What is an ITIN and how to get an ITIN number?

What is an ITIN?

ITIN stands for Individual Taxpayer Identification Number, a tax processing number issued by the Internal Revenue Service (IRS) to individuals who must file taxes yet are not eligible for Social Security Numbers (SSNs).

The IRS allocates Individual Taxpayer Identification Numbers (ITINs) to taxpayers, including some dependents, who need to fulfill their tax obligations in the United States without qualifying for Social Security numbers.

Is an EIN the same as an ITIN?

No, an EIN is not the same as an ITIN. An EIN, or Employer Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States for purposes of identification and tax reporting. In contrast, an ITIN, or Individual Taxpayer Identification Number, is issued to individuals who need to file taxes but are ineligible for a Social Security Number (SSN), including non-resident aliens and their dependents. Essentially, EINs are for business entities while ITINs are for individuals requiring a tax identifier but do not qualify for an SSN.

 What is the difference between an ITIN and a SSN?

The main difference between an ITIN and a SSN lies in their purpose and eligibility criteria. A SSN (Social Security Number) is assigned to U.S. citizens, permanent residents, and eligible working non-residents by the Social Security Administration (SSA). It serves multiple functions including tax reporting, employment, and access to social services. An ITIN (Individual Taxpayer Identification Number), on the other hand, is issued by the IRS to individuals who are required to have a U.S. taxpayer identification number but do not have, and are not eligible to obtain, a SSN from the SSA. This includes people such as foreign nationals and certain non-residents who still need to file or report U.S. taxes.

Who qualifies for an ITIN?

A surprising array of people may need an ITIN. For example:

Individuals from abroad with income sources within the U.S., such as someone from Mexico who owns a consulting business in the U.S., must file their U.S. tax returns using an ITIN as mandated by law.

If a person is temporarily residing in the U.S. under a work visa (like an H-1B visa for specialty occupations) and brings their spouse, the spouse will require an ITIN to file a combined tax return in the U.S.

A person living in the U.S. who does not meet the requirements for a Social Security number but passes the substantial presence test will need an ITIN for their tax reporting duties within the country.

Procuring an ITIN ensures that taxpayers remain compliant with U.S. tax laws and may allow them to take advantage of certain tax benefits, such as filing taxes jointly with a spouse or claiming dependent-related credits.

What can’t you do with an ITIN?

Taxpayers using an ITIN cannot avail themselves of the Earned Income Tax Credit since it specifically requires a valid SSN. Nonetheless, those filing with an ITIN can apply for the Other Dependent Credit if they have dependents in the U.S. with ITINs. Furthermore, if they have a dependent child with an SSN, they might be eligible for both the Child Tax Credit and Additional Child Tax Credit.

Starting from 2015, to qualify for child-centric credits, both the taxpayer and qualifying children need to have SSNs or ITINs by the return’s filing deadline (this includes extensions). Delaying your application can make you ineligible for these credits, even if you meet other criteria. Also, securing an SSN or ITIN post-deadline does not allow retroactive claims for these credits.

How do you get an ITIN?

Obtaining an Individual Taxpayer Identification Number (ITIN) involves gathering specific documents and selecting a method of application. To start, applicants must compile their identification documents, which usually include a passport as the primary document. Alternatively, a combination of other documents such as a foreign ID, U.S. driver’s license, or birth certificate may be used to prove one’s identity and foreign status.

Once the necessary documentation is ready, there are three primary ways to submit your ITIN application: mailing the documents directly to the IRS, using the services of a Certified Acceptance Agent (CAA), or making an appointment at an IRS Taxpayer Assistance Center. Mailing your application involves sending Form W-7 (Application for IRS Individual Taxpayer Identification Number), along with the required identification documents or certified copies from the issuing agency, directly to the IRS’s address specified for ITIN applications.

Applicants preferring not to mail their original documents can opt for a CAA who can verify their documents and forward the application on their behalf.

Advantages of working through a CAA include:

Assistance with completing Form W-7 (Application for IRS Individual Taxpayer Identification Number)

Support with any further details requested by IRS during application processing

Offerings in languages preferred by applicants like Spanish

Expert guidance through both taxation concerns and the detailed process of applying for an ITIN

Each method is designed to accommodate different needs, offering flexibility to applicants around the globe. Regardless of the chosen method, it’s crucial to follow all application steps meticulously to ensure a smooth processing of your ITIN request.

Understanding the Individual Taxpayer Identification Number (ITIN) is crucial for individuals who need to comply with U.S. tax obligations but aren’t eligible for a Social Security Number (SSN). The ITIN, issued by the IRS, serves as a vital tax processing identifier for non-resident aliens, their dependents, and certain other individuals, enabling them to file tax returns and fulfill their tax responsibilities in the United States. Recognizing the process to obtain an ITIN—completing Form W-7, providing necessary documentation for identity and foreign status, and choosing a submission method—is essential for ensuring timely compliance with U.S. tax laws and avoiding potential legal complications.