The Tax Court yesterday held that parents cannot claim dependency exemptions and child tax credits for their children who are not U.S. citizens during the tax year in question, even if the children become U.S. citizens in later years:
[T]he denominator common to the deduction and credit issues is whether a child, to qualify as a dependent for a parent's taxable (calendar) year, must be a U.S. citizen or a resident at some time during that year. The answer is "yes".
In both cases, the couples had multiple children (six and nine) and lived in Israel, and only one of the spouses was a U.S. citizen. The Tax Court upheld accuracy-related and late-filing penalties in one of the cases.
- Carlebach v. Commissioner, 139 T.C. No. 1 (July 20, 2012)
- Stern v. Commissioner, T.C. Memo. 2012-204 (July 20, 2012)
