Hello,

I have some questions related to claiming visiting parents/in-laws as dependents for the upcoming tax returns.

1)My father-in-law and mother-in-law came to the US (B2 visitor visa) in Sep 2007 and have been staying with us since.They will stay with us till end of Jan 2008.Me and my wife file jointly each year.This year we will also be claiming our new born child as dependent.Can we also claim the in-laws as dependents by applying for their ITINs? If yes,will it be for the whole year or only from Sep-Dec?

2)Will claiming them as dependents make a big difference in the amount of federal and state tax refunds we get (by means of deductions/exemptions or other applicable things)?

3)General question - Lets assume my total federal taxes "withheld" are around $3500.Also assume that after applying all exemptions,deductions,child tax credit,moving expenses,foreign tax credits etc etc the end tax after credit amount comes to $0 or less than $0 (if at all that's possible - pardon my ignorance).If it becomes less than $0 say $x, do we get ($3500 + $x) as total tax refunds or does it remain at $3500 no matter what?

Thanks

1) Sorry, but you cannot claim the in-laws because they have not been in the U.S. long enough. They must be in the U.S. for at least 183 days in 2007.

2) Each exemption is $3,400, so that's $6,800 in exemptions. Worth about $1,700 at the 25% tax bracket.

3) It IS possible to get MORE back than what was withheld if you factor in the Earned Income Credit, but you will NOT qualify for EIC if either you or your wife has an ITIN.

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.

Also foreign tax credit can never reduce your taxes on the U.S. income. Maximum, on the income in foreign country you will pay no tax in the U.S.
If you file jointly as resident alien and don't itemize your deductions, then your deductions are standard deduction $10,700 plus $13,200 (for 3 exemptions at $3,400 each). So your AGI minus $23,000 is your taxable income.

Agreed!

1) Sorry, but you cannot claim the in-laws because they have not been in the U.S. long enough. They must be in the U.S. for at least 183 days in 2007.

2) Each exemption is $3,400, so that's $6,800 in exemptions. Worth about $1,700 at the 25% tax bracket.

3) It IS possible to get MORE back than what was withheld if you factor in the Earned Income Credit, but you will NOT qualify for EIC if either you or your wife has an ITIN.


IRS website says following for resident alien
You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
All the days you were present in the current year, and
1/3 of the days you were present in the first year before the current year, and
1/6 of the days you were present in the second year before the current year.

According to above rule can anyone claim parents or in-laws as dependent if they meet the SPT

Yes, parents and in-laws who meet SPT CAN get ITINs and be claimed as dependents; I have prepared multiple returns for clients under these circumstances.