Unique Filing Status and Exemption Situations

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1 Unique Filing Status and Exemption Situations Entire lesson Individuals who are not U.S. Citizens Pub 4491 Lesson 8 Pub 4012 Tab L

2 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 2

3 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 3

4 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 4

5 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 5

6 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 6

7 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 7

8 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 8

9 Check the Intake Sheet 9

10 Resident or Nonresident Alien? Use Chart in Pub 4012 Tab L F, J, M or Q visas require that tax preparer and quality reviewer have foreign student certification 10

11 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

12 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 -AND- 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) 12

13 Nonresident Spouse s Exemption IF Nonresident spouse had no U.S. income -AND- Cannot be claimed as dependent on anyone else s return -AND- Taxpayer provided more than ½ the support THEN taxpayer can claim personal exemption for nonresident spouse, if spouse has SSN or ITIN 13

14 Spouse s Exemption Married Filing Separate Return Filing MFS and claiming NRA spouse, in Filing Status section: Must have SSN or ITIN for spouse 14

15 Spouse s Exemption Head of Household Return Filing HoH and claiming spouse s exemption (spouse has no income and no one else can claim them) TaxSlayer does not handle at this time 15

16 Head of Household Return With NRA Spouse Whether or not claiming the spouse s personal exemption, verify that TaxSlayer software prepares the HoH return correctly 16

17 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 17

18 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 18

19 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 19

20 EIC with a Nonresident Spouse? No both taxpayer and spouse must be citizens or residents for entire year (even though filing HoH) In personal info section, check if spouse is NRA during the year 20

21 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 21

22 Unique Filing Status Comments Questions 22

Unique Filing Status and Exemption Situations

Unique Filing Status and Exemption Situations Taxpayers who are not U.S. Citizens Pub 4491 Part 2 Entire Lesson NTTC Training 2014 1 Alien An alien is any individual who is not a U.S. citizen or U.S. national