Individual Taxpayer Identification Numbers & The Child Tax Credit
Editor’s Note: Even if you don’t have a Social Security number, you may be required to file a U.S. tax return. To do that, you need an Individual Taxpayer Identification Number (ITIN). There is some confusion about what ITIN filers are allowed to claim, or not, including the Child Tax Credit. Read on to learn more about ITIN and the Child Tax Credit.
Who Needs a Tax ID Number, Or ITIN Number?
Many people from foreign countries are required to file U.S. tax returns due to claiming income in the U.S., but may not qualify for a Social Security number. Since an identification number is required to file a tax return, the alternative for these individuals is an Individual Taxpayer Identification Number, or ITIN. The IRS will also issue ITINs to dependents who can be claimed on a tax return but do not qualify for Social Security numbers.
ITIN vs. SSN
SSNs belong to U.S. citizens and authorized residents, while an ITIN is a tax number issued by the IRS for certain individuals who are not eligible for an SSN, but are required to file certain federal tax returns.
An ITIN and SSN both follow a nine-digit format – like this: XXX-XXX-XXXX. ITINs can be easily identified because they always begin with the number 9.
Tax Benefits You Can Claim With an ITIN
There are some common misunderstandings around what tax benefits you can claim when you file with an ITIN.
An ITIN filer can’t claim the Earned Income Tax Credit, which specifically requires a Social Security number. Similarly, any children using an ITIN instead of a Social Security number can’t be taken into account when an otherwise qualified individual claims the credit.
ITIN Limitations Around Dependent Credits
This limitation doesn’t apply to the Child Tax Credit (CTC) or the Additional Child Tax Credit (ACTC). So, ITIN filers can’t claim the EITC, but they can claim the CTC or the ACTC. However, there are still requirements that must be met. To claim these CTC or the ACTC, your child (or children) must:
- Live in your home for over half the year (limited exceptions to this rule apply)
- Be your child, stepchild, adopted child, or foster child, or your brother or sister or stepsibling (or a descendant of any of these)
- Be under 17 years old at the close of the year
- Not provide over half of his or her own support for the year
- Be a U.S. citizen or resident
- Have an SSN issued to them by the due date of the return, and
- Not file a joint return (with exceptions).
Tax Reform Requires SSN for CTC and ACTC Qualifying Children
One of the changes with tax reform is that children are now required to have an SSN by the due date of their return to be qualifying children for the CTC and the ACTC. This rule is effective for tax years 2018 through 2025.
Before 2018, children with ITINs could qualify taxpayers for the CTC and ACTC but only if they had an ITIN by the due date of their return for that tax year.
New Other Dependent Credit Available for ITIN Holders
The TCJA added the new Other Dependent Credit (ODC) which is a $500 credit for each dependent who doesn’t qualify for the CTC. This means a taxpayer can claim the ODC for a dependent who meets all the rules to be a qualifying child for the CTC except for the SSN requirement.
Children Who Live Outside the U.S. Can be Qualifying Children
A child with an ITIN that lives in the U.S. can qualify for the ODC, and children with ITINs that live outside of the U.S. generally will not qualify. Children that live outside the US generally can qualify for the CTC if they live in your home for more than half of the year and meet the other requirements, including the SSN requirement.
U.S. citizens will almost always have SSNs and therefore qualify for the CTC regardless of where they live so long as they meet the other tests. Also, note that special rules apply to children of divorced and separated parents.
Need more information on ITINs? Check out these links:
For help with ITINs and tax credits like the Child Tax Credit, find your H&R Block Tax Office today.
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