Individual Taxpayer Identification Number (ITIN)

What is an Individual Taxpayer Identification Number

An ITIN (Individual Taxpayer Identification Number) is a U.S. tax processing number that is issued to individuals by the IRS (Internal Revenue Service). It is a taxpayer I.D. Number for those taxpayers that do not qualify for an SSN (Social Security Number). The ITIN is a nine digit number and looks just like the Social Security Number; however, its first digit is nine.

It has a range of seventy to ninety-nine but excludes eighty-nine and ninety-three in its fourth & fifth digits, for instance, 9XX-70-XXXX or 9XX-99-XXXX. Temporally taxpayer Identification numbers are the ones who are issued with the excluded range for the fourth and the fifth digits. Temporally Taxpayer ID Numbers are issued only to the main taxpayer and it is after a forty-five days suspension that such numbers are triggered.

The Individual taxpayer Identification number is designed purposely for tax filing and do not entitle a taxpayer to other benefits like social security.

The purpose of an ITIN

An ITIN is used mainly for filling taxes only. They a not designed for other purposes. The reason IRS issues these numbers is to facilitate individuals who do not qualify for the Social Security Numbers with the means to efficient process as well as account for tax returns & payments hence abiding with the United States tax laws. Through ITINs, more people are able to pay into the system something that widens the tax base. Over 7.2 million ITINs were issued between the years 1996 and 2003. Over $300 million in the form of taxes was collected from ITIN filers in the year 2001 alone, most of which came from undocumented persons.

Whether an individual is in the country legally or illegally, an ITIN application process is designed to enable tax payment for such a person. ITINs are not immigration enforcement tools and cannot provide a state of legal immigration. They are not documents, which could be used to prove legal immigration within the United States. Again, ITNs do not provide work authorization. One cannot use it to prove authorization to work on a 1-9 form.

Holders of ITINs are not qualified for the tax benefits as well as the public benefits, which United States citizens, as well as other taxpayers, can receive. For instance, ITIN holders are not eligible for Earned Income Tax Credit or social security benefits. On the other hand, where in the future an individual comes to qualify for social security (by way of legalizing his/her own status, for instance), the earnings reported by way of ITIN could be counted towards what he or she qualifies to receive.

Other Purposes that an ITIN can Serve include:

1. Securing your Driver’s license- certain states have made it acceptable for an individual to use his /her ITIN in the space of a Social Security Number to receive his or her driver’s permit, driver’s licence or a state Identification card.
2. Opening an Interest Bearing Account- provisions in the Patriot Act require banks to gather information on their customers’ identities. Such provision also allows individuals to make use of their ITINs for opening interest bearing accounts.

Applying for an ITIN
The following steps show what you need to do to apply for an ITIN:

1. You need to download the latest version of the IRS W7 form W-7 by visiting the “IRS. gov” on the internet. You may download the fill-in-form or even order the paper form, which will be delivered via the U.S. Mail. To order online, select the “Forms & Publications” link. Instead, you can still make your request through the automated forms & publications line at 1-800-829-3676. It will take between seven and fifteen days for the form to be delivered.

2. Submit your identification documents together with the W-7. No other document will be required if you are using a valid passport. The passport has to be notarized or a certified copy. If not so then, you will have to produce two or more documents, which verify your identity. You are required to include a current photo of yours as well as confirm your foreign status. Valid identification forms include:

• Civil birth certificate
• U.S, driver’s license
• Foreign driver’s license
• Foreign voter’s registration card
• U.S. State identification card
• Foreign military identification card
• U.S. military identification card
• U.S. Citizen & Immigration services photo identification,
• Visa
• School records (students and/or dependents only)
• Medical records (dependents only)

3. If applying for a dependent’s ITIN, the documents of identification have to show that the dependent is either a the United States national or a United States, Mexican, Indian, South Korean or Canadian resident. For those living outside the US with the children legally residing in their homes pending adoption or even adopted already, they have to submit the form proving their relationship if they are the ones signing form W-7. Examples include birth certificate, adoption papers, as well as court papers, which identify you as the legal guardian.

4. Follow these directions on the form W-7 to submit through mail or check the IRS publication 1915 for locations of local Tax Assistance Centres, which accept the form in person. Choosing the latter option means that your documents will be reviewed and returned to you at the time of your visit. Choosing to mail your form means that the documents will be reviewed then sent back to you through mail. It will then take four to six weeks for you to receive your ITIN notification. Failure to receive any information by sixty days then you should check your application status by calling 1-800-829-1040 from within the country or 267-941-1000 from outside the country, (Monday – Friday 7:00 a.m. – 10:00 p.m. local time)

5. After your ITIN application is complete, you are going to receive your ITIN in the form of an IRS authorization letter but not a card. The reason for this is to avoid similarities as well as confusion with the Social Security Number Card. The letter from IRS will assign your tax identification number.

Always remember:

• You should only call after 6 weeks to ask about your ITIN application status
• Make sure your residence address is correctly written on the W-7 form because your original documents if submitted as well as your ITIN will be mailed to the same address you provided. Make sure that you have correctly included your street address, unit No., as well as the Zip code.
• Immediately you receive the ITIN, make sure that you make copies of it. You can as well maintain scanned copies on your PC. An ITIN is very important and needs to be kept safe all the time.

Who needs to have an ITIN?

Any person who does not qualify for a Social Security Number and must file a U.S. federal tax return qualifies to receive and has to apply for an ITIN. This will mostly include immigrants who are undocumented. With regard to this, any person who has received some earnings from whatever source while living in the United States must file tax returns given that the amount they earned is above a specified minimum amount.

The law is clear that no one person will have both an ITIN and the SSN. While completing the tax return form, people using their ITIN should enter the ITIN in the SSN space. Examples of persons who need an ITIN include:

• Non-resident alien individuals who qualify for reduced rates of withholding benefits under an income tax agreement
• Non-resident aliens who do not qualify for SSNs and are needed to file U.S. tax returns or are filing U.S. tax returns for the purpose of claiming refunds
• Non-residents who do not qualify for SSNs electing to file joint returns with spouses who are United States’ citizens or resident aliens
• United States resident aliens (who are eligible for U.S residency status on the basis of a substantial residency test), who files U.S. tax returns but do not qualify for SSNs
• Alien spouses claimed as exceptions on U.S. tax returns but are not eligible for SSNs
• Alien individuals who qualify to be claimed as dependents on U.S. tax returns bur are not eligible for SSNs
• Non-resident alien students, researchers or professors required to file U.S. tax returns or claiming exceptions to tax return filing requirements and do not qualify for SSNs
• Dependents or spouses of non-resident alien United States visa holders who do no qualifies for SSNs

When to Apply for One

Individuals need to make their applications for ITINs as soon as they are ready to file their federal tax returns. This is because they are required to attach the returns to their applications. You can apply for your ITIN any time of the year, on the other hand, in case you attach a tax return to your ITIN application form W-7, which is in turn filed after the due date of the return then you could owe interest, penalties or both.

To avoid being charged such interests and penalties, tax returns have to be filed before the deadline, which is the 15th of April. In case you qualify for one among the exceptions that are listed on page 3 of the form W-7 and do not require filling tax returns then you should apply for your ITIN the soonest possible while specific exception covers you.

Operating locations need to encourage foreign individuals, more specifically short term visitors that are do not qualify for SSNs to apply for their ITINs before the arrive to the US. This is because the process of the application could take a number of weeks. ITIN application is available for them on the IRS website as well as at most IRS offices as well as particular U.S. Consular Offices abroad.

How Long an ITIN is Valid

On 30th June 2014, IRS posted a change on ITIN’s validity period. For individuals who file their tax returns using their ITINs, at least, in a single year in the course of their last five years, then their ITINs will not expire. On the other hand, for individuals who were issued with ITINs and have not filed any tax returns using the ITINs in five consecutive years then their ITINs will expire in the five years’ time. In case you would wish to reapply once more, IRS is not going to initiate deactivating ITINs till 2016. Such a rule applied to every ITIN even those issued after the 1st of January 2013.

ITIN Acceptance Agents

This is an organization (for instance, an accounting firm, a financial institution, a college etc.), an individual, or a business that is IRS authorized to help individuals obtain their ITINs. Certifying acceptance agents (CAAs) are tasked with reviewing applicants’ documentations, completing certificates of accuracy and forwarding the certificates as well as applications together with tax returns to IRS for processing. However, this is limited only to primary as well as secondary applicants. Applications for dependents still need that originals application or rather certified copies be mailed to the IRS from the issuing agency. Certain acceptance agents charge some fee.

What Happens after the ITIN Holder becomes Eligible for SSN?

In a case where you have been issued with an ITIN and you later become a citizen of the United States or an alien who is legally permitted to enter United States for permanent residence or with regard to the authority of law allowing U.S. employment, then it will be necessary that you get a Social Security Number. Once you have been assigned an SSN, you have to utilize it for the purpose of filing tax returns, meaning that you will stop using your ITIN. It is not appropriate that a single person uses both the SSN and the ITIN assigned for filling tax returns.

You have to notify IRS so that they can bring together your tax records under a single identification number. Failure to inform IRS after being assigned an SSN means that you may fail to receive credit for all wages paid as well as taxes withheld something that may decrease the amounts of refunds due.

You can write a letter or visit your local IRS office to explain that an SSN has been assigned to you now and that you want then to combine your records. Do not forget to include your full name, mailing address, as well as ITIN together with some copy of the social security card as well as a CP 565 copy, ITIN assignment notice if available. IRS will cancel the ITIN as well as associate all tax information that had been filed earlier under the ITIN with your SSN.

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