Summary:
I want to claim Dependent Care FSA, which I assume, requires applying for new ITIN for my child. However, the child does not quality for child/other-dependent tax credit due to AGI threshold limit, which is why it appears that IRS has rejected the ITIN application. Please advise what should I do now?
Details:
I have used Turbo tax Online Premium and then I have physically mailed my 2023 year tax return to IRS. Filed the return with married filed jointly. My spouse, my child and I, all are U.S. resident aliens for year 2023.
In the tax return, I have also claimed for Dependent Care FSA for my dependent child (5 years old). My child did not have an SSN or ITIN as of now, so also mailed Form W7 alongside the return.
However, our household income exceeds maximum AGI limit for claiming any of Child Tax Credit or Credit for Other Dependents.
I have just received ITIN Rejection letter from IRS (Notice CP567) saying that the ITIN application is rejected because:
- you did not include a completed and signed federal tax return with your application.
- you were not listed on an attached federal tax return, or
- you were listed as a dependent on an attached federal tax return but were not claimed for any allowable tax benefit.
My understanding is that the application is rejected due to reason number 3 (you were not claimed for any allowable tax benefit). The turbo tax online tool did not "Check any box" for "if qualify for Child tax credit" or "Credit for other dependents", given AGI exceeding income threshold.
What should I do now? Please advise.
