to file a joint U.S. Income Tax Return.

Here is some information regarding the IRC 6013-H election:

The election is made by attaching a piece of paper that contains a statement, to an income tax return filed by the couple that are filing Married Filing Jointly.

This statement must contain the following information:

• A declaration that the election is being made.
• A declaration that the requirements of IRC §6013(a)(1) are satisfied (meaning that the couple qualifies to file a joint income tax return).
• The name, address, and taxpayer identification number (Social Security Number) of both of the spouses.
• The statement must be signed by both spouses. Note: this is an addition to the signature on top of the normal signature that you put on page 2 of Form 1040.

Also please note that if you are making this Section 6013(h) election to be taxed as a resident of the United States, you are not a U.S. taxpayer for all purposes. This election is limited to tax purposes. purposes.

There are some limitations to this election:

• The election may not be made after the expiration of 3 years from the last date prescribed by law, for filing the tax return (disregarding any extensions granted to either spouse); or

• after a notice of deficiency (under IRC Section 6212), has been mailed to either spouse with respect to such taxable year, if the spouse has filed a petition with the Tax Court within the time prescribed in section 6213; or

• if either spouse has filed a suit in any court for the refund of any part of the tax for such taxable year; or

• if either spouse has entered into a closing agreement with the IRS with respect to that taxable year or there is any civil or criminal suit against either spouse with respect to that tax year that has been compromised.

More Information regarding the 6013-H election can be found at the following IRS link:

https://www.irs.gov/pub/int_practice_units/JTO9431_02_10.PDF

This article from Turbo Tax Live may also be of some help depending on your specific question regarding this election.

https://ttlc.intuit.com/community/state-taxes/discussion/how-to-treat-my-non-resident-spouse-as-resi...

If you have elected to be treated as a resident alien for the tax year, for income tax purposes you are eligible for the American Opportunity Tax Credit.  The following applies to this tax credit:

• It applies to you, your spouse or your dependent that you listed on your tax return
• You, your spouse, or dependent are pursuing a degree or other recognized education credit
• You, your spouse, or your dependent have qualified education expenses at an education facility that is eligible 
• You, your spouse, or your dependent are enrolled at least half time for at least one academic period that begins in the tax year
• You, your spouse, or your dependent have not finished the first four years of higher education as of the beginning of the tax year
• You, your spouse, or your dependent have not claimed the AOTC or the former Hope credit for more than four tax years
• You, your spouse, or your dependent do not have a felony drug conviction at the end of the tax year

To claim AOTC, you must file a federal tax return, complete the Form 8863 and attach the completed form to your Form 1040 or Form 1040A.

Use the information on the Form 1098-T Tuition Statement, received from the educational institution the student attended. The form includes the institution’s federal identification number, the student’s taxpayer identification number, payments received, amounts billed, or refunds made for tuition and related expenses, scholarships administered by the institution, and the student’s enrollment and graduate status.

https://turbotax.intuit.com/tax-tips/college-and-education/take-advantage-of-two-education-tax-credi...

[manuez35]

thanks a lot for the detailed explanation.

Can you help me with a sample Joint Election statement? Do I have to mention the dates we landed in US i.e 23rd July 2022. Does my son also have to sign a statement stating that he wants to be treated as a Resident for the full year. Will we still be able to claim the AOTC if he was a Dual-status resident for 2022?

How do I report my India income and taxes deducted at source for period 1st Jan 2022 to 22nd July 2022? I guess, if we want to be treated as US Resident for tax purposes for full year 2022 then I have to report by Foreign income. 

Is it possible TurboTax Expert help me with doing the taxes for 2022 with  

thanks,

Manuel

[LindaS5247]

Yes, I can help you with a sample of a Section 6013(h) Election.

First, I would put a heading on a blank piece of paper.

For example, list both of your names and social security numbers and state to what tax return they apply (such as 2022 Form 1040), as a header in case this gets detached from your return the IRS will be able to identify to which return it pertains.

Then continue below this heading with the language necessary to make the election:

Election Under IRC §6013(h)

The undersigned declare:

• We hereby make an election under IRC §6013(h) for the current tax year.
• On the last day of the current tax year, we were married to each other.
• For the current tax year, the requirements of Regs §1.6013-6(a)(1) are satisfied.
• (Spouse1) was a U.S. citizen (or resident alien) on the last day of the current tax year.
• (Spouse1) taxpayer identification number is (insert their Social Security Number).
• (Spouse1) address is (insert their address).
• (Spouse2) was a nonresident alien, within the definitions of IRC §7701(b)(1)(B), on the first day of the current tax year, and a U.S. citizen (or resident alien) on the last day of the current tax year.
• (Spouse2) taxpayer identification number is (insert).
• (Spouse2) address is (insert address).

(Signature of Spouse1) 

(Signature of Spouse2) 

Your son does not have to sign the statement.

In general, if this election is made, then the worldwide income of both spouses is, in general, subject to U.S. income taxation for the entire taxable year.

Yes, you can have a Turbo Tax Expert help you do your taxes for 2022.  Here is a link to help you get started with that.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/product-setup/connect-tax-expert-turbota...

[manuez35]

I have two follow-up question.

• (Spouse1) was a U.S. citizen (or resident alien) on the last day of the current tax year.

On last day of 2022, we both were present in USA but we both didn't complete 183 days of presence in USA. Am I still considered a resident alien on 31st Dec 2022 ?

Can we make this joint election on 1 Feb 2023 and file our taxes or have to wait until 15th May 2023 to complete the substantial presence test?

[pk]

@manuez35 , having gone over the above discussion  and keeping in mind  the requirements of section 6013 (h) , I am of the opinion  that you can only qualify for the "First Year Choice " after meeting the SPT in 2023 and you are not eligible to apply for section 6013(h) benefits ONLY because you do not meet the requirement of meeting SPT by the end of the year i.e. 12/31/2022.  

@LindaS5247 

[manuez35]

Hi, 

I have decided to wait until May 2023 to meet the SPT requirements. 

We plan to report worldwide income. I had around $14000 income in India for 1st Jan to 23rd July and paid Taxes of $1850 on this income in India.

What option do I have?

- Can I go for Foreign Income Exclusion? Am I eligible under Physical Presence test as I was in India from Jan 2013 to 23rd July 2022. (Getting more refund)

OR

- Should I go for Form 1116 - Foreign Tax Credit. (Getting little less refund)

Also, you mentioned my son's don't have to do the election for full year resident. Right? but he is 18 years so is it safe to just attach his Full year resident election statement. He doesn't have any income in India neither in USA. He was student and we were supporting in India. Here too we support him?

thanks.

[pk]

@manuez35 , let me go over a few things first before you choose the first year choice --

(a) in your particular and were  case since you were admitted 07/23/2022 ( and assuming that you were not present any days in 2021, and 2020), you will generally meet  SPT ( all days present in 2022 + 1/3 rd days in 2021 and 1/6th days in 2020) around Jan  26th 2023.  This is because we are dealing with tax year 2022.

(b)As quoted below , if you choose to exercise the first year option to be treated as a resident for the year , your first day of residency starts on July 24th of 2022 -- the first full day that you were present in the USA. and you are resident till 12/31/2022.

Residency Starting Date Under the First-Year Choice

If you do not meet either the green card test or the substantial presence test for the current year (for example, 2021) or the prior year (2020), and you did not choose to be treated as a U.S. resident for part of the prior year (2018), but you meet the substantial presence test in the following year (2022), you can attach a statement to your income tax return choosing to be treated as a U.S. resident for part of the current year (2021). To make this first-year choice, you must:

1.  Be present in the United States for at least 31 days in a row in the current year, and
2. Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of the current year. (For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States.)

When counting the days of presence in 1 and 2 above, do not include any days in the United States as an exempt individual under any of the days of presence in the United States exceptions to the substantial presence test.

If you make the first-year choice, your residency starting date for the current year is the first day of the earliest 31-day period (described in 1 above) that you use to qualify for the choice. You are then treated as a U.S. resident for the rest of the year.

If you are present for more than one 31-day period and you satisfy condition 2 above for each of those periods, your residency starting date is the first day of the first 31-day period. If you are present for more than one 31-day period but you satisfy condition 2 above only for a later 31-day period, your residency starting date is the first day of the later 31-day period.

(c) Since there is no allocation possibility of standard deduction, you will have to use itemized deduction , just as you would do if you filed as a Non-Resident Alien.

(d) This choice would also mean exposing your foreign earnings  but from ONLY the day you became a resident --- so you cannot use your earlier  income in India ( not eligible for foreign earned income exclusion, no foreign tax deduction / credit ).

Thus I see no advantage to you as far as being able to use the Standard Deduction to reduce taxable income and thus  tax liability.

For 2023, you are resident for the whole year and indeed can file form 1040, use standard deduction and for your child school fees should be deductible ( with

So I am at a loss as to how to help ameliorate your tax burden in a legal way .   I am assuming here that both you and your spouse are citizens of India  and were working in India for a local entity.

Is there more I ca do for you ?

pk