Whenever you file your taxes or contact the Internal Revenue Service (IRS) for any services, you’ll be required to provide a tax identification number. Naturally, Social Security Numbers (SSNs) are the most common form of tax identification when it comes to filing your taxes, but the IRS also issues other types of tax identification numbers, especially to those who don’t qualify for SSNs. One such tax identification number is the Individual Taxpayer Identification Number (ITIN).
What is an ITIN?
Individual Taxpayer Identification Number (ITIN) is a unique tax processing number issued by the IRS. Unlike SSNs, which are primarily for U.S. citizens and eligible U.S. residents, ITINs are designed to enable individuals who don’t have SSNs or cannot obtain an SSN to comply with U.S. tax laws.
Who Needs an ITIN?
Here are the eligibility criteria for those who need an ITIN:
- Non-resident aliens who are not U.S. citizens or residents but have a U.S. source of income that requires them to pay U.S. taxes.
- Dependents or spouses of a U.S. citizen, resident alien, or non-resident alien visa holder.
- Others: Anyone who doesn’t qualify for an SSN but must file taxes or engage in financial transactions in the United States.
What are the Benefits of Having an ITIN?
ITIN is your gateway to financial participation and tax benefits in the United States. Here are some of the benefits of having an ITIN:
- Tax compliance: ITIN allows individuals who are not eligible for an SSN to comply with U.S. tax laws.
- Claiming tax refunds: With an ITIN, you can claim tax refunds if you are eligible. You can also claim tax credits and deductions available to taxpayers, such as the Child Tax Credit or the Earned Income Tax Credit. Even if you are not required to file a tax return, having an ITIN ensures that you receive any refunds owed to you.
- Access to financial services: If you aren’t eligible for an SSN, having an ITIN enables you to open bank accounts, apply for loans, or obtain credit cards. It also allows you to establish a credit history in the United States.
- For estate planning: Whether you’re a non-U.S. citizen or resident alien and you inherit assets or property or plan to buy property in the United States, or just want to set up estate trust administration, you’ll need an ITIN.
- For business and investment purposes: If you’re a non-resident alien conducting business or investing in the United States, ITIN allows you to remain compliant with the tax laws.
- Spouse and dependent benefits: If you are a foreigner and are married to a U.S. citizen or resident alien, having an ITIN allows you to file joint tax returns. More so, ITINs are crucial for claiming dependents (such as foreign-born children) on your tax return.
What is the Difference Between an ITIN and an SSN?
The primary differences between an ITIN and an SSN include their purpose, eligibility, issuing authority, and validity. Here’s a snapshot of their differences:
| ITIN | SSN | |
| Purpose | Specifically for tax reporting purposes | Serve as lifelong identifiers for U.S. citizens and eligible residents |
| Eligibility | Individuals who cannot obtain an SSN due to immigration status, non-resident status, or other reasons can apply for an ITIN | U.S. citizens, permanent residents, and non-citizens qualify for SSNs |
| Issuing Authority | The Internal Revenue Service (IRS) | The Social Security Administration (SSA) |
| Lifetime Validity | Valid as long as it’s used on a federal tax return at least once every three years | Valid throughout an individual’s lifetime |
How to Apply for an ITIN
Here’s how you can apply for an ITIN:
- File Form W-7, the Application for IRS Individual Taxpayer Identification Number, and your federal income tax return.
- Show proof of identity and foreign status by including original documentation or certified copies from the issuing agency to prove your identity and foreign status. They verify who you are and your non-U.S. residency status.
Where Can I Apply for an ITIN?
You have three options when applying for an ITIN:
- Mail Application: Mail the completed Form W-7, tax return, proof of identity, and foreign status documents to the IRS.
- In-Person Application: Use the services of an IRS-authorized Certifying Acceptance Agent (CAA) to apply for an ITIN in person. You won’t need to mail your proof of identity and foreign status documents.
- IRS Taxpayer Assistance Center: You can do this by booking an appointment at a designated IRS Taxpayer Assistance Center to apply in person.
How Long Does It Take to Get an ITIN?
You can apply for an ITIN any time of the year when you have a tax filing or reporting requirement. Note that you must complete Form W-7 when you’re ready to file your federal income tax return. It will take the IRS up to seven weeks to assign you your ITIN.
Do I Need to Renew My ITIN?
Yes, you should renew your ITIN if it has expired or if you haven’t used it on a federal tax return in the last three years. Here are a few things to note about renewing your ITIN:
- Expiration: ITINs expire if they are not included on a U.S. federal tax return within three years.
- Renewal Steps: The renewal steps are the same as those when applying for an ITIN for the first time.
- Timely Renewal: Remember, timely renewal of your ITIN ensures you avoid unnecessary fines and penalties when it comes time to file your taxes.
Common Mistakes When Applying for an ITIN
Although applying for an ITIN is a fairly straightforward process, here are some of the most common mistakes you may make:
- Incorrect or incomplete Form W-7 when applying for your ITIN. Ensure all fields are accurately completed, including your personal information and the reason for reapplication, if applicable.
- Providing insufficient supporting documents. Missing or inadequate documentation will lead to delays or rejection.
- Not providing your foreign address. If you have a foreign address, make sure to include it on the application form.
- Not keeping copies of documents. Ensure you keep copies of the documents you submit with your ITIN application. This ensures that if any issues arise, you address them promptly by providing the supporting documents.
- Late application. Apply for an ITIN well in advance of your tax filing deadline. Submitting a late ITIN application may result in interest and penalties if your tax return is consequently filed late.
- Late ITIN renewal. Always renew your ITIN if you haven’t used it on a tax return for three years.
Frequently Asked Questions
Am I eligible for an ITIN?
You’re eligible for an ITIN if you cannot obtain a Social Security Number (SSN) due to immigration status, non-resident status, or other reasons. You’ll need the ITIN if you have U.S. income and need to file tax returns.
What documents do I need to prove my eligibility for an ITIN?
To prove your eligibility for an ITIN, you’ll need to provide the IRS with original or certified copies of documents that verify your identity and foreign status. These could include passports, birth certificates, and visa records.
Can my dependent get an ITIN?
Yes, if you are a U.S. citizen, then your dependents who don’t qualify for SSNs, such as foreign-born children, can obtain ITINs. Note that each eligible dependent will require an ITIN if you intend to claim them on your tax return.
Can I get an ITIN if I have undocumented immigration status?
Yes, you can apply and be approved for an ITIN by the IRS regardless of your immigration status. Remember, ITINs are a vital tool for tax reporting and compliance, which means even if you’re undocumented and have a U.S. source of income, you have a tax obligation. However, it is important to note that although you’ll be issued with an ITIN even if you’re undocumented, this doesn’t legally authorize you to work in the United States or provide eligibility for Social Security benefits.
Where can I submit my ITIN application?
You have three options to submit your ITIN application: mailing your application to the IRS,applying in person at an IRS Taxpayer Assistance Center, or applying through a Certified Acceptance Agent (CAA).
What fees are associated with getting an ITIN?
There are no fees associated with obtaining an ITIN. The IRS provides it for free.
Can I apply for an ITIN online?
No. Unfortunately, direct online applications for ITINs are not available. You’ll need to fill out Form W-7 and mail it to the IRS along with the supporting documents or apply in person at an IRS Taxpayer Assistance Center or through a Certified Acceptance Agent (CAA).
What happens after I submit my ITIN application?
Once you submit your ITIN application to the IRS, the IRS reviews your application, verifies your eligibility, and assigns your ITIN. It will take the IRS up to seven weeks to assign you your ITIN.
The Bottom Line
The Individual Taxpayer Identification Number (ITIN) is a unique tax processing number issued by the IRS to individuals, who for whatever reason, are not eligible to obtain a Social Security Number. More specifically, it allows them to comply with the U.S. tax laws. We’ve discussed the eligibility criteria for the ITIN, its benefits, how you can apply for an ITIN, and the ITIN renewal process.
If you’re a non-resident alien needing to file your taxes or a U.S. citizen who wants to claim your foreign-born children or spouse in your taxes but are unsure of how to proceed, you can always consult tax professionals on how to apply for an ITIN.
