What are ITIN used for?

DOES FATCA APPLY FOR INDIVIDUAL TAXPAYER?

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Individual Tax Identification Number, or ITIN is a US taxpayer identification number issued by the Internal Revenue Service (IRS), which allows the taxpayers without a Social Security Number (SSN) to file income tax returns. This tax processing number is only available for both residents and non-residents, their spouses, and dependents who aren’t eligible for a  Social Security Number (SSN).

ITINs are the alternate option of Social Security numbers for those taxpayers who are not eligible for a Social Security number.

It is a 9-digit number, beginning with the number “9” which appears similar to an SSN (XXX-XX-XXXX).

The purpose of the ITIN is different from the other forms of ID and is confined to tax filing and reporting. The taxpayers will be excluded from enjoying the benefits such as social security or earned income credits.

ITINs can be obtained by both residents and non-residents regardless of their immigration status especially if you are not eligible for an SSN.

Importance of ITIN:

  • It ensures that taxpayers comply with U.S tax laws
  • To efficiently process tax returns and payments for taxpayers without a Social Security number.
  • Internal Revenue Code requires both residents and non-residents to have a U.S. filing or reporting.
  • ITINs are mainly used for federal tax reporting.

The following people may obtain ITIN:

  • A non-resident foreign national who owns or invests in a U.S. business and receives taxable income from that U.S. business, but lives in another country.
  • A foreign national student who qualifies as a resident of the United States (based on days present in the United States).
  • A dependent or spouse of a U.S. citizen or lawful permanent resident.
  • A dependent or spouse of a foreign national on a temporary visa.

An ITIN does not promise the following:

  • To authorize work in the U.S.
  • To benefit from Social Security
  • To provide Earned Income Tax Credits
  • To  provide legal immigration status

Some ITIN holders are eligible for the Child Tax Credit (CTC).

The new tax bill passed in December 2017 states that the CTC tax credit may be worth as much as $2,000 per qualifying child, depending upon the applicant’s income (if a child does not have a SSN they are no longer eligible for the tax credit)

The other purposes with ITIN

  • Individuals without an  SSN can open interest-bearing accounts using ITIN.
  • ITIN can be used in some states instead of an SSN in order to receive a driver’s license, driver’s permit, or state identification card.
  • ITIN can be used by immigrants to provide proof of residency.

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Form W-7 is used to apply for a USTAXID or often referred to as ITIN [Individual Tax Identification Number], This application process is required for non-citizens who aren’t eligible to receive a Social Security number but need to file a federal tax return with the IRS for income from US sources. A common scenario includes a foreign person with a United States based income filing a 1040Nonresident Federal Tax Return or US citizen/resident alien with a foreign spouse filing a joint 1040 tax return with a Married filing Jointly status.

We are happy to assist our clients in a timely, efficient, & cost-effective way

We are one of the IRS Enrolled Agents with many years of experience in US 1040/1040NR personal tax compliance reporting and FATCA Compliance FBAR Reporting.

We are also IRS Approved Certified Acceptance Agent [CAA] with many years of experience dealing with types of ITIN Form W7 application and passport certification processes for US TAX ID.