ITIN expired & Consequences

[elisamallen85]

Hello, 

I filed my 2023 taxes as Married - Filing Jointly LATE, in Spring 2025, after I requested and was granted an extension. My husband is Mexican and we lived in Mexico for years. He had an ITIN number for our taxes and I did not know it had expired when I filed the late 2023 return (I didn't know that ITINs expired at all). We came to the USA in Summer 2024 and I waited to file the 2023 taxes due to uncertainties regarding his immigration status and whether or not we needed to file for his green card. I was unsure how the filing taxes process might change based an immigration/green card process. I filed once we initiated his green card process with a lawyer using the ITIN he had. I recently received a notice, that due to the late filing AND the expiration of the ITIN, they've added thousands of dollars to what we owe for that year. It is too much for us to pay by far. Why didn't get a notice that his ITIN was going to expire?

Also, I am currently on an extension for our 2024 taxes as well, as I was hoping to file them late once he received a SSN and a green card. If I file them now, within the extension window, with the SSN he received this summer, will I receive another penalty for the expired ITIN? I'm confused and worried as to how the uncertainty of the immigration process is potentially putting us into tax debt that we can't pay!

[ClarissaA1]

Based on the information you've provided it sounds like a couple things happened with your 2023 tax return.  First you unknowingly filed using an expired ITIN for your spouse.  Second, you filed for an extension and then missed the extension deadline, ultimately filing that return late.   I'm going to address these in order. 
Yes, an ITIN can expire.  The ITIN automatically expires if it isn't used to file a tax return for three consecutive years.  When a return is filed with an expired ITIN, you forfeit certain tax credits that may have been included in the return.  These could include the Child Tax Credit (for children you had on your return that had an SSN) and the American Opportunity Tax Credit.  If your return included tax credits that were disallowed for this reason, it can reduce your refund or result in a tax liability that you owe.  
If the IRS disallowed credits and recalculated your tax liability, and this means you owed taxes instead of getting a refund, filing the return long after the extension deadline would definitely trigger additional penalties.  The IRS assesses several penalties when a taxpayer files their return with a balance due.  These can include an underpayment of estimated tax penalty, a failure to pay on time penalty, and a failure to file on time penalty.   The underpayment penalty and failure to pay on time penalty attach to your balance due on the date the return was originally due to be filed (in April of 2024.)  An extension for your 2023 return would have allowed you until October 15, 2024 to file your 2023 taxes and be considered "on-time," and avoids the failure to file on time penalty.  After the extension deadline passed, the failure to file on time penalty would again apply to any tax balance you owed.    

The 2024 return should not cause you nearly as much trouble!  You stated that filed an extension planning to wait for your husband's SSN and green card before filing.  As his SSN was received this summer, you will file the 2024 return with his SSN.  Even if his green card hasn't been issued, you will not file the 2024 return with an ITIN, so the ITIN expiration will not be an issue for the taxes that are due next month.