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Many ITINs Expire January 1st 2017; Renew Now to Avoid Refund Delays

Many ITINs Expire January 1st 2017; Renew Now to Avoid Refund Delays
Ines Zemelman, EA
24 December 2016

Many ITIN holders will need to file a federal income tax return in 2017 in order to claim federal refund. 

An Individual Taxpayer Identification Number (ITIN) is used by anyone who has tax-filing or payment obligations under U.S. law but is not eligible for a Social Security number. Under a recent law change by Congress, any ITIN not used on a tax return at least once in the past three years will expire on Sunday, Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) will also expire on that date.

This means that anyone with an expiring ITIN should act now to make sure they have a renewed ITIN in time to file a return during the upcoming tax season. Failure to do so will result in refund delays and possible loss of eligibility for some tax benefits until the ITIN is renewed.

Application for ITIN renewal filed within the remaining days of 2016 will be processed before one submitted in January or February at the height of tax season. Currently, a complete and accurate renewal application can be processed in as little as seven weeks. But this timeframe is expected to lengthen to 11 weeks during the tax season.

Several common errors are currently slowing down and holding up some ITIN renewal applications. The mistakes generally center on missing information and/or insufficient supporting documentation. To avoid processing delays, ITIN renewal applicants should be sure to use the latest version of Form W-7, revised September 2016.

To ensure prompt processing of the form, ITIN renewal applicants should also complete the following steps:

- At the top of the form, be sure to check the box that says, “Renew an existing ITIN.”

- Under “Reason you’re submitting Form W-7,” every applicant must check one of the eight boxes. If more than one applies, be sure to check the option that best describes the tax purpose for filing the application. Do not write “ITIN renewal” in this section of the form, as it is not a valid reason.

- On Line 3, an applicant living outside the United States should enter their foreign address, if different from the mailing address on Line 2. If now living in the U.S., be sure to enter the foreign country of last residence. See Form W-7 instructions for details.

- Include original supporting and required identification documentation, or certified copies from the issuing agency to prove foreign status and identity.

Unlike the past, only a passport with a U.S. entry date is now acceptable as a stand-alone identification document for dependents. This means that dependent ITIN applicants who use a passport without a date of entry must provide additional documentation, along with the passport, to prove U.S. residency. Acceptable documents include:

- If under age 6, a U.S. medical record.

- If under age 18, a U.S. school record.

- If at least age 18, a U.S. school record for anyone who is a student.  Otherwise, anyone 18 and over can provide a rental or bank statement or a utility bill listing the applicant’s name and U.S. address.

Dependents from Canada or Mexico or dependents of U.S. military personnel stationed overseas are exempt from these additional requirements.

Ines Zemelman, EA
founder of Taxes for Expats