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For long term expats living in another country with a step-family / step-children via marriage.

Looking at [26 U.S. Code § 152 - Dependent defined as a reference which states:

The term “dependent” does not include an individual who is not a citizen or national of the United States unless such individual is a resident of the United States or a country contiguous to the United States.

With a caveat subtitled "Exception for adopted child." but text of -

Subparagraph (A) shall not exclude any child of a taxpayer (within the meaning of subsection (f)(1)(B)) from the definition of “dependent” if—

(i) for the taxable year of the taxpayer, the child has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household, and

(ii) the taxpayer is a citizen or national of the United States.

which would sort of imply that a step-child should be qualified as a dependent. Even if they can't get an ITIN number. Does this seem a reasonable interpretation of the law? If so, how do people take this up with the IRS so they can claim non-US-citizen-step-children as dependents?

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  • The section talks about adopted children, not step-children. Unless you adopted your step-child, your step-child is not your adopted child.
    – user102008
    Jun 21 '16 at 8:31
  • Thank you. I agree the label is misleading - I'm voting with the text which specifies any child of a taxpayer. If they had intended it to mean "adopted" - the text should be consistent. Let's see what they say in 15 business days or less.
    – NJL
    Jun 21 '16 at 10:20
  • No, it clearly says child "within the meaning of subsection (f)(1)(B)", which defines adopted child.
    – user102008
    Jun 21 '16 at 10:33
  • they called back - if you want to add an answer, the reputation points are yours. I'll send a note to my congressman.
    – NJL
    Jun 21 '16 at 12:55
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The section you mentioned is for adopted children of US nationals only. The section's title says "adopted child":

(B) Exception for adopted child Subparagraph (A) shall not exclude any child of a taxpayer (within the meaning of subsection (f)(1)(B)) from the definition of “dependent” if—

(i) for the taxable year of the taxpayer, the child has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household, and

(ii) the taxpayer is a citizen or national of the United States.

and the text says "any child of a taxpayer (within the meaning of subsection (f)(1)(B))" which refers to the following part that defines it as only for adopted children.

(B) Adopted child

In determining whether any of the relationships specified in subparagraph (A)(i) or paragraph (4) exists, a legally adopted individual of the taxpayer, or an individual who is lawfully placed with the taxpayer for legal adoption by the taxpayer, shall be treated as a child of such individual by blood.

You have not mentioned that you have adopted your step-children. If you haven't adopted them, then the exception wouldn't apply to them.

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Same section, subsection (f)(1):

(1) Child defined

(A) In generalThe term “child” means an individual who is—

(i) a son, daughter, stepson, or stepdaughter of the taxpayer, or

(ii) an eligible foster child of the taxpayer.

You need SSN to get certain things (like child credit etc), and you can ask for ITIN if needed instead.

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  • Thank you. I just want the dependent exemption - nothing fancy. A previous application for an ITIN for a stepchild was rejected as he was not a "Qualifying Child" .Specifically - 'If your adopted child applies ITIN , he must be a U.S.citizen,U.S.national or U.S.resident to be considered a "qualifying child ". The definition of "Qualifying child" is vague,but IRS will not overturn this result unfortunately.'
    – NJL
    Jun 20 '16 at 14:56
  • @NJL this is weird. I guess you can point them to the actual law? If a child is a US citizen/national - the child gets SSN. And child, specifically, doesn't need to satisfy residency requirements.
    – littleadv
    Jun 20 '16 at 15:02
  • It's a child who is not a US citizen (sadly other issues prevent that without moving to the US - which we are planning on). That child does meet the stepson clause and the exception to the "non-nationals" clause so I think I have a case here... will report back after revisiting this. thank you!
    – NJL
    Jun 20 '16 at 15:07
  • They'll get back to me in 2-weeks to see if they can provide any revised guidance on why the case would have been rejected... apriori it should have gone through.
    – NJL
    Jun 20 '16 at 16:30

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