Spouse ITIN application rejected, Child ITIN granted How to amend the return

[gkg1]

Status J1 visa (in 3rd calendar year, in the USA since 2021). Spouse and child on J2 visa (in the USA since Sep 2022).
I filed the 2023 return as "Married filing jointly" and sent the paper return with w7 forms for spouse and child. I submitted the paper application at the Tax Assistance Center myself.  Wanted to claim the child as dependent (TurboTax allowed 2000 child tax credit from the system, although I understand it is not allowed if the child does not have the SSN).

Decision: IRS rejected ITIN for the spouse but granted ITIN for the child.
The return was processed, and I received a lower refund than filed.

Question:

How do I re-apply for the spouse's ITIN? What documents will be needed?
Do i need to wait for 2024 return filing period? Or can the amendment be filed with a fresh ITIN application earlier with the documents for 2023 return?
I could not file the state return because I had to wait for the ITIN application to be processed. Will I be able to file the state return at a later time?

Thank you so much for the guidance.

[pk · Accepted solution]

@gkg1  before you do anything, suggest you  read the letter  from the IRS to find the reason for rejection  of ITIN   for the spouse. If nothing else go back to  TaxPayer Assistance center   ( at IRS local office ) and  take all the curative actions  ( usually some document issue )  required to get  the ITIN issued.   You should not file any amended return till the ITIN issue is resolved.  Make sure that spouse is NOT eligible for SSN ( depends  on her visa conditions ).

[gkg1]

@pk Thank you so much for the insight.
We received the notice CP567, and it has some steps mentioned as "What you need to do".

Looks like we need to take a new form w7, IDs, the notice CP567 copy, and a copy of the tax return.

What I did not understand:

Since the return was processed and we received some refund, shall we take the 2023 return's copy again for this application again?

AND

If we submit this fresh ITIN application, shall we wait for its outcome before filing 2024 return?

[pk · Accepted solution]

@gkg1 ,  I would follow the exact instructions  of CP 567.   Prepare the  ITIN application W-7, attach all the documents requested  in CP 567 and go to local IRS office for help and  then follow their  suggestions.

1.   Take with you  a copy of the  2023  return as suggested  in CP 567. Take the originals  of  spouse's passport etc.   Hopefully this can be resolved on your visit.

2.  Do not  amend your filed / processed return for 2023, leave  it as is.  IRS  will already  have  changed/amended the return  per their decision to not  issue ITIN for the spouse.

3. Hold off filing your 2024 return till  2023  is resolved -- because you still do not have ITIN for the spouse.   You have all the way till Oct 15th of 2025.  However, you can indeed  prepare your 2024 return assuming  issuance of ITIN  ( for TurboTax use a dummy ITIN) , so you know  and are able to  pay-in any taxes due.

4. Note that  CP 567  issuance  and  the ITIN of the child generally implies that  your spouse is eligible for a  tax id   ( TIN), its just a paperwork issue .

Good Luck.

Is there more I can do for you ?

[gkg1]

@pk I understand and will follow as you suggested.

For the "Reason you’re submitting Form W-7", I selected 2 options: e: Spouse of U.S. citizen/resident alien, and h: Other.

I believe I should not have selected h: Other. This, in my opinion, led to the rejection, since all other documents were as required (Passport, legal stay). Filling only option "e" this time in a fresh W-7.

Thank you so much for the detailed instructions.

[pk]

@gkg1 , you are correct --- her ITIN is required ONLY for purposes of joint filing  ( with spouse whom is a US  person).

Is there more i can do for you ?

pk

[gkg1]

@pk Thank you for affirming.

Since we are not eligible for the child tax credit, how do we opt for the dependent credit for our child for the 2023 return? We should amend the 2023 return (for dependent credit) after we receive ITIN for the spouse?

Any link with this information / suggestion will be very helpful.

Thank you so much for your patience; I really appreciate it.