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Information required on Joint Election under 6013 (h)

Forum|Forum|3 years ago
January 14, 2023
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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 ?

Best answer by pk12_2

@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 ?

A

Anonymous_

Employee

Stay tuned. I will page Champ @pk12_2.

P

pk12_2Answer

Employee

@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 ?

M

manuez35Author

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.

P

pk12_2

Employee

@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:

Be present in the United States for at least 31 days in a row in the current year, and
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