[crazee85]

I was wondering if dual-status aliens are allowed to claim Making Work Pay Credit.

My research so far, on this topic, is below:


Definition of Dual-Status Alien:
You are a dual status alien when you have been both a resident alien and a nonresident alien in the same tax year.


Source: http://en.wikisource.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009/Division_B/Title_I/Subtitle_A#PART_I.E2.80.94GENERAL_TAX_RELIEF

American Recovery and Reinvestment Act of 2009/Division B/Title I/Subtitle A
PART I—GENERAL TAX RELIEF
SEC. 1001. MAKING WORK PAY CREDIT
SEC. 36A. MAKING WORK PAY CREDIT
"(d) Definitions and Special Rules.—For purposes of this section—
"(1) Eligible individual.—
"(A) In general.—The term `eligible individual' means any individual other than—
"(I) any nonresident alien individual,


Source: http://www.irs.gov/publications/p519/ch06.html

'Restrictions for Filing Dual-Status Tax Returns' in p519 (2009)
"6) Tax credits. You cannot claim the education credits, the earned income credit, or the credit for the elderly or the disabled unless:
You are married, and
You choose to be treated as a resident for all of 2009 by filing a joint return with your spouse who is a U.S. citizen or resident, as discussed in chapter 1 ."

'Credits' in p519 (2009):
"As a dual-status alien, you generally can claim tax credits using the same rules that apply to resident aliens."


Since Making Work Pay Credit was for both 2009 and 2010, I believe this credit would also have been included in the Restrictions list (in p519) if dual-status aliens were not allowed to claim this credit. p519 also says that a dual-status alien can claim tax credits using the same rules that apply to resident aliens (except for the restrictions).

Even in the restrictions for Making Work Pay Credit, it says 'nonresident alien individual' and not 'nonresident alien individual at any time of the year'. In addition, I observed that for unallowed credits such as the Earned Income Credit, it says that you must be a U.S. citizen or resident alien all year to claim it which makes it quite obvious that dual-status aliens cannot claim it. However this is not the case with Making Work Pay Credit.

So I guess a dual-status alien should be allowed to claim Making Work Pay Credit.


My guess gets further strengthened by the following forum discussion:
http://pub33.bravenet.com/forum/static/show.php?usernum=2786238237&frmid=20&msgid=994452& cp=1&cmd=show
"The IRS will honor the MWP credit on a dual status return where the taxpayer is a resident on the last day of the year. The MWP will use the income earned during the residency period.
For individuals who have left the USA and elected an earlier termination date (eg, before 12/31/2010), they will not get the credit."


Any help or inputs in this regard will be highly appreciated...

Thanks...

[jagrover]

Per Internal Revenue Manual, "Dual Status -Taxpayer can only get the Making Work Pay Credit when Form 1040 is the controlling document. Dual Status taxpayers are eligible for Government Retiree Credit with either as the controlling document."

So, I concur that the credit is available to dual status aliens filing the 1040NR as a statement and Form 1040 as the primary return. Those filing Form 1040 as a statement are not entitled to the MEPC. I don't know whether this IRS position has been challenged in court.

[AtlantaTaxExpert]

Sorry, I dis-agree.

A dual-status alien MAY be eligible for the Givernment Retiree Credit, but he/she is NOT eligible for the Making Work Pay Credit itself.

[crazee85]

Sorry, I dis-agree.

A dual-status alien MAY be eligible for the Givernment Retiree Credit, but he/she is NOT eligible for the Making Work Pay Credit itself.

As far as I understand from the following text in IRS Revenue Manual, dual status taxpayers with Form 1040 as the controlling document can get the Making Work Pay Credit. Can you explain how can this text be interpreted in the opposite way? Thanks!

Internal Revenue Manual - 3.38.147 International Notices (Cont. 1)

3.38.147.9.8 (01-01-2011)
Making Work Pay and Government Retiree Credits

3. Dual Status - Taxpayer can only get the Making Work Pay Credit when Form 1040 is the controlling document. Dual Status taxpayers are eligible for Government Retiree Credit with either as the controlling document.

[AtlantaTaxExpert]

Okay, I stand corrected.

[crazee85]

Okay, I stand corrected.

Actually even I noticed this after jagrover posted his findings... but I hv already filed my dual status tax return (with Form 1040 as the controlling document) without the making work pay credit... I ll hv to file an amended return now..!

[AtlantaTaxExpert]

Not an overly difficult amendment; all you would have to file is Form 1040X and Schedule M.

[crazee85]

thanks AtlantaTaxExpert... I believe I don't have to send any 'as previously filed' or 'amended' tax forms... Only Form 1040X and Schedule M should suffice... Is this correct?

[AtlantaTaxExpert]

Yes, Form 1040X and Schedule m is all that is needed.

[crazee85]

thanks AtlantaTaxExpert... I finally got the time to fill out the Form 1040X and Schedule M, and am ready to send them out... Is it OK if I send a printout of the http://www.irs.gov/irm/part3/irm_03-038-147-cont01.html#d0e2662 as well with relevant statement highlighted??

[AtlantaTaxExpert]

You can add the printout, or cite the specific paragraph in the IRS manual in the explanation on the Form 1040X.

[crazee85]

Awesome... thanks a lot for your reply... really appreciate your help...

[AtlantaTaxExpert]

Glad to help!