Are Social Security Numbers Required to Claim Children on Federal Tax Returns?

Members of some religious groups can submit a request to be exempt from the Social Security tax, but this choice may limit the tax credits you can claim on your federal return. For example, in order to claim a child tax credit, your child must have a Social Security number. A child who has an individual taxpayer identification number (ITIN) will not qualify.

Sowards v. Commissioner of Internal Revenue

The US Tax Court heard the case of Sowards v. Commissioner of Internal Revenue, in which Sowards sought a review of an IRS Office of Appeals decision. The appeal decision involved a levy and a tax lien to collect federal income tax due for 2008 through 2010.

In October 2011, Sowards and his wife filed a joint federal income tax return for 2008 through 2010. He claimed his four children as dependents each year, claimed the additional child tax credit in 2008 and 2009, the child tax credit in 2010, and the earned income tax credit in 2008 and 2009.

No Social Security Numbers

Sowards did not include Social Security numbers for himself, his wife, or his children when he filed the returns because none of them had SSNs at that time. His wife was not a citizen, and his children did not have SSNs because he was allowing them to decide whether they wanted to participate in the Social Security system based on his religious beliefs. As an alternative, he had mailed requests for individual taxpayer identification numbers (ITINs) with his 2010 tax return.

Sowards’ claims for the earned income tax credit and the child tax credits were disallowed by the IRS as mathematical or clerical errors. Sowards owed taxes, interest, and additions for failing to file his returns for 2008 and 2009 in a timely manner. For several years after filing these returns and requesting ITINs, Sowards and the IRS communicated regarding the claims for various tax credits, the returns in general, and the ITIN requests.

Collections Stopped, Then Resumed

The IRS stopped collection activity on the tax Sowards owed and placed his account in a non-collectible status, even though he had not asked them to do so. In 2016, the IRS resumed collection activity and sent Sowards and his wife a levy notice and a lien notice. He requested a hearing, and the Appeals officer upheld the levy and lien. Sowards then filed for review of the Appeal determination and submitted amended returns with his children’s SSNs. A partial trial was held, and the case was remanded to Appeals upon request by the IRS.

The second Appeals consideration determined that Sowards was not eligible for the child tax credits because his children did not have taxpayer identification numbers prior to the date of filing. Additionally, he could not receive the earned income tax credit because his wife did not have a valid taxpayer identification number.

US Tax Court Weighs In

The US Tax Court upheld the decision to disallow the child tax credits and earned income credits. Additionally, the Court did not find Sowards’ contentions about his religious beliefs and conscientious objection to participation in the Social Security system persuasive.

Sowards also argued that the PATH Act, which was enacted after his original tax filing but before he submitted his amended returns, retroactively disallowed his claims for the child tax credits, which he stated violated his due process rights. However, the PATH Act only applies to filings submitted after its enactment, such as Sowards’ amended returns.

For solid advice on child custody and its tax implications, contact the experienced family law attorneys at Woodruff Family Law Group