I've been preparing my clients' returns for several years. Wife has a sister and nephew who immigrated from Iran as refugees on 8/9/06. My clients, as sponsers, were required to put $6,000 in an account for sister and nephew while they were in a "holding pattern" in Europe. The funds were used for support, housing and eventually airfare to the US in August. Sister and nephew got welfare in mid-December (nephew now has a job). For the dependency deduction, they meet the relationship test, not a qualifying child test, and the gross income test. I am not sure what to do about the support test. My clients provided 100% of support from 8/9/06 through 12/15/06. They may have provided more than 50% of the support while in Europe. Do I need to calculate the cost for living in Iran and compare it to the total cost for the year to determine if the 50% test is met an would it even matter? Can I assume that if my clients provided more than 50% of support from 6/15/06 through 12/15/06 that the support test is met? Does anyone know if the $6,000 can be deducted under some special rule for refugees?
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The over 50% support test requirement applies for the entire year.
As long as the dependent is a U.S. resident as of the end of 2006, money spent on support while they were in Europe would count as support.
Having said that, the gross income test is also for the entire year. So if they earned gross income while in Iran during 2006 that is the equivalent of $3,300 or more, they could not be claimed as dependents. However, if it is true that their income for the entire year is less than $3,300, then you should have no problem passing the over 50% support test requirement for the entire year.
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