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The Guy Behind the Tree
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Category: Tax
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My husband has two children who live in Europe. He pays $4500/mo

Customer Question

My husband has two children who live in Europe. He pays $4500/mo for their care and pays for summer camps, private tuition and travel and airfare for time in the US. He feels discriminated against because his children, while US citizens, do not live in the US and therefore his expenses are not tax deductible. He insists this must be an error, that there must be a reasonable way to deduct his expenses notwithstanding this situation. Please advise.
Submitted: 5 years ago.
Category: Tax
Expert:  The Guy Behind the Tree replied 5 years ago.
Your husband should know that when I paid those same expenses for my own son (we both live in the USA) they are not deductible for me either... nor are they deductible just because they are "for the children" for any other USA taxpayer.

What IS available to most US taxpayers is the "standard deduction" for dependents... which of course comes nowhere near what it actually costs to provide for children.

Private tuition is generally not deductible. US-based taxpayers who own real estate get to pay real estate taxes to educate other children and get to pay AGAIN if they send their own children to private school.

If a child has medical expenses in excess of a certain percentage of adjusted gross income, that excess is usually deductible. But that's about it.

Your accountant is correct.

And most of the taxpayers of the USA share your husband's frustration.
Customer: replied 5 years ago.

I would like clarification.

 

I understand that all the expenses outside of the standard deduction are not deductible per your response; however, I am not clear on whether the standard deduction can be taken for the children when they live in another country. That is also his concern, that at a minimum, he should get a deduction for children living in another country.

 

Our accountant is not giving him this credit either.

 

Your advice so far has been very helpful, just need this further clarification, thank you.

 

 

Expert:  The Guy Behind the Tree replied 5 years ago.
There is a residency test for taking the standard deduction for "qualifying child" standard deduction.

"...Residency Test

To meet this test, your child must have lived with you for more than half of the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.
Temporary absences.   Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as:

    *

      Illness,
    *

      Education,
    *

      Business,
    *

      Vacation, or
    *

      Military service.

..."

From the IRS Publication 501 that can be reviewed here:

http://www.irs.gov/publications/p501/ar02.html#d0e3180

Unfortunately, because of the residency requirement, if the children do not live with your husband more than half of any given calendar year, the standard deduction cannot be taken.

Does this seem unfair? Yes. Just another one of the many oddities of US income tax law.

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