Can I Claim My Parents in Another Country on My US Tax Return?

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Michael Lodge    by Michael Lodge

Clients come into our office from time to time to obtain an ITIN number for their parent or relative in a foreign country so they can claim them on their tax returns.  Many times we have to explain to the client that there are certain guidelines they have to meet.  Many do not qualify for the dependent exemption because they have not met the rules.  What are the rules?
Claiming parents is difficult, but it can be done if you pass the “Qualifying Relative” tests.  There are to big issues that seem to get in the way.
You can’t claim a married person who files a joint return with his or her spouse.  If your parents file a joint tax return in the United States, then you won’t be able to claim them. I am guessing they do not file a return, but you need to know this information.
To claim someone as a dependent, the person must be a US citizen, US resident alien, US national or resident of Canada or Mexico.  Where our clients have trouble is when their parents visit the US, but their visas are only for 6 months, not longer.  Then they don’t qualify as a US resident.  You need to understand the 6 month rule because that is the issue most likely to cause foreign families trouble with claiming their parents.  After that, the rules are the same for anyone else in America who wants to claim their parents on their US income tax return.  You need to pass the qualifying relative test and substantial presence test. https://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test 

The 5 requirements are as follows:

1. Support test: You must provide more than half of the support of the claimed dependent. Support includes food, lodging, clothing, education, medical and dental care, recreation, transportation and other necessities.

2. Gross income test: The person claimed as a dependent must have gross income of less than $4,000, which is the personal exemption amount for 2015.

What if siblings also provide support?Special consideration must be given to multiple support agreements. This is an agreement signed by 2 or more taxpayers who provide financial support for the same dependent. A multiple support agreement allows several persons who jointly support a single dependent to take turns claiming this person as a dependent on their tax returns. This is reported in detail on Form 2120, which is filed along with your tax return.

3. Member of household relationship test: The person claimed as a dependent must be related to the taxpayer in a specific way (e.g., the natural or adopted child or parent). A parent or child does not have to live in the same household as long as other criteria are met.

4. Joint return test: The person claimed as a dependent generally must not file a joint income tax return with another unless the only reason to file the return is to obtain a full refund of tax withheld.

5. Citizen/residency test: The claimed dependent must be a citizen, national or resident of the United States or a resident of Canada or Mexico at some time during the calendar year in which the tax year of the taxpayer begins.

In addition to these 5 tests, an individual must not be claimed as a dependent on another person’s return. For example, a parent cannot claim a personal exemption for himself.

Dependency exemption rules are complicated, so review IRS Publication 501 and talk to a tax adviser before staking your claim. And don’t forget that your dependent may need to file a tax return, as well. Welcome to your parents, and good luck!