A spouse is NEVER a dependent.
You can't keep your return as single. If you are legally married, you must file using one of the married filing statuses. It's simply illegal to file as single. And, you probably lose the health insurance subsidy. You need to fix this correctly and legally.
The first question is, did they meet the substantial presence test as of December 31, 2023? (Not now, August 2024, but as of December 31, 2023 for tax year 2023).
- If they did meet the substantial presence test for 2023, you had the option to file jointly (married filing jointly). List your spouse and dependent. Include a form W-7 ITIN application for each person. Mail the tax return and the W-7 applications to the address for processing ITINs, not the usual address for tax returns (and don't e-file). After the IRS issues the ITINs, they will process the tax return.
- If they did not meet the substantial presence test for 2023, then you have two options.
- A. File as married filing separately, and leave them off your return. This will probably negatively affect your insurance subsidy, but I don't know how much.
- B. File as married filing jointly by making the election to treat your spouse as a resident. Follow the procedure above to get ITINs.
Because you are using the insurance subsidy, I think you need to file as married filing jointly, either because your spouse and child met the substantial presence test, or by making the election to treat them as residents for tax purposes even if they did not pass the test for 2023.
Since you have an assessment letter from the IRS, you can't just file an amended return. And you need to respect any deadlines in that letter.
My suggestion is to prepare a joint return (married filing jointly). You can list your spouse and your child. Your spouse is never a dependent, any tax benefits you get come from claiming a spouse and using the married tax rates. You may need to use a fake ITIN to get through the Turbotax amended return interview. Try 999-88-9999 and 999-88-8888. Before mailing the return, use some white-out to cover the fake ITIN and write "ITIN applied for." Prepare two applications for ITIN on form W-7, for your spouse and your child. Be sure to include any documents or proofs required. Mail the entire package to the IRS address for processing ITINs. Use a mailing service that includes tracking and proof of delivery.
Then, send a copy of the amended return to the office that sent the deficiency notice, along with a letter of explanation that you recognize you made a mistake and have filed an amended return to fix it. That should stop any questioning of the subsidy until after the amended return is processed.
You may even get a tax refund, since the tax rates for married are a bit lower than single and you said your spouse doesn;t have income to report.
