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taxgeek · Jan 30, 2009, 06:21 PM

Hello

I filed Federal Income Taxes as a non resident in tax year 2007 (1040NR).
I will be filing as a resident for tax year 2008 using form 1040 (I pass the substantial presence test).
Furthermore, I will be filing married filing joint since I got married on Dec 24, 2008. I have an SSN. My spouse does not yet have an ITIN/SSN, but I plan on submitting the W7 (have read all relevant posts) with the Federal return, so that I can file my federal return joint and then subsequently use her ITIN on my State Return to file joint.

In calendar year 2008, I did not receive any economic stimulus rebate payment (probably because I filed as NR for tax year 2007).

Question : Can I claim Recovery Rebate Credit in my Federal Returns (Form 1040, Line 70). I have no children, and hence I claim the full $1200 (since I'm filing jointly)?

Thanks in advance,

taxgeek

AtlantaTaxExpert · Feb 2, 2009, 10:32 AM

If you file jointly with your wife on her ITIN, you are NOT ELIGIBLE for the Recovery Rebate.

However, you CAN file Married Filing Separately, list your wife's name and the acronym NRA (for non-resident alien) where her SSN goes, and THEN you would be eligible for the recovery rebate (probably for $600) to be added to your refund.

Once you got the refund, you would then file Form 1040X to amend your return to Married Filing Jointly and submit it, along with Form W-7, to the IRS ITIN Processing Center in Austin, Texas, to get the bigger refund that goes with filing jointly.

The IRS has stated on their website that this process is perfectly legal.

taxgeek · Feb 2, 2009, 01:40 PM

Ok. Thanks for the answer!

a) If I file married filing separately, I probably won't get the FED refund by Apr 15, 2009.
Is it OK to file 1040X AFTER Apr 15, 2009? (I guess it is, but see question below) --

b) If I were to file married file separately (FED returns), I will not have an ITIN for my wife by Apr 15 that I can use in a timely manner on my state tax form to file married file jointly...
My guess was that filing State Taxes under the joint category would also yield similar benefits like they do in FED returns. What do I do?

c) On a related note : If I file my FED returns married file jointly, am I obliged to use the same category in my state taxes. i.e. Do both returns have to be the same?

d) Can I not write "RRC" on my 1040 and hope that IRS will calculate a non zero credit for me? :) (Ref : Instructions, form 1040, pg 61 : "If you want us to figure the credit for you, enter “RRC” next to line 70.")

Taxgeek

helpseeker66 · Feb 3, 2009, 10:51 AM

TaxExpert

I am also in a similar situation and would like to get the 600$ as the Recovery Rebate credit for myself and my wife's ITIN disqualifies me. I would like to follow the 1040X filing approach but could you tell me where is this mentioned on the IRS site so I could research it further.

Thanks

Helpseeker

AtlantaTaxExpert · Feb 9, 2009, 10:38 AM

You will have to do some heavy duty searching on the IRS website, because I cannot find it (even though I distinctly remember reading it, and I HAVE confirmed the legality of the process with the IRS telephonically).

helpseeker66 · Feb 11, 2009, 11:08 AM

Thanks
Are you referring to this link . I found it on the IRS website
Economic Stimulus Payment Q&As: Taxpayer Identification Numbers

taxgeek · Feb 11, 2009, 01:29 PM

Originally Posted by helpseeker66

Thanks
Are you referring to this link . I found it on the IRS website
Economic Stimulus Payment Q&As: Taxpayer Identification Numbers

Hmm... looking at the question :

"Q. I have an ITIN, but my spouse has a valid Social Security number. Can we get a payment?

A. In most cases, if you and your spouse file a joint return, you will not get a stimulus payment. There is only one exception to this rule: If either you or your spouse is a member of the U.S. military, you will get a payment in November. If your spouse files a separate return, your spouse may qualify for a payment, based on his or her income deductions and credits."

Clubbing this with the fact that you can file an amended return later on to file joint, is sort of what the IRS is implying here...

AtlantaTaxExpert : Was this your line of thinking (I would agree with it!)

helpseeker66 · Feb 11, 2009, 01:51 PM

That too and the question right below it goes a step further

Q. If I have a spouse with an ITIN and choose "married filing separately" status to qualify for the economic stimulus payment and later on amend my original return to "married filing jointly" status, will I need to return the stimulus payment?

A. No.

I believe that is conclusive.

taxgeek · Feb 11, 2009, 06:38 PM

Originally Posted by helpseeker66

That too and the question right below it goes a step further

Q. If I have a spouse with an ITIN and choose "married filing separately" status to qualify for the economic stimulus payment and later on amend my original return to "married filing jointly" status, will I need to return the stimulus payment?

A. No.

I believe that is conclusive.

Quite conclusive indeed. Don't know why I missed the next question. That settles it! :)

helpseeker66 · Feb 24, 2009, 09:18 PM

HI

In the above context, I have been doing the number crunching and this is the scenario I run into:
When I file the 1040 as married filing separately, I fall into a higher tax bracket ( quite naturally ) and I owe the IRS $300. Now by virtue of the recovery rebate credit I get a refund of $300. This refund is SOLELY due to the $600 RRC ( 600 - 300).

Now when I correct the 1040 using the 1040X and when filing the 1040X as married filing jointly, I automatically fall into a lower tax bracket and have a higher refund. For the sake of this example let us assume the refund is 3000$ (This amount is exactly the same amount as the amount I would have gotten as a refund if I had filed the 1040 as married filing jointly in the first place) As I go through the steps of filling the 1040X the form wants me to subtract the amount I got refunded in the 1040 from the amount due ( 3000 - 300 = 2700 ). So my refund on the 1040X reduces to 2700 for a total of $3000 ( $300 on the 1040 and $2700 on the 1040X)

I think this is wrong:). The refund that I had gotten in the 1040 when filed married filing separately was due to the RRC and should not be something I should pay back as is clear based on the above thread. So instead of getting a total of 3000 I should get 3300.

Is my line of thought correct and do you have any thoughts on the matter?

thanks

taxgeek · Feb 25, 2009, 11:22 PM

Would be quite interesting to see what ATE and MukatA have to say about this.

ddpddp · Feb 27, 2009, 03:50 PM

The following answer makes absolutely no sense, especially the way you can "use 1040X to amend the previous return and get a bigger refund based on joint application". No matter what you will end up with the same amount.

Really doubt why this guy called himself Expert...

Originally Posted by AtlantaTaxExpert

If you file jointly with your wife on her ITIN, you are NOT ELIGIBLE for the Recovery Rebate.

However, you CAN file Married Filing Separately, list your wife's name and the acronym NRA (for non-resident alien) where her SSN goes, and THEN you would be eligible for the recovery rebate (probably for $600) to be added to your refund.

Once you got the refund, you would then file Form 1040X to amend your return to Married Filing Jointly and submit it, along with Form W-7, to the IRS ITIN Processing Center in Austin, Texas, to get the bigger refund that goes with filing jointly.

The IRS has stated on their website that this process is perfectly legal.

AtlantaTaxExpert · Mar 12, 2009, 11:15 AM

The process of filing Married Filing Separately, then amending to file jointly after you get the Recovery Rebate Credit, IS a valid way to get your rebate.

You have to be sure you do NOT give the RRC back when you amend, but, other than that, it is pretty straight forward.

The entire process takes between 3-4 months.

You have to decide if it is worth the trouble for $600.

ddpddp · Mar 12, 2009, 12:47 PM

OK... let us do a simple calculation here.

Basic conditions:
If you file jointly, you get A dollars back. This A does not include the rebate.
If you file separately first, you get B dollars back. This B includes the rebate ($600).

Now, suppose we follow your process, and file separately first, of course, we get B. Then, as you suggested, we do 1040X to amend it and file 1040 jointly. The purpose of the 1040X is simply to get the difference, which is A-B. Note, I have not returned the rebate of $600. The point is that you have to say you have got the rebate when amending your tax filing, even though you are not returning it.

I suggest you really go into the process and do the 1040X yourself, you will understand this. Another suggestion is do not advise people unless you really understand this.

Originally Posted by AtlantaTaxExpert

The process of filing Married Filing Separately, then amending to file jointly after you get the Recovery Rebate Credit, IS a valid way to get your rebate.

You have to be sure you do NOT give the RRC back when you amend, but, other than that, it is pretty straight forward.

The entire process takes between 3-4 months.

You have to decide if it is worth the trouble for $600.

helpseeker66 · Mar 12, 2009, 01:39 PM

OK ddpddp... here is the deal... aim is to get your share of $600. So lets say you file jointly you are entitled to sum A ( includes nothing from the RRC since you don't qualify when filing joint ). So your goal is to get A + 600. The 600 is a payment that is paid one time and is a stimulus payment to a taxpayer and non refundable to the IRS. To get this you file single , now obviously you fall in a higher tax bracket, say therefore you owe the IRS nothing and are due nothing (0). Just because of the RRC you will get a straight 600 refund. Now this refund is due to the RRC ONLY. So in the case where you would have gotten nothing filing separately now you get 600 due to the stimulus payment.

Now when you file the 1040X you are trying to get A and therefore you should not subtract the 600 from it because the stimulus payment is not a tax refund but a one time payment to a tax payer which you are given in addition to your refund.

make sense..

ddpddp · Mar 12, 2009, 01:48 PM

How do you explain the line 15 of form 1040X (Feb. 2009)? Are you saying you will leave it blank for column A? It doesn't make too much sense to me...

Originally Posted by helpseeker66

ok ddpddp .... here is the deal ...aim is to get your share of $600. So lets say you file jointly you are entitled to sum A ( includes nothing from the RRC since you dont qualify when filing joint ). So your goal is to get A + 600. The 600 is a payment that is paid one time and is a stimulus payment to a taxpayer and non refundable to the IRS. To get this you file single , now obviously you fall in a higher tax bracket, say therefore you owe the IRS nothing and are due nothing (0). Just because of the RRC you will get a straight 600 refund. Now this refund is due to the RRC ONLY. So in the case where you would have gotten nothing filing separately now you get 600 due to the stimulus payment.

Now when you file the 1040X you are trying to get A and therefore you should not subtract the 600 from it because the stimulus payment is not a tax refund but a one time payment to a tax payer which you are given in addition to your refund.

make sense .... ?

ddpddp · Mar 12, 2009, 03:55 PM

Forget about all the details we need to go through, let's look at the large picture. The bottom line for this case is that, for a couple with 1 SSN and 1 ITIN, neither of them is qualified for the RRC. It does not sound fair but this is true. Thus no matter what you do, how you do it, you are not supposed to get the RRC. If you somehow play with it and get it, that means something is wrong.

The USCIS website says you do not have to return the RRC if you file separately and then amend it to a joint-filling using the 1040X, that's true. But, it does not mean you will get A+600 since the amount you will request using the 1040X needs to subtract $600 eventually.

To be more specific, the following chart shows what you will get and how much

1040 jointly: A
1040 separately (and claim the RRC) + 1040X: B + (A-B)
1040 separately (and not claim the RRC) + 1040X: (B-600) + (A-B+600)

In other words, if you want to eventually use 1040 joint, the effect of 1040X is to make sure that eventually you get what you were supposed to get if you were using 1040-joint at the first place, which is, obviously, A.

Originally Posted by ddpddp

How do you explain the line 15 of form 1040X (Feb. 2009)? Are you saying you will leave it blank for column A? It doesn't make too much sense to me...

helpseeker66 · Mar 12, 2009, 09:23 PM

Well, I believe it boils down to the fact that if you feel that you are entitled to it and have the willingness to make an effort to get it you may get it. With one SSN you are entitled to one stimulus payment and that cannot be denied. If you are willing to give it a try it might work for you. Another thing that is for certain is that you are in the right as shown by the IRS FAQs and the fact that when you file the 1040 you are letting them keep a larger share of the refund for longer. We all know that the government is fallible too and does not get everything correct.

ddpddp · Mar 13, 2009, 11:11 AM

Okay, there are just too many places in your argument that need to be discussed:

1. Your claim "With one SSN you are entitled to one stimulus payment and that cannot be denied" has not been confirmed. Even if this make perfect sense, but nowhere you can find legal support for this. You can blame the government on this, but that's it.

2. Even if your above claim is confirmed, and you want to follow the 1040-seperate + 1040X + 1040-joint strategy, you still have no way to get the $600 as extra money. This is because in line 15 column A of form 1040X, you need to put this $600 in. By doing this, you will effectively get what you are supposed to get by filling 1040-jont at the first place. Note, no, you have not returned this rebate to IRS, an amount of -$600 will be counted in the final refund.

3. If you leave the line 15 column A in the form 1040X blank, you are actually cheating by saying that you have not got the rebate. If you are lucky by "trying this out", you may get it. BUT, this is another issue of how comfortable you will be by doing this, and potential risk in the future audit. It is not an issue of "willing to try" or not, it is an issue of "should try" or not. No matter if this is the government's problem in regulating the rebate this way, it is the fact. You may argue with them about this, but you will not have a chance to win. This is hard-coded in the law.

I personally would wish what you (and the tax expert) said was true, because my wife doesn't have an SSN. However, I need to regretfully say that we cannot EFFECTIVELY get the rebate anyway. And I am keeping my posts here to help people in my case from doing something incorrect.

Originally Posted by helpseeker66

Well, I believe it boils down to the fact that if you feel that you are entitled to it and have the willingness to make an effort to get it you may get it. With one SSN you are entitled to one stimulus payment and that cannot be denied. If you are willing to give it a try it might work for you. Another thing that is for certain is that you are in the right as shown by the IRS FAQs and the fact that when you file the 1040 you are letting them keep a larger share of the refund for longer. We all know that the government is fallible too and does not get everything correct.

helpseeker66 · Mar 13, 2009, 07:59 PM

Aight, let me clarify one thing right away. I DO NOT ( in any way, shape or form ) ADVOCATE CHEATING ON FILING THE TAX RETURN. I would not do it and will not recommend it. I am trying to find a legal way in the system to claim what is rightfully mine (it may not exist but I am looking). I do not claim to be an expert on the matter either, I am seeking help too.

Now about the method I have been discussing - It is a 2 step process (filing the 1040 as separate and then amending it using the 1040X where you change filing status to joint) . When you file the 1040X you do NOT leave line 15 column A blank but fill in the $600 that you have gotten but if your refund amount is anything less than $600 (RRC ) you do not enter that amount on line 19. So this amount (line 19) does not get subtracted from your refund. If you have gotten a refund more than $600 on the 1040 then you enter the amount over the $600 on line 19 (X-600). All this is , is some math to serve the purpose. Now one of the greatest point of the 1040X that each change you make has to be noted with line numbers on the form itself. So that is where you get to explain why and what changes you have made. Go all out , put in the details in the explanation. So it is clear what your intent is and the IRS has a chance to review it and respond. Now I do not know enough about this matter to state what the response would be and how you would be required to comply but you have to be forthright will all the information you can supply for the amendments so that your intent is clear.

Now this is where my purpose about discussing this matter here is clarified. I strongly recommend people to talk about these scenarios to knowledgeable tax consultants, CPAs, tax advisors or even the IRS itself. We need all the information we need on the matter. As it is quite evident there is not much support as far as this cause is concerned as it is a minority cause. So I call one and all to talk about it, ask about it , research it. It is 600$. You can get yourself those new golf clubs you have wanted :-) or whatever.

This post is to find a way if it does exist. If it did not exist such a question on the IRS website would not hold any meaning since the sum would be the same no matter what you do or maybe I am reading between the lines.

Q. If I have a spouse with an ITIN and choose "married filing separately" status to qualify for the economic stimulus payment and later on amend my original return to "married filing jointly" status, will I need to return the stimulus payment?
A. No.

Definitely worth some dialogue and each one has to weigh their options.