Preheat the oven to 425°F. Lightly coat a 13x9 metal baking pan with nonstick cooking spray. Cook the sausage in a large skillet over medium heat, breaking it into small crumbles. Cook until no pink remains, then drain the grease well.
Reduce the heat to low. Add the cream cheese, drained Rotel, garlic powder, onion powder, smoked paprika, and 1 cup of the cheddar. Stir until the cream cheese melts and the mixture is evenly combined.
Spread the sausage mixture into the prepared 13x9 pan. Arrange the frozen tater tots in a single row around the perimeter of the pan. Keep the center uncovered. Bake for 20 minutes.
Sprinkle the remaining 1 cup cheddar over the center of the dip. Return the pan to the oven and bake for another 10–15 minutes, until the cheese is melted and the tater tots are golden and crisp.
Garnish with green onions and jalapeño, if using. Let the dip rest for 5 minutes before serving with tortilla chips.
