In a large pot or Dutch oven, heat the stove over medium-high heat and add the ground beef. Cook for about 5–7 minutes, breaking it apart with a spatula until it’s nicely browned and no longer pink. Drain any excess grease.

Add the finely chopped medium yellow onion to the pot and sauté for 5–7 minutes until translucent.

Add the minced garlic, stirring well. Cook for an additional minute until fragrant.

Pour in the beef broth, followed by the diced tomatoes and diced green chilies. Stir gently to combine.

Sprinkle in the dried Italian seasoning, salt, and black pepper to taste. Stir thoroughly.

Introduce the cubed potatoes and shredded carrots to the pot, mixing them gently into the bubbling broth.

Bring to a boil, then reduce heat to low, cover, and simmer for 15–20 minutes until fork-tender.

Remove from heat and whisk in the cream cheese until melted and smooth.

Stir in the milk until the mixture is well combined and creamy.

Fold in the shredded cheddar cheese, stirring until melted and smooth.

Ladle the soup into bowls and top with cheese, bacon, sour cream, and green onions if desired.