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shekhar_a2k · Jan 15, 2009, 08:19 PM

Hi,
My mom visited me in the United States, California with a B1/B2 visitor visa. She stayed with me for more than 183 days for the year 2007. I had filed for tax returns claiming her as a dependent after applying for her ITIN number. But the California State Tax department sent me a notice stating that I cannot claim her as dependent and I cannot file with myself as head of household but to rather file under the Single filing status.
I get different inputs from various sites. Please let me know the actual law and if I stand a chance to question the State Dept.

Thanks
Shekhar

MukatA · Jan 15, 2009, 09:47 PM

When did she enter the U.S. and leave the U.S. You can not claim non-residents.

shekhar_a2k · Jan 15, 2009, 10:57 PM

Originally Posted by MukatA

When did she enter the U.S. and leave the U.S.? You can not claim non-residents.

Hi MuktaA,
My mom entered the US on the 6th of Dec 2006 and left the country on Sep 15, 2007. She visited Canada for 3 weeks just when her six months period was expiring here in US and then returned back to California to continue her stay till Sep 15th.
Thanks
Shekhar

MukatA · Jan 15, 2009, 11:38 PM

1. Your mom did not complete SPT in 2007.
2. Also, even if she has completed SPT, she is not resident for 2007; she is dual status as she left on Sept 15.
3. You can not claim your mother.
Read about Qualifying Relative: Your U.S. Tax Return: Filing Requirement for a Dependent

shekhar_a2k · Jan 15, 2009, 11:51 PM

Originally Posted by MukatA

1. Your mom did not complete SPT in 2007.
2. Also, even if she has completed SPT, she is not resident for 2007; she is dual status as she left on Sept 15.
3. You can not claim your mother.
Read about Qualifying Relative: Your U.S. Tax Return: Filing Requirement for a Dependent

I was checking the exact dates of her travel - she entered US on 23rd Dec 2006 and returned on Oct 21st 2007. I am not sure what SPT means and not sure how you mean 'she is not a resident'
Thanks
Shekhar

AtlantaTaxExpert · Jan 16, 2009, 09:16 AM

I disagree with MukatA on this one. Your mother DID meet the Substantial Presence Test (SPT), and my queries to the IRS confirmed that, if the parent meets SPT, they CAN be claimed as dependents on the federal tax return.

However, the state of California may have a more stringent residency requirement. Since I do not practice in California, I cannot comment on their residency requirements to claim parents as dependents.

MukatA · Jan 16, 2009, 11:15 AM

If you meet SPT, you are resident for that year except for the years you enter the U.S. and leave the U.S. as during those years you are dual status.

AtlantaTaxExpert · Jan 16, 2009, 01:36 PM

That is true for the taxpayer who is filing the return.

It does NOT apply to the parents who are being claimed as dependents. My conversation with the IRS was very clear, and their response was clear: If the parents meet SPT in the year they are being claimed as dependents, they CAN be claimed, even if they return to their home country in that year.

shekhar_a2k · Jan 16, 2009, 03:41 PM

Originally Posted by AtlantaTaxExpert

That is true for the taxpayer who is filing the return.

It does NOT apply to the parents who are being claimed as dependents. My conversation with the IRS was very clear, and their response was clear: If the parents meet SPT in the year they are being claimed as dependents, they CAN be claimed, even if they return to their home country in that year.

Hi Atlanta Tax Expert,
I tried to read through the tax laws for dependents on the website, but could not really get to interpret them. Thank you for clarifying. Can you please suggest as to what should be my next action, since the State Tax dept has sent a letter asking me to pay up the amount I had claimed including the interest earned.
Meanwhile my Tax consultant is now saying that my mom shouldn't have been declared as dependent as she was on Visitor Visa even though the same firm filed my tax last year declaring her as dependent. It sounds strange that the tax consulting firm to which we go for consultation may not be aware of the law properly which is another perplexing thing. Should I ask them to not to file the amendment with me being declared as single status which is what they said they will do.
Thanks
Shekhar

AtlantaTaxExpert · Jan 20, 2009, 07:12 AM

Shekhar:

Did the IRS issue her an ITIN?

shekhar_a2k · Jan 20, 2009, 12:22 PM

Originally Posted by AtlantaTaxExpert

Shekhar:

Did the IRS issue her an ITIN?

Yes, I applied and got the ITIN number for my mom

AtlantaTaxExpert · Jan 21, 2009, 10:38 AM

California's interpretation of the dependency rules are apparently more stringent than the IRS interpretation.

You can appeal the California interpretation, citing the fact that the IRS both allowed the dependency exemption and issued the ITIN, but I suspect it would do no good.

How much more are they asking for in taxes?

shekhar_a2k · Jan 21, 2009, 12:14 PM

Originally Posted by AtlantaTaxExpert

California's interpretation of the dependency rules are apparently more stringent than the IRS interpretation.

You can appeal the California interpretation, citing the fact that the IRS both allowed the dependency exemption and issued the ITIN, but I suspect it would do no good.

How much more are they asking for in taxes??

Around $ 2k

AtlantaTaxExpert · Jan 21, 2009, 01:50 PM

You have to decide if $2,000 is worth your time and effort to appeal.

shekhar_a2k · Jan 21, 2009, 01:53 PM

Originally Posted by AtlantaTaxExpert

You have to decide if $2,000 is worth your time and effort to appeal.

I have asked my Tax consultant to re-submit the case. Is there an issue in re-submitting my case to the State tax dept.

AtlantaTaxExpert · Jan 21, 2009, 02:08 PM

No, that should work. With luck, it will be considered by someone who has a more lenient attitude on such matters.