Have you received a CP567 Notice with ITIN rejection for Spouse of the U.S. Citizen category? 

In recent months ITIN operations office has been rejecting the ITIN application for foreign spouse of U.S. Citizen category if the IRS notices the filing status on the 1040 US Federal tax return as Married Filing Separate (MFS). 

The reason for rejection is  “Because of the Tax Cuts, and Jobs Act (TCJA) of 2017, the deduction for personal exemptions were suspended for Tax years 2018 through 2025. As a result, most spouses and dependents should not apply for or renew an ITIN unless they qualify for an allowable tax benefit or are filing their own federal return.”

In simple terms, until 2017, even for MFS status, the foreign spouse would get an additional personal exemption of $4,050, resulting in an advantageous tax position for U.S. citizens. These personal exemptions have been stopped from the 2018 tax year onwards. As there are no real tax benefits with Married Filing Separate status on the 1040 tax return, the ITIN office rejects the ITIN application as there is no tax benefit. We understand even if no tax benefit, many ITIN application is made, so e-filing is easy. Without ITIN, the only option would be to send tax returns by post to IRS.

For more FAQ on difference in Married filing seperate VS Married filing jointly

What is the next alternative option if I cannot file ITIN and 1040 tax return with Married Filing Separate (MFS)? 

Please note you cannot file as Single if you are legally married as of 31st Dec of the U.S. tax calendar year. The next option is, If your 1040 US Federal tax return is with filing status as Married Filing Jointly (MFJ) and if a 6013(g) election [i.e., treating your foreign resident spouse as a resident of USA] and reporting his/her income, even if no USA or Foreign income on 1040 tax return then the ITIN office considers this ITIN application with MFJ status as valid. From our experience, the ITIN application with MFJ status has been approved without any issues.

If my ITIN is rejected, does this mean even my U.S. tax return is not processed? 

No, If you filed your tax return along with the ITIN application, ITIN rejection does not mean the tax return was filed late or not processed; the IRS office will adjust the tax numbers based on the filing status and send a notice to the taxpayer if any changes in final tax numbers.

Can I reapply for ITIN application by Filing Status from Single, Married Filing Separate(MFS)  to Married Filing Jointly (MFJ)? 

Yes, you can undoubtedly reapply with a new ITIN application by amending a tax return using reporting on 1040X. You should be able to amend the tax return within three years of filing the original tax return. Some of our clients who self prepare tax returns can amend it on turbo tax, or you can request your CPA to have the amended tax return prepared with a change of filing status from Single, MFS to MFJ.

Please ensure when the tax returns are amended, the below-listed steps are taken:

• 1040X – Amended tax return is prepared with the explanation provided.
  
• 1040 – Federal tax return with a new filing status and changes in numbers with 6013(g) election. On top of the 1040 tax return, write “As Amended.”
  
• 1040 – Federal tax return, which was initially sent/filed with ITIN application. On top of the 1040 tax return, write “As Originally Filed.”

We are one of the IRS-approved Certified Acceptance Agents [CAA] with many years of experience with the ITIN application process.

Our team specializes in international expatriate U.S. personal tax return service. If you need assistance with ITIN Renewal/US 1040 filing for refund claim/FATCA Compliance work/FBAR FINCEN114 Filing, ITIN/ Form W7 Application/E.I.N./Form W8BENE or Certified Acceptance Agents [C.A.A.] services/1040NR U.S. tax filing for refund claim of excess 1042S / 8288A/ 8805/ W2/ 1099.

We are happy to assist our clients in a timely, efficient, and cost-effective way

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