Foodman CPAs and Advisors

ITIN

An ITIN (Individual Taxpayer Identification Number) is a tax processing number issued by the IRS to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for Social Security Numbers (SSNs). ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. ITINs are for federal tax reporting only and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws (such as filing a Forms 1040s and other tax schedules) and to provide a means to efficiently process and account for tax returns and payments for those NOT eligible for SSNs. In sum, ITINs do not prove identity outside the Federal tax system and should not be offered or accepted as identification for non-tax purposes.

Who needs an ITIN?

The IRS states that individuals that need an ITIN are:

  • A nonresident alien individual claiming a tax treaty benefit
  • A nonresident alien filing a U.S. tax return
  • A resident alien (who is treated as a resident alien for income tax purposes based on days present in the United States) who files a U.S. tax return
  • A resident or nonresident alien individual who can be claimed as a dependent of a U.S. citizen or resident alien on a U.S. tax return
  • A resident or nonresident alien spouse who isn’t filing a U.S. federal tax return (including a joint return) but who can be claimed as a dependent on a U.S. tax return
  • A resident or nonresident alien electing to file a joint tax return with a spouse who is a U.S. citizen or resident alien
  • A nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception
  • A resident or nonresident alien individual who can be claimed as a dependent or a spouse of a nonresident alien U.S. visa holder

An ITIN is for federal tax purposes only

An ITIN is issued for federal tax filing purposes only and does NOT:

  • entitle an individual to Social Security benefits
  • make an individual eligible for the earned income credit
  • authorize work in the U.S.

The ITIN creates no inference concerning the immigration status or the right to work of an individual in the United States. ITINs cannot be used as proof of identification to obtain a state driver’s license.

How to determine if an individual needs an ITIN? Use the IRS Interactive On line Tool

The IRS Interactive Tax Assistant tool can help determine if an individual should file an application to receive an ITIN.  The on line tool will ask the individual the following set of questions to help determine whether the individual is  eligible to apply for an ITIN:

  • Have the U.S. Citizenship and Immigration Services (USCIS) issued to you or are you currently eligible for a Form I-551 Permanent Resident Card, also known as a “green card”?
  • Do you have a United States Citizenship and Immigration Services (USCIS) Photo Identification card or other USCIS documents?
  • Do you have a visa issued by the U.S. Department of State? Note: For purposes of this question, the visa can be either current or expired.

The On-line tool has the following Reasons to Apply for an ITIN:

  • Filing your own federal tax return
  • Being claimed as a spouse on a joint federal tax return
  • Being claimed as a spousal exemption on a married filing separate return, for years prior to 2018
  • Being claimed as a spousal exemption on a head of household federal tax return, for years prior to 2018
  • Being claimed as a dependent on a federal tax return
  • Being claimed as a spousal exemption on a Form 1040NR, for years prior to 2018
  • So that your spouse can file as married filing separately
  • Applying for an extension on Form 4868
  • Making an estimated tax payment for individuals
  • Applying for an Employer Identification Number
  • Other reason

If the Individual chooses “other reason” because none of the above apply, then the options are:

  • Passive income (such as interest from a bank)
  • Wages, salary, compensation, honorary payments with tax treaty benefits claimed
  • Only honorary payments with tax treaty benefits claimed
  • Gambling winnings with tax treaty benefits claimed
  • Third party reporting of mortgage interest
  • Third party witholding for disposition by a foreign person of U.S. real property interest
  • Non-U.S. representative of a foreign corporation needing an ITIN to meet their E-filing requirement
  • None of the above apply.

How to obtain an ITIN?

To obtain an ITIN, and individual must:

What is an ITIN Acceptance Agent?

  • An individual, business or organization (college, financial institution, tax practitioner, non-profit etc.) authorized by IRS to assist individuals in obtaining ITINs.
  • Certifying Acceptance Agents (CAA) review applicants’ documents and submit a completed Form W-7, along with a certificate of accuracy, copies of required documents, and tax return or exception documents to the IRS for processing.
  • CAAs can authenticate all documents for primary and secondary applicants except foreign military identification cards.
  • CAAs can only authenticate passports and birth certificates for dependents.
  • For all other dependent documents, the CAA must mail the original document or certified copy from the issuing agency to IRS.

Know this

The IRS is the only issuing authority for an ITIN. An ITIN is valid as long as it’s used on a federal tax return at least once every three years. An ITIN  can allow an individual that is not eligible to obtain a  SSN to be in compliance with U.S. tax laws.

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