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What is an ITIN and why do you need one?

What is an ITIN and why do you need one?

Taxpayer identification numbers are essential for anyone who wants to pay taxes in the United States. However, not everyone is eligible for a Social Security number.

That's where an Individual Taxpayer Identification Number, or ITIN, comes in.

In this article, we'll explain what an ITIN is, why you might need one, and how to apply for it.

What is an ITIN?

An ITIN is a tax processing number issued by the IRS to individuals who are required to have a U.S. taxpayer identification number but are not eligible for a Social Security number.

The ITIN is a nine-digit number that always begins with the number 9 and is formatted like an SSN (e.g., 9XX-XX-XXXX).

ITINs were introduced in 1996 to enable individuals without SSNs to file tax returns and pay taxes. Some examples of individuals who may need an ITIN include:

  • non-resident aliens who own U.S. property,
  • dependents or spouses of non-resident aliens,
  • non-resident aliens who receive income from U.S. sources.

NB! An ITIN does not:

  1. Give the holder any legal right to work in the United States.
  2. Change the holder's immigration status.
  3. Make the holder eligible for Social Security benefits.
  4. Allow the holder to claim the Earned Income Tax Credit (EITC).
  5. Permit a child to be claimed for the EITC or Child Tax Credit (CTC). A child must have a valid SSN and authorization to legally work in the U.S. to be claimed for these credits.

However, having an ITIN can help non-citizens comply with U.S. tax laws, which can be important for maintaining legal status in the US. It can also enable non-citizens to claim certain tax benefits that they might otherwise not be able to claim.

NOTE! If you have an ITIN that was issued before 2015, it has expired and you should have already received a notice from the IRS about the need for ITIN renewal.

Or, if you haven't used your ITIN on a U.S. federal tax return in the last three years (2021-2023), you will need to renew it.

Why do I need an ITIN?

There are several situations where you might need an ITIN.

For example, if you're not a U.S. resident but own property here, you might need to file a tax return and pay taxes on any money you make from renting out or selling the property.

Or, if you're married to someone who's not a U.S. resident but they earn money from a U.S. source, you might need an ITIN to file a joint tax return.

Foreign students, researchers, or professors who get money from a U.S. source like a scholarship or grant might also need an ITIN.

And in some cases, you might need an ITIN to open a bank account or apply for a mortgage.

What is an ITIN used for?

An ITIN is mainly used for taxes. If you don't have a Social Security number but you make money in the U.S. and owe taxes, you'll need an ITIN to file your tax return and pay what you owe.

You might also use your ITIN to get tax treaty benefits that can lower your tax bill based on agreements between the U.S. and other countries.

Another way to use an ITIN is to open a bank account or apply for a mortgage, depending on the bank or lender. And some states or schools might require an ITIN for things like getting a driver's license or enrolling in classes.

NB! One thing to keep in mind is that an ITIN isn't a valid form of ID, so you can't use it to prove who you are or that you're allowed to work in the U.S.

Should I get ITIN for my non-citizen spouse?

If you are married to a non-citizen spouse and you plan to file taxes jointly, it is generally recommended that you apply for an ITIN for your spouse. Filing taxes jointly can provide several benefits, including a lower tax rate and eligibility for certain tax credits and deductions.

However, to file taxes jointly, both spouses must have a valid taxpayer identification number. If your non-citizen spouse is not eligible for a Social Security Number (SSN), then an ITIN can serve as an alternative identification number for tax purposes.

NOTE! Obtaining an ITIN for your non-citizen spouse does not grant them legal status or work authorization in the United States. It is simply a tax processing number that allows them to file taxes jointly with you.

Pro tip. If you are unsure whether you should apply for an ITIN for your non-citizen spouse, it may be helpful to consult with a tax professional or immigration attorney. They can provide guidance on your specific situation and help you make an informed decision.

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How to apply for an ITIN?

If you need an ITIN, you can apply for one by following these steps:

Step 1: Gather the necessary documents. To apply for an ITIN, you'll need to round up some paperwork that shows who you are and that you're not a U.S. resident. Stuff like your passport, driver's license, or birth certificate should do the trick.

Step 2: Complete the Form W-7. Next, you'll need to fill out a Form W-7. Make sure you take your time and fill it out carefully. If you make a mistake, it can slow things down or even lead to your application being rejected.

Step 3: Submit the application and supporting documents. Once you've completed the Form W-7, submit it along with your supporting documents to the IRS. You can mail your application to the address listed on the form, or you can submit it in person at an IRS office that accepts ITIN applications.

Step 4: Wait for your ITIN. It can take up to 11 weeks to receive your ITIN from the IRS. If your application is approved, the IRS will mail your ITIN to you. If your application is denied, the IRS will send you a letter explaining why it was denied and what you can do to correct the problem.

FAQ

1. Is an ITIN the same as an SSN?

No, an ITIN (Individual Taxpayer Identification Number) is different from a Social Security Number (SSN). The IRS issues ITINs to individuals who are ineligible for an SSN but need to file taxes in the U.S.

2. What does an ITIN number look like?

An ITIN is a nine-digit number starting with "9" and has the fourth and fifth digits ranging from 50 to 99. For example, an ITIN might be formatted as 9XX-50-XXXX.

3. Is an ITIN the same as a tax ID number?

An ITIN is a type of tax ID number issued by the IRS. However, it's not the only type; other tax ID numbers include Employer Identification Numbers (EINs) and Social Security Numbers (SSNs).

4. How do I check if I have ITIN?

To determine if you have an ITIN, review your past tax returns where it would be listed in the taxpayer identification number field. Alternatively, you can contact the IRS directly through their toll-free number for assistance in locating your ITIN.

Ines Zemelman, EA
Founder of TFX