A taxpayer's dependent is a newborn and was not yet issued an SSN. How does this impact their return?
If you do not provide a Social Security Number, the IRS may disallow an exemption and other tax benefits based on the dependent. Per the 1040 Instructions, page 20:
You must enter each dependent's social security number (SSN). Be sure the name and SSN entered agree with the dependent's social security card. Otherwise, at the time we process your return, we may disallow the exemption claimed for the dependent and reduce or disallow any other tax benefits (such as the child tax credit) based on that dependent. If the name or SSN on the dependent's social security card isn't correct or you need to get an SSN for your dependent, contact the Social Security Administration. See Social Security Number (SSN), [see instructions]. If your dependent won't have a number by the date your return is due, see What if You Can't File on Time? [see instructions].
If there is no SSN for a dependent due to their death, you can still enter the child on the return. Per IRS guidelines:
If your dependent child was born and died in 20YY and you do not have an SSN for the child, enter “Died” in column (2) and include a copy of the child's birth certificate, death certificate, or hospital records. The document must show the child was born alive.
- In Drake Tax, enter DIED in the SSN field on screen 2 Dependents and press CTRL+F to force the non-numerical entry. The date of death for the dependent may also be entered at the bottom right of screen 2.
- An entry of DIED will require you to attach one or more of the following documents as a PDF. This will clear red messages 5598 and 5562 and allow e-filing. Note that the file descriptions and file name(s) are case sensitive and must be named exactly as shown below:
- View the return and click Attach PDF to attach the PDF showing the required document(s).
If a deceased child was issued a valid SSN, enter it on screen 2 Dependents as shown on the Social Security card. A date of death for the dependent may also be entered at the bottom right of screen 2.
- An e-filed return with a newly-issued dependent's SSN may be rejected (R0000-504-01) because the SSN does not immediately appear in the IRS database. The Social Security Administration must forward it to IRS and the IRS must update its master file. That process often is not completed prior to the filing deadline.
- If the return is rejected with code R0000-504-01, the return will have to be paper-filed.