# Possible to claim NRA son as dependent and child tax credit?



## Alltimegreat1

My wife is German and we were thinking of having our son initially obtain only German citizenship. I don't really have an issue with that unless there are negative US tax implications associated with it. Anyone one know if an NRA child without an ITIN can be claimed as a dependent on the 1040 (line 6c)? Also, can the $1,000 child tax credit be claimed for an NRA child? I file as married filing separately.


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## BBCWatcher

You cannot claim the Additional Child Tax Credit, or claim a child as a dependent, while living overseas unless the child is a documented U.S. citizen with a SSN. See IRS Publication 972 and IRS Form 1040 (instructions p. 16 in the 2014 edition) for more information. Yes, Married Filing Separately is OK, though you don't get as much "income room" before the ACTC phases out. So if you're a moderately high (or higher) income earner, you may not get the $1000 per child there. A joint filing doubles the income phase-out.

My view, expressed before but I'll reiterate briefly, is that it's wise to grab the tax advantages associated with documenting a child's citizenship. Put the extra money in a college fund or whatever. Then, once the child reaches age 18, he/she can decide whether he/she wishes to maintain that citizenship. (I'm leaving aside the fact you're actually obliged to document the child's U.S. citizenship anyway.)


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## Bevdeforges

According to Publication 17:


> 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.1


And this is the info on the Child Tax Credit from pub 972: Publication 972 (2014), Child Tax Credit

Actually, whether or not you register your child with the Consulate, s/he is considered to have US citizenship from birth. If you apply for an ITIN for your child, chances are you'll be turned down because the child is actually eligible for a SSN.
Cheers,
Bev


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## Alltimegreat1

BBCWatcher said:


> You cannot claim the Additional Child Tax Credit, or claim a child as a dependent, while living overseas unless the child is a documented U.S. citizen with a SSN. See IRS Publication 972 and IRS Form 1040 (instructions p. 16 in the 2014 edition) for more information. Yes, Married Filing Separately is OK, though you don't get as much "income room" before the ACTC phases out. So if you're a moderately high (or higher) income earner, you may not get the $1000 per child there. A joint filing doubles the income phase-out.
> 
> My view, expressed before but I'll reiterate briefly, is that it's wise to grab the tax advantages associated with documenting a child's citizenship. Put the extra money in a college fund or whatever. Then, once the child reaches age 18, he/she can decide whether he/she wishes to maintain that citizenship. (I'm leaving aside the fact you're actually obliged to document the child's U.S. citizenship anyway.)


I only make about $60,000-$65,000 depending on the exchange rate. Would this be too much to get the Additional Child Tax Credit?


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## BBCWatcher

Looks like you just barely qualify for the full $1000 per U.S. child (assuming you file Married Filing Separately), but run the numbers to make sure. The ACTC starts to phase out when your "Modified AGI" is above $55,000, but I think your MAGI will be a touch below that if your total income was in that range.

A provisional congratulations. Well spotted.


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## Nononymous

Interesting piece on the possible trend of American expats choosing not to register the birth of children abroad:

When American Expats Don’t Want Their Kids to Have U.S. Citizenship - Expat - WSJ

The minor detail is that the kids "are" US citizens, but if the US doesn't know they exist, so what.

It might change my tune if enough free money was on offer, but with the potential problems US citizenship can cause, I'd keep foreign-born kids off the US radar. If one day they want to "activate" that citizenship, they can do so. Only potential glitch is if you travel to the US as a family - at some point a vigilant customs officer might look at the various passports and ask questions.


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## Alltimegreat1

The $1,000/year child tax credit would be reason enough for me to obtain US citizenship for my child. According to the article you cited, children can renounce for free up to age 18 1/2 anyway.


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## Nononymous

Reasonable enough. Also saves potential grief when visiting the US as a family, provided the child has US passport.

Remember, you are not "obtaining" citizenship for your child, you are documenting it. The US considers them a citizen from the moment of birth, provided the qualifications are met (one US citizen parent must have lived five years in the US, two of which after the age of 14). If the birth isn't registered the child can more easily pretend they are not, particularly with a non-US birthplace on their non-US passport.


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## Alltimegreat1

Nononymous said:


> Remember, you are not "obtaining" citizenship for your child, you are documenting it. The US considers them a citizen from the moment of birth..


So the citizenship of an American does not need to be documented in order to have tax liability to the IRS, but in order to claim a child tax credit I can only assume that documentation would be necessary. This is in line with some of the other helpful responses I've received today.


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## Nononymous

Yes, as I understand it. 

If your child is a US citizen, they would have tax reporting obligations (which may or may not involve owing the US money) even if you did not register their birth. However, if they are born outside the US and the US does not know of their existence, the tax reporting obligation is extremely hypothetical - they are well and truly off the radar. 

To claim the tax credit, they would need to be documented. Seems only fair.


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## Nononymous

Nononymous said:


> However, if they are born outside the US and the US does not know of their existence, the tax reporting obligation is extremely hypothetical - they are well and truly off the radar.


By "hypothetical" I mean this: the reporting obligation exists, legally, but it could be effortlessly and safely ignored. Particularly because children born outside the US are very FATCA-proof in their dealings with financial institutions.


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## jbr439

Bevdeforges said:


> According to Publication 17:
> 
> 
> And this is the info on the Child Tax Credit from pub 972: Publication 972 (2014), Child Tax Credit
> 
> Actually, whether or not you register your child with the Consulate, s/he is considered to have US citizenship from birth. If you apply for an ITIN for your child, chances are you'll be turned down because the child is actually eligible for a SSN.
> Cheers,
> Bev


The US has no way of knowing whether the child is a US without looking into details. E.g., Was parent a USC at the time child was born? Did parent satisfy US residency requirements to be able to transmit US citizenship? For this reason I expect an ITIN would be granted. FWIW, I know a USC who did get an ITIN for their child - no questions were asked.


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## Nononymous

jbr439 said:


> The US has no way of knowing whether the child is a US without looking into details. E.g., Was parent a USC at the time child was born? Did parent satisfy US residency requirements to be able to transmit US citizenship? For this reason I expect an ITIN would be granted. FWIW, I know a USC who did get an ITIN for their child - no questions were asked.


But the child has to be a US citizen for you to claim the credit, no?


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## jbr439

Nononymous said:


> But the child has to be a US citizen for you to claim the credit, no?


That would seem to be the case.


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## Nononymous

No free lunch - you want money from Uncle Sam, you need to give up your kid's anonymity in exchange. (Maybe it's worth $18k to you, if you qualify, maybe it's not - but that would appear to be the bargain here.)


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## BBCWatcher

Same thing for the child dependent deduction (documented U.S. citizen), though the Additional Child Tax Credit is usually more interesting. And maybe also the childcare expense deduction, though I'd have to check that. You could also open up a tax-advantaged 529 account if you like.

Congratulations on the birth of your tax credit, Alltimegreat1.


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## Alltimegreat1

BBCWatcher said:


> Congratulations on the birth of your tax credit, Alltimegreat1.



Thanks! I sure hope I'll qualify. Otherwise it's ITIN for the wife.


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