Urgent Help Needed! Spouse with Tax ID: how to file?

nitinbudhiraja

New Member
Hi! I need some urgent help here, hoping someone can advise.
I’m an immigrant working in the US on a work visa (O-1B). My wife (on an O-3 dependent visa) is a stay at home mom and I have 3 kids who are all US citizens. I’m moving to a new job, where I need to fill out a new W-4. My wife does not have a SSN but does have a tax ID and we’ve seen major drop in returns in the past two years as I filed as married filing jointly. I have been told that spouses who don't have SSNs are not tax deductible for benefit anymore.

Is that accurate? Is my status the correct on for tax filing? If not what should my status be?

I’d love some help here.
Thanks so much!
 
I am not sure what you mean by "tax deductible for benefit". What tax deduction are you talking about? The standard deduction and most other tax deductions and credits do not depend on whether the spouse has an SSN. The only thing I can think of is that you will only get the 2020 and 2021 stimulus payments for you and the kids since your spouse doesn't have an SSN. But that wouldn't be a "drop" since they didn't have stimulus payments before 2020.

When you say "drop" in refunds, what are you comparing against? Refunds are just the amount you overpaid in withholding over the amount you are supposed to pay, so perhaps it's just that less was withheld in the last two years? (There have been adjustments in how withholdings are done in the last few years.) But less refunds is a good thing -- overwithholding means that you are giving the government a free loan -- optimally you want no refund and to owe a small amount (just not enough to trigger a penalty), as a small underwithholding would mean you are getting a free loan from the government. What really matters is the amount of tax liability for the year, as calculated on your tax return. Did that increase?

The filing statuses you can choose are Married Filing Jointly (MFJ) and Married Filing Separately (MFS). MFJ is almost always better than MFS, and will usually be much better than MFS when there is a big difference in the two people's incomes, as in your case.
 
thank you so much! I do understand what you mean. To clarify, I always get an estimated refund when I do the tax prep but the actual refund i get has been much lower for the year 19 and 20. I get a letter in the mail saying the refund was adjusted. That could be because my wife's tax ID is expired but we have had trouble renewing it because in the passport her visa is expired but she's approved to stay in the country along with me. We've sent IRS the passport as well as the 797s which shows she's a legal resident but we have been getting rejected for it.

I was told by the IRS agent on the phone that spouses can not be claimed as dependents anymore but when I was able to our refunds were higher (18 and prior) We took the standard deduction plus I believe i got additional credit for having 3 kids (dependents) + spouse on top of the std. deduction. No we seem to not have that.

Does this make sense?

thanks again!
 
A spouse could never be claimed as as "dependent"; rather, you can file jointly with them to get an increased standard deduction and better tax brackets. In 2017 and before, you get an "exemption" deduction for yourself, your spouse, and each of your dependents. In 2018 and later, they got rid of "exemptions", and increased the standard deduction. They also increased the child tax credit to $2000 and added a $500 tax credit for dependents who did not qualify for the child tax credit. None of this is affected by whether the taxpayer or spouse has an SSN. The child tax credit requires that the child have an SSN (which your children do) but does not require either of the parents to have an SSN. Can you compare the latest tax returns against the ones before to see what the difference is?

Even if your wife's ITIN is expired, I don't see how that would affect your taxes (unless they are somehow changing your filing status from MFJ to MFS). Also, one does not need to be in legal status to get an ITIN; illegal immigrants who have income are required to file taxes, and are required to get an ITIN to do so if they don't have an SSN. What was the reason for denial of her ITIN renewal?
 
Another thing is that the Child Tax Credit or credit for dependents requires the parents have an SSN or ITIN "issued on or before the due date" of the tax return. So if her ITIN was denied, then I guess it could make it not issued before the due date, which would make you guys not qualify for the Child Tax Credit for the children, so you would lose their $2000 credits.
 
Another thing is that the Child Tax Credit or credit for dependents requires the parents have an SSN or ITIN "issued on or before the due date" of the tax return. So if her ITIN was denied, then I guess it could make it not issued before the due date, which would make you guys not qualify for the Child Tax Credit for the children, so you would lose their $2000 credits.
Ok so that might make sense. Does me having a ssn not qualify is for Child Tax credit for our 3 kids? It’s such a waste of money for no fault of ours. It seems like my wife’s tax id is the issue and they keep rejecting her and giving really vague responses in return! Like send original materials or ID. We sent the damn passport 3 times and still rejecting it. Maybe we go through an agent this time instead of filing personally.
 
The requirement that the parent and child have SSN/ITIN issued before the due date of the tax return in order to claim the Child Tax Credit started in 2015. Form 1040 instructions in 2018 and later clearly states that "you (and your spouse if filing jointly)" must have the SSN/ITIN issued before the due date. Form 1040 instructions in 2015-2017 were not clear on whether the spouse had to have it. If you applied for an ITIN with the tax return before the due date, and the ITIN was issued from this application, it would be considered to have been issued before the due date.

How did your wife apply for ITIN renewal? Did she mail her physical passport (not a copy) with the W-7? Or did she bring her passport to an IRS taxpayer assistance center or certifying acceptance agent with the W-7? Did she select box "c" or "e" on the W-7? Why did she send evidence of her status when that is not required? What exactly did they say in the denial?
 
We selected option 'g' Dependent/spouse of a nonresident alien holding a U.S. visa which made sense to us. She first brought it to a IRS assistance center, she took a copy of her passport and sent it out. When we were rejected, she sent in her actual passport again along with the proof of status which is what we thought would be needed because the form said something along the lines of send original or proper identification. See below! We're clueless on what's happening here!
 

Attachments

  • Screen Shot 2022-01-31 at 10.54.55 AM.png
    Screen Shot 2022-01-31 at 10.54.55 AM.png
    659.9 KB · Views: 2
The requirement that the parent and child have SSN/ITIN issued before the due date of the tax return in order to claim the Child Tax Credit started in 2015. Form 1040 instructions in 2018 and later clearly states that "you (and your spouse if filing jointly)" must have the SSN/ITIN issued before the due date. Form 1040 instructions in 2015-2017 were not clear on whether the spouse had to have it. If you applied for an ITIN with the tax return before the due date, and the ITIN was issued from this application, it would be considered to have been issued before the due date.

How did your wife apply for ITIN renewal? Did she mail her physical passport (not a copy) with the W-7? Or did she bring her passport to an IRS taxpayer assistance center or certifying acceptance agent with the W-7? Did she select box "c" or "e" on the W-7? Why did she send evidence of her status when that is not required? What exactly did they say in the denial?
and thank you so much for all your help!
 
If you pass the Substantial Presence Test (i.e. days in the US that year + 1/3 days in the US the previous year + 1/6 days in the US the year before that >= 183 days), you are a resident alien for tax purposes. If you are working in the US, you are almost certainly a resident alien every year you are here (except perhaps in the year of arrival, if you arrived in the second half of the year; even in that case, there are ways to make you a resident alien in the year of arrival, but I will not go into that). If your wife was living with you while you were working in the US, then she was almost certainly a resident alien every year for the same reason. So she should have selected "c" (U.S. resident alien (based on days present in the United States) filing a U.S. federal tax return).

If she was living abroad while you were working in the US, and she was never in the US enough to pass the Substantial Presence Test, then she would be a nonresident alien. But nonresident aliens cannot file jointly. The only way to file jointly in that case (where one spouse was a resident and the other spouse was a nonresident alien) is to use the Nonresident Spouse Treated as Resident option, which treats her as a resident alien for the year and you guys must file jointly. If that's the case, she should have selected "e" (Spouse of U.S. citizen/resident alien).

"g" (Dependent/spouse of a nonresident alien holding a U.S. visa) is not a valid reason for an ITIN, because nonresident aliens cannot file jointly, and you don't need an ITIN for a spouse when filing separately, so there is no reason why their spouse needs an ITIN. In 2017 and before, people filing as Married Filing Separately could still get a deduction for an "exemption" for their spouse who didn't file, so in that case, there was still a reason for a nonresident alien to get an ITIN for a spouse, but they got rid of exemptions in 2018 and later, so this reason no longer exists. In any case, this was never the option to choose when filing jointly.

You guys filed form 1040, not 1040NR, right? So you knew that you were filing as resident aliens, not as nonresident aliens. Only form 1040 allows filing jointly so if you guys filed jointly you must have used 1040 and not 1040NR.
 
OMG thanks so much! We did file form 1040. It is perplexing that IRS will not comment on the option chosen for our case (maybe they can't) and provide random details like proof / documents aren't accurate. We will try immediately with option c and mail it back out again and hope for the best! thanks so much!
On a side note, are you accepting new (personal) tax clients for coming returns? If soi, I'd love to chat.
 
Top