Recovery Rebate Credit

[Questionguy101]

I guess this question is a tough one...

The rule says non-resident alien is not eligible for the Recovery Rebate Credit in 2008.

Tax situation: Taxpayer was married in 2008 but his wife (a non-resident at that time) was in a foreign country at that time. So taxpayer has filed a separate return.

Now his wife has immigrated to the US and got a SSN. They are filing an amended tax return to change their filing status to a joint return. So his wife will now be treated as a resident alien for tax purposes for year 2008. Does she qualify for the RRC?

[Burke]

I thought the filing status was determined at the end of the tax year. Just because she is now a resident with a SSN does not mean you can amend 2008, IMO.

[Questionguy101]

I thought the filing status was determined at the end of the tax year. Just because she is now a resident with a SSN does not mean you can amend 2008, IMO.

That's true. But by electing to file a joint return with her husband for tax year 2008, she is now treated as a resident for income tax purpose in 2008. Would that make her eligible now?

[Burke]

Okay. It appears a joint return could have been filed in 2008 if only the spouse had had a valid ITIN (which she could have applied for at the time). So I am assuming they are eligible to amend to that filing status, MFJ standard deduction, reduced tax liability, etc. TTB does state an ITIN person could qualify for dependents, CTC & adoption credits, but not EIC. However, had the RRC worksheet been completed at that time, you would have had to answer questions 2 and 4 as No. She would not have qualified for RRC, because she was a non-resident alien in that year, even if she had had an ITIN. I do not believe that even if you amend the return to MFJ that it should affect the RRC. (or EIC if applicable). It was not Congress' intent to allow NRA's to receive it. But you could always ask for a letter ruling or other input from the IRS.