Necessary to include dependents with only ITIN?

[chovaz]

Is there any benefit or requirement for including a dependent on your tax return if they only qualify for an ITIN?

My daughter is here on an L2 visa so she does not qualify for an SSN. I understand that I cannot claim her as a dependent or receive any tax credits for her if she does not have an SSN. Do I even need to include her on my return?

[HelenC12]

You don't need to but you may want to add her as a dependent.

The $500 Credit for Other Dependents (aka “Family Tax Credit”) was signed into law as part of the 2017 Tax Cuts and Jobs Act and is in effect for tax years 2018 through 2025.

• The credit allows taxpayers a credit for certain dependents that don't qualify for the Child Tax Credit, such as qualifying children age 17 or older, adult dependents, and dependents who have an ITIN.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.

To be eligible for this credit, the person(s) being claimed must fit the definition of a qualifying child or a qualifying relative, as defined here:

Qualifying child

• They are your biological child, stepchild, adopted child, eligible foster child, sibling or half-sibling, stepsibling, or an offspring of any of these;
• They haven’t already been claimed for the Child Tax Credit or Credit for Other Dependents, either by you or by anyone else;
• They are a U.S. citizen, U.S. resident alien, or U.S. national;
• They aren’t filing a joint return with their spouse;
• They are under the age of 19 (24 for full-time students; no age limit for permanently and totally disabled children);
• They live with you for more than half the year (exceptions apply); and
• They didn't provide more than half of their own support for the year.

Qualifying relative

Despite the name, a qualifying relative doesn’t have to be related to you. However, a nonrelative must have lived with you for the entire year.

On the other hand, a true relative isn’t required to live with you the entire year, as long as they are your:

• Biological child, stepchild, adopted child, foster child, sibling, half-sibling, stepsibling, or an offspring of any of these; or
• Biologically-related direct ancestor (parent, grandparent, etc.), stepparent, aunt, uncle, son- or daughter-in-law, father- or mother-in-law, brother- or sister-in-law.

Related or not, the person you’re claiming as a qualified relative must also fit these criteria:

• They haven’t already been claimed for the Child Tax Credit or Credit for Other Dependents, either by you or by anyone else;
• They are a U.S. citizen, U.S. resident alien, or U.S. national;
• They aren’t filing a joint return with their spouse;
• They either lived with you for the entire year or are related to you;
• They have less than $4,200 gross income in 2019 (nontaxable Social Security doesn't count); and
• You provided more than half of their financial support. More info

The credit is $500 per qualifying dependent as long as the adjusted gross income (AGI) doesn’t exceed $200,000 ($400,000 if filing jointly). The credit goes down $50 for every $1,000 that the AGI exceeds the $200,000/$400,000 limit.

Source: TurboTax FAQ

[chovaz]

Thanks for the info. It seems that she should qualify but what is interesting is that if I delete her from my return, my refund balance did not change at all.  She meets all the criteria and I have her listed as a US resident.  

[HelenC12 · Accepted solution]

The $500 is not refundable. It's a credit against your tax. 

• If your tax liability is $0, the $500 would not help.
• The $500 per child credit is reduced once your AGI reaches $200,000 (or $400,000 if you're filing jointly with your spouse).

Preview your Form 1040, page 2 to see your tax, line 12a and your Child tax credit, Line 13a.