Unique Filing Status and Exemption Situations Entire lesson Unique Filing Status and Exemption Situations Individuals who are not U.S. Citizens Pub 4491 – Lesson 8 Pub 4012 – Tab L #7 removed ref to P519 – covered in next slide #15 deleted, not correct (TP needing to file 1040NR to claim NRA spouse’s exemption on HoH return) #16 clarified “Lived in” choices #18 updated to add spouse to screen shot

Resident or Nonresident? A resident alien is taxed the same as U.S. citizen – on worldwide income Nonresident aliens are generally taxed on U.S. income only NTTC Training – TY2016

Who is an Alien? An alien is any individual who is not a U.S. citizen or U.S. national A nonresident alien is an alien who has not passed: The green card test, or The substantial presence test NTTC Training – TY2016

Who is a U.S. Citizen? An individual born in United States An individual whose parent is a U.S. citizen A former alien who has been naturalized as a U.S. citizen An individual born in a U.S. Territory NTTC Training – TY2016

Who is a U.S. National? An individual who owes his sole allegiance to the United States, including all U.S. citizens and some individuals who are not U.S. citizens The term "U.S. National" includes American Samoans or Northern Mariana Islanders who choose not to be U.S. citizens NTTC Training – TY2016

Resident Alien: Green Card Test A lawful permanent resident of the United States at any time during calendar year Has or can get a social security number NTTC Training – TY2016

Resident Alien: Substantial Presence Test Physically present, at any time of the day, in United States for minimum number of days over past three years NTTC Training – TY2016

Substantial Presence Test: Exempt Individuals Special day-counting rules apply for substantial presence test for: Foreign government-related person Teacher or trainee – J or Q visa Student – F, J, M, or Q visa Professional athlete Refer to Pub 4012 Tab L and Pub 519 NTTC Training – TY2016

Check the Intake Sheet NTTC Training – TY2016

Resident or Nonresident Alien? Use Chart in P 4012 Tab L F, J, M or Q visas require foreign student certification NTTC Training – TY2016

Nonresident Alien Spouse Treat spouse as nonresident alien on HoH or MFS return Cannot file Single if lawfully married in any country OR Elect to treat spouse as resident alien on MFJ return and include worldwide income Election to treat spouse as resident alien must be made in writing – see Pub 519 Open whether election should be in scope - lsa NTTC Training – TY2016

Head of Household Return IF Taxpayer is U.S. citizen or resident alien for entire year -AND- Taxpayer meets all “considered unmarried” requirements to file for HoH with a different qualifying person, except for living apart from spouse Nonresident spouse chooses not to file MFJ, Then taxpayer can file as Head of Household But – cannot claim EIC (both taxpayer and spouse must have valid SSNs) If the spouse is a nonresident alien, the “living apart” rule does not apply to the taxpayer NTTC Training – TY2016

Nonresident Spouse’s Exemption IF Nonresident spouse had no U.S. income -AND- Cannot be claimed as dependent on anyone else’s return Taxpayer provided more than ½ the support THEN – taxpayer can claim personal exemption for nonresident spouse, if spouse has SSN or ITIN NTTC Training – TY2016

Head of Household Return Filing HoH and claiming NRA spouse, on Main Info Page: Must have SSN or ITIN for spouse TaxSlayer Issue #480 If the spouse is a nonresident alien, the “living apart” rule does not apply to the taxpayer Checking (c) automatically checks (b) Spouse NTTC Training – TY2016

Dependent’s Exemption Nonresident alien stepchild is not a dependent unless child is resident of Canada or Mexico A resident alien stepchild can be a dependent (if tests are met) Determine residency status first Dependent must have SSN, ITIN or ATIN ITIN – individual taxpayer identification number assigned by IRS ATIN- adoption taxpayer identification number assigned by IRS NTTC Training – TY2016

Child Tax Credit with a Nonresident Dependent? No – qualifying child for child tax credit must be a U.S. citizen, national or resident Select Lived in Canada or Lived in Mexico on dependents page, number of months in home – TaxSlayer denies CTC NTTC Training – TY2016

Adopted Dependent’s Exemption An adopted nonresident alien child is a dependent if he/she lives with taxpayer entire year Adopted dependent must have SSN, ITIN or ATIN NTTC Training – TY2016

EIC with a Nonresident Spouse? No – both taxpayer and spouse must be citizens or residents for entire year (even though filing HoH) In EIC Checklist, check “yes” if spouse is NRA during the year NTTC Training – TY2016

Quality Review If electing MFJ with nonresident spouse, written election made in prior year or attached? If MFJ, worldwide income included and correctly converted to U.S. dollars? If HoH or MFS, spousal exemption properly claimed or not? No EIC claimed NTTC Training – TY2016

Unique Filing Status Comments Questions NTTC Training – TY2016