An ITIN number is your passport for doing business in the United States. Therefore, if you plan to do business in the U.S., you should be familiar with the four letters “ITIN.” The following information gives you details about this all-important tax number and clues you in on how to receive the number more quickly.
What Is an ITIN Number?
An ITIN is the equivalent of a Social Security Number (SSN), except the number begins with a 9. You will need this number for reporting U.S. taxes or to get an Employer Identification Number (EIN) to pay employees in a U.S. business.
Obtaining an ITIN – Start with IRS Form W7
You cannot start a U.S. business without obtaining an ITIN first. The ITIN can be obtained by filling out IRS Form W7, which represents the IRS Application for an Individual Taxpayer Identification Number – thus, the shortened version ITIN. The W-7 form requires gathering documents that support an applicant’s foreign or alien status and true identity.
Who to Contact for Faster Service?
You can have your application processed through an acceptance agent or through a legal services provider, who offers the service, that is based in the U.S. By using the services of an acceptance agent, you can realize a more successful outcome, as your agent will verify your form and make sure it is properly completed.
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What an ITIN Cannot Do for You
An ITIN will not qualify an individual to work in the U.S. nor does to make it possible for the holder to access Social Security benefits.
Who Can Use an ITIN?
Some of the following applicants can use an ITIN:
- Foreign nationals who cannot qualify for SSNs who need to file federal U.S. taxes or want to obtain an Employer Identification Number (EIN) to pay employees.
- Non-resident aliens who cannot obtain an SSN who must file a U.S. tax return to receive a refund.
- Spouses or dependents of U.S. citizens or resident aliens who must report federal U.S. taxes
- Spouses or dependent of non-resident alien visa holders who must report U.S. taxes.
The ITIN program is fairly new, and started around 1996. At that time, the issuance of the ITIN was set up so people without Social Security Numbers (SSNs) could file their U.S. taxes and comply with the U.S. tax law.
Unlike a joint bank account, which allows 2 people to share the same account number, people must file their taxes individually and must each have an individual tax reporting number. While you may need to file for an ITIN, your dependents should also file for the number. This will ensure that you are claiming one specific person as a dependent who is known to the IRS.
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Using Your ITIN to Report Your Taxes
The reason for an ITIN is simple. The U.S. government merely wants to make sure that everyone who makes money in the U.S. has a way of reporting their taxable earnings. Once you receive an ITIN, make sure you use it to file your taxes. An ITIN will expire if is not included on a tax form and submitted for 5 consecutive years.
At one time (between 2012 to 2014), ITIN numbers were issued with 5-year expiration dates. If you received an ITIN previously between these dates, check your files. You may need to reapply for an ITIN. The IRS has since revised the 5-year expiration date rule and states that ITINs will only expire if the holder’s taxes are not filed for 5 successive years.
So, what, specifically, do you need an ITIN for besides filing taxes?
Other Ways to Use Your ITIN
You can also use an ITIN, as follows:
- To pay any taxes owed (when you file a return)
- To open a U.S. bank account for personal or business checking or savings accounts (this number is required if you do not have an SSN)
- To open online accounts, such as Stripe, Amazon, or PayPal
- To comply with U.S. withholding requirements on earned income, such as dividends, rental income, or royalties.
- To give to an employer, if you wish to get a job in the U.S. and you don’t have an SSN
- To apply for mortgage funding
- To rent an apartment
- To buy and finance a vehicle
- To obtain a credit card
Types of Businesses that Ask for ITINs
Many types of businesses will ask for your ITIN number besides banks. These businesses include insurance companies, universities, online retailers, such as eBay or Amazon, and investment companies.
You really cannot transact business in the U.S. without a tax reporting number, such as an SSN or ITIN. By going through the right channels and using the services of an acceptance agent, you can get your ITIN fast.
How Long It Will Take
Using the services of an acceptance agent will ensure that your IRS Form W-7 will be filled out, as required, and you will get your ITIN more quickly. In this case, it will take about 7 weeks, as long as your application is filled out completely and includes the proper documentation.