Icon Tax Group: ITINs

michael-lodge

by Michael Lodge

The question always comes up, what is an ITIN, what is it used for, how long does it last.

First let’s get the IRS alert on ITINs out of the way.  All ITINs not used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of Jan. 1, 2017. Additionally, all ITINs issued before 2013 will begin expiring this year, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX). All expired ITINs must be renewed before being used on a U.S. tax return. No action is needed by ITIN holders who don’t need to file a tax return next year. Also, there are new documentation requirements when applying for or renewing an ITIN for certain dependents. Find more information in the ITIN Expiration Frequently Asked Questions.

Ok, now lets talk about the questions that always get asked.  One of the questions asked is can you work legally with an ITIN.  The answer is no, you must have a Social Security Number with an applicable visa or green card to allow you to work legally.  If you are an employer and you see on an application that they have a look-alike SSN that starts with a “9”, that is a ITIN and not eligible to work.

IRS Notice 2016-48, released on August 4, 2016, outlines the new procedures by the Protecting Americans from Tax Hikes (PATH) Act enacted by Congress in December 2015.

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 (SSN) from the Social Security Administration (SSA).

The IRS issues ITINs regardless of immigration status, because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. They do not serve any purpose other than federal tax reporting. An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.

Select a topic below for the information you need:

Do I need an ITIN?

You must obtain an ITIN if:

1. You do not have an SSN and are not eligible to obtain one.

And

2. You identify with one of the following categories.

• Nonresident alien who is required to file a U.S. tax return.
• U.S. resident alien who is (based on days present in the United States) filing a U.S. tax return.
• Dependent or spouse of a U.S. citizen/resident alien.
• Dependent or spouse of a nonresident alien visa holder.

How do I get one?

Option 1

You can file Form W-7, Application for IRS Individual Taxpayer Identification Number, with your federal income tax return. You must also include original documentation or certified copies from the issuing agency to prove identity and foreign status. If you qualify for an exception, then file Form W-7 with your proof of identity and foreign status documents.

Mail your W-7, tax return, proof of identity, and foreign status documents to:

Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

You will only file a tax return to the address above once, when you file Form W-7 to get an ITIN. In subsequent years, when you have an ITIN, you will file your Form 1040, 1040A, and 1040EZ as directed in the form instructions.

Option 2

You can apply for an ITIN in-person using the services of an IRS-authorized Certified Acceptance Agent or visit an IRS Taxpayer Assistance Center. This will prevent you from having to mail your proof of identity and foreign status documents. After processing, the IRS will issue your ITIN through the mail. You will then file your Form 1040, 1040A, and 1040EZ as directed in the form instructions.

When should I apply?

You can apply for an ITIN any time during the year when you have a filing or reporting requirement. At a minimum, you should complete Form W-7 when you are ready to file your federal income tax return by the return’s prescribed due date. If the tax return you attach to Form W-7 is filed after the return’s due date, you may owe interest and/or penalties.

How long does it take?

You will receive a letter from the IRS assigning your tax identification number usually within seven weeks if you qualify for an ITIN and your application is complete.

Who can I call for help?

You can call the IRS toll-free at 800-829-1040 if you are in the United States or 267-941-1000 (not a toll-free number) if you are outside the United States. This service allows you to check the status of your application seven weeks after submitting Form W-7 and your tax return.