Joint tax returns using ITIN ineligible for special rebate
By TERI WEAVER AND AND JOHN VANDIVER | STARS AND STRIPES Published: March 29, 2008
Military families who file joint tax returns will not get this year’s special stimulus check if their foreign spouses do not have Social Security numbers, according to military tax experts and the Internal Revenue Service.
Under the current policy, if a family files a joint tax return for 2007 and includes an individual taxpayer identification number, or ITIN, on the document, the entire family will be ineligible for the economic stimulus rebate President Bush announced earlier this year.
The stimulus rebates — intended to put extra cash into taxpayers’ pockets to help the struggling U.S. economy — range from $300 to $600 per adult taxpayer, plus another $300 for each child younger than 17.
The rebates are expected to begin rolling out in May, but only after a taxpayer files his or her 2007 tax return, and as long as that return doesn’t contain an ITIN.
“Taxpayers with an Individual Taxpayer Identification Number (ITIN) instead of [a Social Security number] are not eligible to receive a stimulus payment,” reads a posting on the Internal Revenue Service’s Web site. “Both people listed on a ‘married filing jointly’ return must have valid SSNs to qualify for the payment.
“If only one has a valid SSN, neither can receive the payment,” according to the IRS.
At the tax center in Baumholder, Germany, workers learned on March 17 about the glitch.
“The problem is we found out too late,” said Alisha Brenckle, a Baumholder tax clerk.
Sheila Reed, who works at Command Navy Region Europe in Naples, Italy, has a husband with an ITIN.
“I don’t feel this is fair because I pay taxes like any other U.S. citizen. I just found out about this today, and sent an e-mail to the IRS,” she said. “It’s not right. I have three kids.”
Couples who have already filed their returns have missed the chance to decide whether it is in their interest to file separately or not.
Deciding to file separately isn’t a cut-and-dry matter.
The reality is that, for most military couples, it is better to forgo the stimulus credit and file jointly, according to Kerry Caruselle, supervisor of Baumholder’s tax center. The reason: Filing separately means eligible couples miss out on other tax credits.
For those who have foreign-born spouses and have yet to file their returns, the best bet is to meet with local tax center advisers to determine the proper course of action, according to tax center workers.
In the meantime, soldiers angry about missing out on the stimulus rebate should make their frustrations known, Caruselle said.
“This seems very unfair. We’re encouraging people to contact their congressman,” Caruselle said.
Since discovering last week how the rule will affect servicemembers, Master Chief Petty Officer Robert Collins, a volunteer tax assistant at Yokosuka Naval Base in Japan, said he has contacted media and written U.S. Sen. John McCain, R-Ariz., to see if it could be changed.
Last week was also when servicemembers and other U.S. taxpayers began receiving letters from the IRS explaining how the tax rebates would work.
Bush and Congress agreed to the stimulus package earlier this year to provide extra cash to taxpayers who make between $3,000 and $75,000. The rebate is actually a tax credit on a worker’s 2008 wages.
Q&A on ITINs
An ndividual taxpayer identification number, or ITIN, is issued by the Internal Revenue Service for federal tax purposes only.
Generally, the IRS issues the nine-digit numbers to foreign nationals who need to file federal tax returns. Those people include nonresident aliens, resident aliens and spouses or children of a U.S. citizen.
Many U.S. military members who marry foreigners use an ITIN for their spouses on tax forms. The couples can file joint returns, listing a Social Security number for the servicemember and an ITIN for the foreign spouse.
Under current rules, if an ITIN shows up on a joint return, it will automatically prevent the family from getting any refunds from the economic stimulus package. Here’s more information directly from the IRS’s Web site.
Q. I file using an individual taxpayer identification number (ITIN). Can I still get a stimulus payment?
A: No. The law does not allow stimulus payments to people who file a return using an ITIN. A taxpayer must have a valid Social Security Number to qualify for the stimulus payment. If married filing jointly, both taxpayers must have a valid Social Security Number. And children must have valid Social Security Numbers to be eligible as qualifying children.
Q. I have an ITIN, but my spouse has a valid Social Security number. Can we get a payment?
A. If you and your spouse file a joint return, you will not get a stimulus payment. If your spouse files a separate return, your spouse may qualify for a payment, based on his or her income deductions and credits.
Q. If I have a valid Social Security Number and my child has an ITIN, do I get extra money for the child?
A. No. To qualify for the extra credit for qualifying children, not only do the taxpayer and spouse, if filing jointly, need valid Social Security Numbers, but the qualifying child must also have a valid Social Security Number.
Q. I adopted a child this year and my child has an ATIN (Adoption Taxpayer Identification Number). Will I receive the $300 additional child payment?
A. An ATIN is issued by the IRS as a temporary taxpayer identification number for the child. Adoptive parents who do not yet have a Social Security Number for their child will not get the advance payment. However, if they receive a Social Security Number for the child before the end of 2008, they can claim the additional child payment on their 2008 tax return.