Today many taxpayers are not aware of their tax obligations, especially those who are not US citizens or permanent residents. One common question that arises is about Individual Taxpayer Identification Numbers (ITINs). In this article, I will explain what ITINs are, why you might need one, and how to obtain one.
What is an Individual Taxpayer Identification Number (ITIN)?
An ITIN is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number (SSN) but have tax filing or reporting requirements. ITINs are issued regardless of immigration status, as both resident and non-resident aliens may have US tax filing obligations. ITINs are nine-digit numbers that always begin with the number nine and have a range of digits in the fourth and fifth positions. For example, an ITIN might look like this: 9XX-XX-XXXX.
Why do I need an Individual Taxpayer Identification Number (ITIN)?
There are several reasons why you might need an ITIN. Here are a few common examples:
- Filing taxes: If you are not eligible for an SSN but have US tax filing obligations, you will need an ITIN to file your tax returns. The IRS requires you to file a tax return if you have income from US sources, even if you live outside the US.
- Claiming dependents: If you have dependents who are not eligible for SSNs, you can apply for ITINs for them so that you can claim them as dependents on your tax return.
- Opening a US bank account: Some financial institutions require an ITIN to open a bank account, especially if you are not a US citizen or permanent resident.
- Applying for a mortgage: If you are not a US citizen or permanent resident but want to buy a home in the US, you may need an ITIN to apply for a mortgage.
Obtaining an Individual Taxpayer Identification Number
If you need an ITIN, you can apply for one by filling out Form W-7, Application for IRS Individual Taxpayer Identification Number. You can download this form from the IRS website or request a paper copy by calling the IRS toll-free number at 1-800-829-3676.
Here are the steps to follow to obtain an ITIN:
Step 1: Gather the necessary documents
To apply for an ITIN, you will need to provide documentation to verify your identity and foreign status. The IRS provides a list of acceptable documents on Form W-7, but generally, you will need to provide:
- Your original passport or a certified copy from the issuing agency. A passport must contain a date of entry stamp or a current US visa.
- A second form of identification includes your name and photograph. This can be a driver’s license, a national identification card, or a US state identification card.
- Documentation to support your foreign status and identity. This can be a birth certificate, a voter ID card, or a school record.
Step 2: Fill out Form W-7
Once you have gathered your documentation, you will need to fill out Form W-7. The form asks for your personal information, including your name, mailing address, and birthdate. You will also need to provide information about why you need an ITIN.
Step 3: Submit your application
You can submit your completed Form W-7 and supporting documentation in several ways:
- By mail: Mail your application and documentation to the IRS address listed on Form W-7. The IRS recommends that you use a secure mailing method, such as certified mail, to track your application.
- Through an IRS-authorized acceptance agent: These agents are authorized by the IRS to help individuals apply for ITINs. You can find a list of authorized acceptance agents on the IRS website.
- At an IRS Taxpayer Assistance Center (TAC): You can make an appointment at a local TAC and bring your application and documentation in person.
Step 4: Wait for your ITIN
Once you have submitted your application, it can take several weeks for the IRS to process it. You can check the status of your application online using the IRS’s Where’s My ITIN tool. Once your application is approved, the IRS will mail your ITIN to you.
It’s important to note that you will need to renew your ITIN if you have not used it on a tax return for three consecutive years. Additionally, ITINs with middle digits of 88, 90, 91, 92, 94, 95, 96, 97, 98, or 99 will expire at the end of 2022, so you will need to renew your ITIN if it falls into this category.
Why is Form W-7 Important?
Form W-7 is required for individuals who are not eligible to obtain a Social Security number but who need to file a tax return or other tax-related documents with the IRS. This includes nonresident aliens, foreign nationals, and their spouses and dependents who are not eligible for an SSN but who have US tax obligations.
It is also required for individuals who are claiming a tax treaty benefit that requires an ITIN or for individuals who are eligible for certain tax credits but do not have an SSN.
Form W-7 is an important document for individuals who are required to file a tax return or pay taxes in the United States but who are not eligible for a Social Security number. Without an ITIN, these individuals would be unable to comply with their tax obligations and could face penalties for failing to file a tax return or pay taxes.
In addition, having an ITIN can help individuals establish credit, open a bank account, and obtain a driver’s license or other government-issued identification.
Conclusion
Obtaining an Individual Taxpayer Identification Number (ITIN) is a crucial step for individuals who have tax filing or reporting obligations in the US but are not eligible for a Social Security Number. ITINs are issued by the IRS and allow individuals to file tax returns, claim dependents, and apply for certain financial services. To obtain an ITIN, you will need to gather the necessary documentation, fill out Form W-7, and submit your application to the IRS by mail, through an authorized acceptance agent, or at an IRS Taxpayer Assistance Center. If you have questions about ITINs or your tax obligations, it’s always a good idea to consult with a tax professional.
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