I'm wondering why I am getting a different refund after updating my wife's ITIN? Initially I used a made-up SSN and the refund was 6K, now it has reduced to 2K

[faray]

Brief Background: I applied for an ITIN for my wife and my daughter this year. My daughter's application was rejected while my wife's was successful. Now, I would like to resubmit a w-7 for my daughter and I just updated my spouse's information with the new ITIN in Turbo Tax. Previously I just used a made-up SSN so that I can I get my tax return printed. But, now after updating just the personal information with the new ITIN, I'm surprised that the federal refund is reducing from 6k to 2k. Any idea what could be happening or causing this? Looking forward to hearing you response

[SweetieJean]

Some tax benefits, such as EITC, are only available to those with a valid SSN.  Look at the two tax returns, side by side, to see the differences.

basic qualifications 2 | Earned Income Tax Credit (irs.gov)

[NCperson]

Also, recovery rebate credit requires SSN, so when you fooled turbo tax , it thought you were eligible , once you entered an ITIN , it knew there  was no EITC, RRC eligibility 

[faray]

Hi SweetieJean, I tjink you're right. The tax return with new ITIN has no EITC  but the one with a made up SSN has almost 3K. I think its being removed because the ITIN was issued after the tax filing deadline.  btw, the made up SSN was solely created  to create a spouse in the turbo system. Would you please clarify on the valid SSN- does it mean having a valid ITIN has less tax benefits than having a valid SSN? 

[NCperson]

@faray the rules for tax credits vary when it comes to ITIN. 

taxpayers with ITIN are not eligible for EITC or stimulus / Recovery Rebate credit.  it's not that it was issued after the deadline, it's simply the credit is not available for those with ITIN, regardless of when the ITIN was issued. 

so yes, in these two cases having a valid ITIN has less tax benefits than having a valid SSN

[Critter-3]

@faray 

Making up an incorrect fake SS# to hold the place for the applied for ITIN was your error ... the place holder should have started with a 9  to represent the missing ITIN ... you should have used something like 999 - 88 - 9999.  Some credits are not allowed with an EIN ... the program is correct. 

[faray]

Hi NCperson, Thank you so much for your responses. If the ITIN doesn't come with tax benefits, then it's a waste of time applying for one then!

[Critter-3]

There are tax benefits but not for those credits.   Getting the ITIN allows you to file jointly instead of separately which can be a big help.  Or if you file separately you can efile the return instead of mailing it in. 

[NCperson]

@faray not true - you want that ITIN.

if you don't have ITIN, you can't file a joint return.  that increases your taxes. 

further, and this gets complicated, I note you mention a daughter, did you fake an SSN for her as well? your tax refund may be inflated if so. 

with an ITIN for both spouse and daughter, you are eligible for "other dependent credit" which is $500 credit.  Without the ITIN for both, you don't get it. 

if your daughter is in child care, you can get a credit for that if wife and daughter have ITIN, but can't if they don't. 

so there is benefit of ITIN, it is just a complex subject given different tax credits work differently on the matter of ITIN - in some cases you still get the tax credit, in other cases you don't.