Tax related question

[zyggy 9]

After reading the whole thread I see my own situation was substantially different from yours so pay no attention to my experience. My wife had no income in her home country and I was supporting both her and her stepson for at least half of the year even before they arrived. I think that is a major difference.

I did my taxes with Turbo Tax and just answered the questions as they were asked. It said I was eligible to claim my stepson as a dependent and I think I even got the child tax credit though I'm not sure about that. So far the IRS hasn't disagreed with Turbo Tax.

My fiance' and stepson arrived on December 24th of 2004 and we got married on December 30th. I filed a joint return and claimed our stepson as a dependent.

The thing about it is that China is one of the many countries that has a "tax treaty" with the United States. I was informed by an IRS agent that we would have to claim my wife's income that was earned in China on our tax forms. The IRS agent also stated something about if my wife was taxed in China on her income (which she was) that there would be special provisions. So, once again, more research to be done this weekend.

Thanks,

Keith

I do not think there is any doubt that what you understand about how to handle your filing status and your wife's income is correct (tax treaty and special exception). The question that I think you need to come to a final conclusion is how to handle the child.

Correct...

[zyggy 9]

After reading the whole thread I see my own situation was substantially different from yours so pay no attention to my experience. My wife had no income in her home country and I was supporting both her and her stepson for at least half of the year even before they arrived. I think that is a major difference.

I did my taxes with Turbo Tax and just answered the questions as they were asked. It said I was eligible to claim my stepson as a dependent and I think I even got the child tax credit though I'm not sure about that. So far the IRS hasn't disagreed with Turbo Tax.

My fiance' and stepson arrived on December 24th of 2004 and we got married on December 30th. I filed a joint return and claimed our stepson as a dependent.

How does it differ... While Turbotax is pretty good at doing most people's tax returns.. It really breaks down in situations like this... This is a very obscure area of tax rules... If your child was not considered a US Resident in terms of IRS Regulations (meaning that you met the substantial presence or green card test), you can not claim them. All Turbotax asks you is if your child was a US Resident... If you don't know how IRS Regulations define a US Resident, most people would claim their wife and child as residents as soon as they arrived on a K visa. However, in US Tax Regs, that may not be the case...

This is why in complex tax cases like the kind that we find here, it is potentially very dangerous to do your taxes yourself without knowing all the ins and outs of tax regulations..

Elyjack... you were permitted to claim your stepson in 2004 because the rules on claiming a dependent were significantly different then...

As an example, if we were talking about the new rules that were established in 2005, based on what you have written here.. your could claim your stepson as a dependent on your US Tax return in 2005 unless you waited to file your US Taxes until June.. Support has nothing to do with it in this case... Whether or not you provide half of the support for your stepson is but one of the criterion needed to determine if he qualifies as a Qualifying Child and therefore as a dependent you can use on a US Tax return. It's not a 4 out of 5 deal. You must meet all five. Another criterion is that the child must be a US Resident or Citizen or resided in Mexico or Canada. If your stepson did not meet the definition of a US Resident (as determined by the Substantial Presence or Green Card Test) or was a not resident of the Mexico or Canada, he does not qualify to be a qualifying child... Even then, you can't even meet the substantial presence test for 2005 because your stepson was not in the US for more than 31 days in 2005...

Edited February 9, 2007 by zyggy

[elyjack 0]

Elyjack... you were permitted to claim your stepson in 2004 because the rules on claiming a dependent were significantly different then...

I didn't know they changed the rules. It seemed pretty straightforward back then.

As for Turbo Tax, the IRS has found math errors on my return every time I've used it.