The Ins & Outs of the Individual Taxpayer Identification Number

Do I need an ITIN?

If so, how do I obtain one?

These are common questions that arise every year as tax time approaches. Understanding what an ITIN is and what purpose it serves can help taxpayers effectively manage their U.S. filing requirement without added stress or delays.

What is an ITIN?
An individual taxpayer identification number (ITIN) is a tax processing number issued by the Internal Revenue Service. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number, but who do not have, and are not eligible to obtain, a Social Security number.

In other words, an ITIN is a substitute for the Social Security number to be used for tax purposes only. The IRS issues ITINs to help taxpayers comply with U.S. tax laws and to provide a means to efficiently process and account for tax returns and Social Security payments made by both resident and nonresident alien taxpayers. ITINs do not serve any purpose other than federal tax reporting.

What criteria are required for an ITIN?
ITINs can help taxpayers avoid delays in filing U.S. tax returns and withholding tax. Taxpayers need an ITIN if they meet the following criteria:

• The taxpayer does not have a Social Security number and is not eligible to receive one from the Social Security administration.
• The taxpayer has a requirement to provide a federal tax identification number or a requirement to file a federal tax return.
• The taxpayer falls into one of the following categories:
  • a nonresident alien who is required to file a U.S. tax return
  • a U.S. resident alien who is filing a U.S tax return based on days present in the United States
  • a dependent or spouse of a U.S. person
  • a dependent or spouse of a nonresident alien visa holder
  • a nonresident alien claiming a tax treaty benefit
  • a nonresident alien student, professor or researcher filing a U.S. tax return

It is important to remember that ITINs do expire. If you need to file a tax return in 2021 and your ITIN has expired or will expire before you file in 2021, you should submit a renewal application as soon as possible to prevent delays in processing of the return.

How do you obtain an ITIN?
Obtaining an ITIN from the IRS can unfortunately be a slow and tedious process. Therefore, it is very important to apply for an ITIN as quickly as possible to avoid delays. In order to demonstrate that there is a definite tax need for an ITIN, the general rule is that ITIN applications are to be filed with the individual’s tax return by the due date of the return, but may be done earlier to facilitate withholding requirements.

To obtain an ITIN, you must complete IRS Form W-7, application for individual taxpayer identification number. The ITIN application requires documentation substantiating foreign/alien status and the identity of the person making the application. There are 13 specific document types which are acceptable by the IRS as proof of identity and foreign status. Of these 13 document types, only the passport serves as a stand-alone document as proof of both foreign identity and foreign status.

After completing Form W-7, taxpayers may mail the documentation (example: actual passport document or certified copy of document from issuing agency), along with the Form W-7 (ITIN Application Packet) and the individual’s tax return to the IRS ITIN office.  Or, they may schedule an appointment with a local designated IRS walk in office to meet with an IRS agent to process the ITIN packet, tax return and actual documents in person. 

Alternatively, the individual can use an IRS certifying acceptance agent to handle the actual documents in order to verify the individual’s foreign status and identity in place of an IRS agent.

An acceptance agent is a person or entity authorized by the IRS to help taxpayers obtain their ITIN. Working with an IRS-authorized Certified Acceptance Agent (CAA) can help taxpayers save time and energy.

Taxpayers that choose to work with a Certified Acceptance Agent do not have to submit an original passport or certified copy of the passports to the IRS. Instead, the CAA reviews the documentation and then issues a certificate of accuracy (COA) to be sent to the IRS in place of all the original documents.

We can help you understand what it takes to obtain an ITIN.

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