I'm on L1 Visa and my wife is on L2 visa. Our current visas/I-94 has expired. However we had already filed for an extension and it is pending with USCIS. I'm planning to apply for an ITIN for my wife. Will they reject her application because of the expiry date? Will they take into account the pending extension? Along with W7 form and a notorized copy of her passport should I attach a covering letter saying that a visa extension request has been filed and is pending with USCIS? Any guidance in this direction will be of great help.

Why do you need ITIN for spouse?

I was told that I would get more benefits if I included my spouse for tax refunds and that she had to have either an ITIN or SSN to be included in the tax refunds.

If you have yet gotten approval on the extension, you need to wait until the extension before filing.