Hi, my husband and I and our 2 young children (aged 1 and 3 years) arrived in NC at the end of Feb 2009. He's on an E-3 visa and we're staying for 12 months. We both were working in Australia in Jan and Feb 2009 (I was only working 2 days a week). My husband has taken unpaid leave from his Australian job.

My husband is earning $32,000 pa. Even though he nominated the 2 children and me as dependents, he's being paid as a single person - he is taking home only $395 per week. I'm assuming that this is because the 3 of us don't currently have SSNs.

My first question is: must the children and I obtain SSNs in order to be considered dependents for tax purposes? It will cost us over $1000 USD to obtain the 3 SSNs therefore we want to make sure that it's the only option before we proceed down this path. I'm not planning on working, (basically because there are so few jobs, let alone part-time jobs). Therefore the only reason we want SSNs is for tax purposes.

My second question is: when we lodge our tax return at the beginning of 2010, I know that we'll have to declare our respective Australian incomes from Jan-Feb 2009, but what about our rental income from Australia? It basically covers the cost of our mortgage, rates and storage costs. We'll obviously declare it on our Australian tax return (the Australian tax year runs from July 1 to June 30, which is an added confusion).

Any advice/information would be greatly appreciated. Thank you so much for your time!

Oh, this is a nice complicated question..

I believe your family would be considered dual status aliens in 2009 when you came to America.

Read the extremely complex instructions here:
Publication 519 (2008), U.S. Tax Guide for Aliens (http://www.irs.gov/publications/p519/ch06.html)

As you see after reading these passages you need not concern yourself with your Australian income whether in wages or rent.

I cannot imagine why you would have to pay anything to get a SS number. Go to this site to find the SS office nearest you:
https://secure.ssa.gov/apps6z/FOLO/fo001.jsp

Maybe you should contact a tax professional in your area to help you over the rocky parts.

You do get $1,000 Child Tax Credit for each one of those babies so I wouldn't worry too much.

Do not hesitate to write again if you have a problem.

I agree with Five Rings; apply for the SSN for free.

If you are denied, then you can apply for ITINs (again for free) when your husband files his dual-status return by completing Form W-7 for yourself and for each child and sending it with the tax return to the ITIN Processing Center in Austin, Texas. Submit it in January 2009 and turn-around can be as fast as two weeks.

Atlanta Tax Expert meant to say Jan. 2010 or as soon as you have all your 2009 tax documents.

Thank you so much for responding so quickly and for your advice.

I should have been clearer re: SSNs- we don't have to pay for the actual SSN, but in order to qualify for one I've been told by the Social Security Office and IRS that, as E-3 dependents, we need to fill out an I-765 work authorisation form, which costs $340 each to lodge. They said that even the children need to pay the $340 and apply for work authorisation (crazy! ) in order get a SSN... My husband didn't have to as he is the E-3 visa holder.

Someone else has told me that the W-4 tax form does not require a SSN to be given for dependents... I've no idea... the more I find out the more confused I'm becoming! :-)Because money is so tight for us I don't want to fork out $1000 in order to be eligible for SSNs and then find out that it wasn't necessary...

What do you think? Maybe we're going to have to bite the bullet and pay someone to look into it for us...
Thanks again :-)

Thank you to Atlanta Tax Expert, too. I only just read your comment now. When I spoke to the department on the phone they explored whether I'm eligible for ITINs but I'm not, as I haven't been refused a SSN - I can get one so long as I pay $340 for the I-765 form.

It appears in Form I-765 you are eligible under (a)(17) in the section called "employment based nonimmigrant categories" but certainly not your little babies as only spouses are eligible.

You may certanly get ITINs for them. The silver lining is you get permission to work. But how will you work and take care of two little kids like that? None of my business.

Anyway, apply for the ITINs when you file for 2009 tax year

What you say makes sense Five Rings. It's just that when I went to Social Security they said that our children also have to complete the I-765 form... so they didn't refuse them SSNs, but said that they had to follow the same course as me. And then when I spoke to IRS they said the same. IRS said that none of us are eligible for ITINs as we haven't been refused SSNs. I'm going to call IRS on Monday to try to clarify a few things.
My main query still really is, Do we need to get SSNs in order to be considered dependents for tax purposes (or can my husband simply list our names and attach copies of our passports and visas when he lodges his tax return next year? ). I'm not planning on looking for paid work so the only reason I'd pay the $340 for the I-765 is to be considered a dependent.
Thanks again for your time :-)

Thanks for the little smiley face.

Form I-765 plainly states that only the spouse is eligible for a SSN. That being the case I will discuss this issue with the ITIN Operation and see what can be done for your family to avoid an unnecessary expense.

Your husband needs to have numbers for you and the kids to claim you as a spouse and the kids as dependents. What you suggest as to submitting passports and visas will not suffice. Give me a little time here and let us see what can be done.

You're a star! Thank you so much, it's really appreciated. :-) :-) (yes, you've earned two smiley faces! )

I regret to say that the ITIN Unit gave me the same answer that the SS people did.

It appears you will have to bite the bullet and pay the fees. Then you submit the refusal letter with the W-7 application together with all the rest of the documentation required.

Here is the message:
It is possible children may be eligible for an ITIN. The parents would need to apply for a SSN, be denied and receive the letter and then attach same to the W-7, with proof of identity and foreign status (passport) etc.

Husband should be claiming at least 4 personal allowances.

Thanks so much Five Rings - it's good to know where we stand. I really appreciate all of your time and effort.
Regards
Natalie