My client was serving the U.S. in 2018 and was stationed in Japan with his pregnant wife. His wife gave birth in 2018, to their first child in Japan. Both parents are U.S. citizens. The parents received the child's birth certificate but no social security card. They were told to go to Social Security Administration and apply for a social security card for the child as soon as they went back to the United States. They did as they were told but the child was issued a social security card in 2019.
They prepared their 2018 income tax return without excluding their newborn, since they had no social for him. When they came back to the United States, they filed an amended 2018 tax return and listed the child as their dependent with the newly issued social security number.
The IRS sent them a letter stating the following:
"We can't allow your claim for credit. The taxpayer identification number assigned to your child was issued after the return due date. You cannot retroactively claim the CTC ACTC EIC. "
Is this correct? In my opinion, it doesn't seem fair to lose out on child credit if their child was born in 2018 but they couldn't go back to the U.S. until 2019 to apply for a social security card.
Is it worth it to write the IRS a letter explaining the situation? Please advise.