ITINs: the rules have changed.

• Author: Hunt, Marshall
• Position: Individual taxpayer identification numbers

Individual taxpayer identification numbers (ITINs) are used for a number of tax reporting purposes. They are commonly used by undocumented taxpayers who have a tax filing requirement. In these situations, an ITIN is obtained by completing a Form W-7, Application for IRS Individual Taxpayer Identification Number, for the taxpayer or anyone else shown on the tax return who needs a taxpayer identification number, and filing it with a tax return (prepared without listing the identification numbers being requested). Once the IRS issues the ITIN or ITINs, the taxpayer can file required prior-year returns and state or local tax returns.

As a general rule, a taxpayer filing with an ITIN has been able to claim the same exemptions, deductions, and credits as a taxpayer fifing with a Social Security number (SSN). For example, the child tax credit, including the additional child tax credit, and the American opportunity tax credit are allowable to taxpayers using ITINs to satisfy the taxpayer identification number requirement for those credits. A major exception to this rule is the earned income tax credit (EITC). Sec. 32(m) requires the taxpayer and/or a qualifying child to have an SSN, other than an SSN issued to apply to receive benefits from a federally funded program, to claim an EITC.

In the past, taxpayers could claim an EITC, a child tax credit, or the American opportunity tax credit on an amended or late-filed return with an SSN or ITIN obtained after the return's original due date. However, this will not be the case going forward.

The Protecting Americans From Tax Hikes (PATH) Act of 2015, passed as part of the Consolidated Appropriations Act, 2016, P.L. 114-113, established new limitations for returns filed after Dec. 18, 2015. Section 204 of the PATH Act amended Sec. 32 to require that a taxpayer can use an SSN to obtain an EITC only if it was issued on or before the due date of the return involved. In the past, a taxpayer could file amended returns for up to three years to claim the EITC if the taxpayer was able to obtain an SSN. The new provision disallows retroactive fifing of either amended or original prior-year returns to claim the EITC.

Similarly, Sections 205 and 206 of the PATH Act added limitations on claiming the child tax credit, including the additional child tax credit, and the American opportunity tax credit by providing that a taxpayer identification number can be used to claim those credits only if it was issued on or before...