Can I Claim My Indian Parents on My US Tax Return?

February 10, 2012 by Admin Roberg
Filed under: Family, Uncategorized 
Mother and Daughter

Photo by Rishabh Mathur on flickr.com

Claiming parents is difficult, but it can be done if you pass the “Qualifying Relative” tests. But first, here are the two biggies that tend to get in the way:

  1. You cannot claim a married person who files a joint return with his or her spouse. So if your parents file a joint tax return in the United States, then you won’t be able to claim them. (I’m guessing they don’t, but I wanted to make sure that I told you about that.)
  2. To claim someone as a dependent, the person must be a US citizen, US resident alien, US national or resident of Canada or Mexico. Where my clients have had trouble before is when their parents visit the US, but their visas are only for 6 months, no longer. Then they don’t qualify as US residents. I just wanted to make sure you knew about the 6 month rule because that’s the issue most likely to cause Indian families trouble with claiming their parents.  After that, the rules are the same for anyone else in America who wants to claim their parents on their US income tax return.  You need to pass the qualifying relative test.

The Qualifying Relative Test has 4 parts:

  1. They cannot be considered a qualifying child of anyone else. No problem! As your parents, I’m guessing they’re both over the age of 24. Easy pass.
  2. Member of household or relationship test. As your parents, they do not have to live with you. Also, since they are your parents, they automatically pass the relationship test. Easy pass.
  3. Gross income test. This one is harder. They cannot have more than than $3,650 in gross income for the year. If they are retired, they might qualify, but if they are receiving a taxable pension, that could kick them out of being a dependent. In the US, for example, my mother in law receives Social Security income which isn’t taxable and it doesn’t count as gross income. Her other income is less than $3,650 so she would pass the gross income test for me to claim her as a dependent. Remember, once your parents become US residents, they will be taxed on their “world wide income.”
  4. Support Test. In order to claim your parents as dependents, you must provide more than 1/2 of their support. Let’s say that your parents each earn $3,000 a year in some type of pension. For you to be able to claim them as dependents, you would have to pay more than $3,000 for support for each of them. For example, if they live with you, then you would consider part of your rent or mortgage to be towards their support. Also food, clothing, medical expenses, etc. If they don’t live with you, who is paying for their rent, food, clothing, etc.? Using my mother-in-law as an example again: although I pay some of her bills, I definitely don’t pay over 1/2 of her support. She pays for her food and rent with her Social Security money so I don’t come close to the 50% of her support.

If you do find that you qualify to claim your parents, then you would complete the W7 forms for them, so that they have an ITIN number, and submit them with your next tax return.  I find that the best way to handle the W7 form is to take your tax return in to the nearest IRS office with your supporting documents (like passports) and submit them there.  Although it might be inconvenient making the trip, it will save you a lot of hassle in the long run.

Tags: , , ,

Comments

13 Comments on Can I Claim My Indian Parents on My US Tax Return?

  1. Industrial Disease Compensation on Fri, 10th Feb 2012 9:02 am

    2. Thank you, I’ve just been searching for info about this subject for a long time and yours is the best I’ve discovered till now. However, what concerning the bottom line? Are you certain about the source?

  2. Admin Roberg on Sun, 12th Feb 2012 12:27 am

    3. Thank you. Most of the information can be found in IRS publication 17. The part about claiming a dependent starts on page 25.

    The part about Indian parents and the visa types I unfortunately learned the hard way. I tried submitting some W7 forms for my clients to claim their parents–the parents met all the regular requirements for being claimed by their children–but their VISA was basically a tourist visa–they could could not be in the United States for more than 6 months–hence they could not be considered as US residents. We had to withdraw the application. Basically, your parents would have to have a visa that would allow them to stay in the U.S. in order to claim them on your return.

    Sorry I can’t give you a publication and a page number on that one. But I’m confident about the issue.

  3. Priyam on Fri, 17th Feb 2012 10:36 pm

    4. I and my family arrived in July 2011 on immigrant visa. We all got Greencard within few weeks. Now my parents departed for India after a month (in august). Can I claim them as dependent???

    I read somewhere that parents dont need to stay with the tax filer if the tax filer provides support to them.

    I would really appreciate if you can throw some light on this.
    Thanks in advance.

  4. Admin Roberg on Sun, 19th Feb 2012 3:06 pm

    5. Hi Priyam,
    So the issue here is are your parents US residents? A green card basically guarantees resident alien status. Resident aliens file regular US tax returns and must report their worldwide income so–your parents, as greencard holders must report their Indian income on their US income tax return. There are exclusions for
    income earned outside of the country, but greencard holders do file US tax returns.
    So if your parents are green card holders, they have to file a US tax return. If they are not–they don’t meet the US resident requirements. If they file a US tax return, they can’t file jointly or else you cannot claim them. And remember that their gross income cannot be more than $3650 USD for the year.
    I hope that answers your question.

  5. Mike on Wed, 29th Feb 2012 10:53 pm

    6. Hello everybody,
    I live in US since 2008 and have green card. I have a baby born in March 2011 outside USA and who lives with her mother. Niether baby or her mother have any US status. My baby has never been in US and she doen’t have ssn.
    Question is: Can I clam my baby as a dependent since I always send money for her support.
    Thanks

  6. Admin Roberg on Fri, 2nd Mar 2012 2:43 am

    7. Hi Mike,
    When you are claiming children on your tax return–they either have to be a US citizen or a US resident. (There are rules about living in Canada and Mexico too, but nowhere else.) So, you will not be able to claim your child on your US tax return.
    Now, since you are married–you can file a joint tax return–but you might not want to do that. You would need to make a special election for her to be taxed as a US resident–and then she would be taxed on her world wide income–which might not be to your advantage. But it is an option.
    Even if you file jointly with your wife, you still cannot claim your child.

  7. Mike on Fri, 2nd Mar 2012 5:20 am

    8. Dear Rober, thanks for your help. I suspected such an answer but you clarified it to me and now I am sure. Thanks again

  8. Haley on Thu, 5th Apr 2012 4:38 am

    9. Hi, If my parents immigrated (has green card and SSN) to U.S. in Nov-11 and they lived with me for 2 months in 2012, I provide financial support 100% during the 2 months. Can I claim them as dependent?

  9. Admin Roberg on Sat, 7th Apr 2012 11:50 pm

    10. Hi Haley,
    If your parents have green cards, they qualify to be US residents–but here’s the catch for them–US residents are taxed on their world wide income–so if they are claiming to be US residents, then the have to pay taxes to the United States government on their Indian income–so that could be an issue for you.
    If they don’t want to pay tax on their Indian income, then they would be a dual status alien for 2011–and you wouldn’t be able to claim them.
    Now it you supported them for all of 2012–then you’d have a claim.
    Also, you said that you supported them 100% for the two months they were here since November–you would have had to support them for the entire year (even while they were in India.) So I’m thinking you might not be able to claim them for 2011.

  10. Amit on Sun, 15th Apr 2012 4:57 pm

    11. These days I am seeing IRS is more stressing on reporting global income. If IRS wants to tax global income then shouldn’t expenses/losses incurred outside of US be allowed for tax deductions?

    Examples:
    1. Mortgage interest paid outside of US
    2. Dependent parents (100% dependent and US tax resident sending money for maintenance)

  11. Chinna on Mon, 16th Apr 2012 8:08 pm

    12. Hi,

    The part you mentioned about Indian parents and the visa types but their VISA was basically a tourist visa–they could could not be in the United States for more than 6 months–hence they could not be considered as US residents is correct.

    But what about parents who got extended beyond 6 months and stayed here for more than 183 days?

  12. Admin Roberg on Tue, 17th Apr 2012 2:11 am

    13. Hi Amit,
    You’re definitely right about the IRS stressing reporting global income. (The new reporting forms are making me dizzy!) You can deduct the foreign taxes paid, but right now, (with some exceptions) that’s about it. But for now, the foreign mortgage and foreign dependents are still off limits. You can try contacting your congressman or senator, but I’m not seeing a lot of sympathy in that corner right now.

  13. Admin Roberg on Tue, 17th Apr 2012 2:27 am

    14. Hey Chinna,
    That’s an excellent question. Honest answer–I don’t know, I’ve never tried on that one. I would venture it’s worth trying to get the paperwork passed. The IRS can always say no, but if you don’t ask you don’t get.
    The ruling, as I understand it, it the 183 day rule. Has anybody reading this ever tried and what was the result? Thanks for the input.

Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!





CAPTCHA Image
*

© 2009 Roberg Tax Solutions

111 Westport Plaza, Suite 600, St Louis, Missouri 63146 | Telephone 314-275-9160

Website Designed By Indigo Image
Info