Why my tax return become less when I enter my daughter's ITIN as my dependent

[xmasbaby0]

A tax return is the form 1040 you send to the IRS.   If you are getting money back, that is called a "refund"--not a return.  So.....do you really mean your refund was less after you added a dependent?  That does not make sense.  If you added a dependent who has an ITIN, you get a $500 credit that reduces the tax that you owe.  Are you sure the number that went down did not say "Tax Due" under the number?   That would mean that you owe less---not that a refund was reduced.

[xmasbaby0]

Look at your Form 1040.   Do you see a refund on line 35a?   Or do you see an amount of tax due on line 37?  It cannot be both--it will be one or the other.

https://ttlc.intuit.com/questions/1901539-how-do-i-preview-my-turbotax-online-return-before-filing

What happens to those lines with or without your dependent?

[rjs · Accepted solution]

In some cases, when you first enter a dependent, TurboTax assumes that she has a Social Security number, so it gives you the child tax credit, which could be up to $2,000. Then, when TurboTax asks for her Social Security number and you enter an ITIN instead of a Social Security number, it takes away the child tax credit and gives you the credit for other dependents instead, which is only $500. The smaller credit makes your refund less. A child with an ITIN is not eligible for the child tax credit.

I'm not sure exactly what makes this happen. It doesn't always happen, but it seems to be more likely to happen if you previously entered a dependent and deleted the dependent, or went back and changed dependent information. It will definitely happen if you first entered your daughter with a made-up Social Security number, then changed it to her ITIN. This may be a minor quirk in the TurboTax interview, but the end result on your tax return is correct.

[tinasun710-gmail]

Hi rj5,

Really appreciate your reply, it helps a lot. Yes, at first, I just listed my daughter as a dependent without any SSN/ITNT number, it shows the tax return should be $3268, however, when I entered her ITNT, it becomes 1600, the difference is exactly $1500， which is the credit difference between 2000 for SSN and 500 for ITNT. So May I ask is there anyway to apply for the credit of 2000 if my daughter only has ITNT instead of SSN? Thank you so much,

Regards,

Tina

[Opus 17]

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@tinasun710-gmail wrote:

Hi rj5,

Really appreciate your reply, it helps a lot. Yes, at first, I just listed my daughter as a dependent without any SSN/ITNT number, it shows the tax return should be $3268, however, when I entered her ITNT, it becomes 1600, the difference is exactly $1500， which is the credit difference between 2000 for SSN and 500 for ITNT. So May I ask is there anyway to apply for the credit of 2000 if my daughter only has ITNT instead of SSN? Thank you so much,

Regards,

Tina

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The full Child Tax Credit is only available to a child who has a valid SSN (usually a citizen or green card holder).  I believe that is a result of a law called the PATH act passed in 2015.

https://turbotax.intuit.com/tax-tips/irs-tax-return/what-is-the-path-act-and-how-may-it-impact-your-...

Your child must have a valid SSN before the due date of your on-time tax return.  If your child is eligible for an SSN, and if you have already filed an extension on your tax return so that your due date is October 5, you should wait to file your return until the SSN is issued.  However, if you did not request an extension so that your return is considered late, you should go ahead and file, you aren't eligible for the full credit even if she gets an SSN later this year.

Again for next year, if she will be eligible for an SSN, wait to file your tax return until she gets it, even if that means getting an extension.