This article is aimed at giving an elaborate account of how the Individual Taxpayer Identification Number (ITIN) functions and why it is relevant in the process of tax filing in America. As a dependent, taxpayer or a nonresident alien in the U.S., an ITIN will aid you in making sure that you abide by the U.S. laws. With this guide, you will know how to go through the application and renewal stages of your ITIN. The U.S. Tax System can be quite complicated especially when you are not a resident or fail to obtain a Social Security Number.
An Individual Taxpayer Identification Number (ITIN), which is provided by IRS (Internal Revenue Service), is a specific (nine-digit) individual identification number. The ITIN is nine-digit, which enables you to comply with the taxation law of the US. It is necessary to the people who have to pay their taxes in America but do not have entitlement to SSN. The knowledge of the ITIN becomes vital to all the residents aliens or non-residents, the dependents and the spouses of the citizens or the residents of the United States.
In this body of work, you are going to learn more about Individual Taxpayer Identification Number (ITIN), the way to apply and also its usefulness. Find out how you will benefit with an ITIN. You would as well learn the compulsory documentation that is required in filling the application and the usual pitfalls to be avoided. The required information will help you to proceed through the ITIN application process with a confident mind.
What is the Individual Taxpayer Identification Number (ITIN) number?
Internal Revenue Service issues the Individual taxpayer identification number (ITIN),, to individuals who require a taxpayer ID number but are not eligible to be allocated the social security number (SSN),, as a substitute. ITINs are given to those who must pay their taxes and submit the tax return, and these people are not eligible to legally work in the U.S.
Who wants an Individual Taxpayer Identification Number (ITIN) number?
Whereas, in case you are:
Are non-residents of the U.S., who are aliens, required to file?
You are not a legal resident of the United States and you are supposed to submit an U.S. income tax return.
>You are a wife/husband or dependent of an American citizen or a resident alien.
>You are a U.S. Residents who are required to submit tax returns and you are not eligible to have a SSN.
Individuals needing an Individual Taxpayer Identification Number (ITIN) but do not have an SSN include people with U.S. tax responsibilities. Without this, these people may struggle to abide by the U.S. laws regarding payment of taxes or they may even fail to do so.
2. What does Individual Taxpayer Identification Number (ITIN) mean?
Applying an ITIN is rather simple, though certain steps are to be followed and certain documents are needed. It is an instruction on the process of applying to an ITIN.
Step One Eligibility Determination
Qualify first then go ahead and apply. People, who are not allowed to obtain SSN, though have to comply with the U.S. Tax Laws, can have ITINs. There can be non-resident aliens, and people who must submit a U.S. income tax return or those who have dependent spouses and children.
Step 2: Fill IRS form W-7
To get an Individual Taxpayer Identification Number (ITIN), you have to complete IRS Form W-7. The form requests such basic information as:
Birthdate, complete name and address
ITIN-requirement
Immigration Status (in the event there is).
You will also be required to produce documentation that proves that you are a foreigner and who you are. As a good example, you can arrive with some support documents such as a passport or national ID card.
Step 3: Applying to Get Your Loan
Once you have filled in the Form W-7, and gathered the documents you need, send them to IRS. Individuals may submit the applications through the mail or physically at a Taxpayer Assistance Center.
You should also start sending out your ITIN application as long as possible in time, prior to deadlines.
3. ITIN Common Documents
When filing an ITIN, you will be required to submit documents that show that you are a foreign national, as well as your identity. IRS requires documents which are original, or certified copies by the issuing agency. Some of the conventionally accepted documents are:
The preferred document is known as passport. This document is considered acceptable to ascertain your identity as well as establishing that you are a foreigner.
National Identification Card In some instances, such an identification card may suffice.
U.S. In case it may be so, a valid U.S. Visa can be used as a source of evidence concerning their identity.
Birth certificate A birth certificate may also serve as a source of proving identity.
In case you fail to present the original, then you should present a certified copy of the document. The documents should be legible and clear because this is the only way to avoid delays.
4. Individual Taxpayer Identification Number ( ITIN ) the SSN What are the differences?
A distinction should be made between a Social Security Number in contrast to an Social Security Number because they serve distinctive purposes and are issued in different circumstances.
Social Security Number:
Within a group of people who can access this card are citizens, Permanent residents and even some Non-Citizens who fit in some eligible categories.
Applicable in the tax reporting and Social Security Benefits.
People allowed to work in America are expected to offer their SSN.
Individual Taxpayer identification number (ITIN):
Those people who are not qualified to receive SSN, but they need tax number.
This document fails to permit one to work in the U.S.
To be applied to taxation purposes only.
5. ITINs are very beneficial
ITIN is also an excellent way of getting an opportunity to file tax in the U.S. in a situation whereby the individual cannot acquire a social security number. These benefits are the most significant ones.
Filing Tax
A good method of having your U.S. income tax returns filed is through ITINs. Individual Taxpayer Identification Number (ITIN) would be the only way you could claim tax credits and make your tax return.
Tax Credits and Taxes Deductions
You can also receive some applicable deductions or credit that includes the child tax credit and American Opportunity Credit.
Claim Dependents
Your dependents who do not reside in the U.S can be claimed in your taxes which reduce the amount of overall tax payable.
6. What happens to failure to do not apply to an ITIN?
In case you miss the deadline of getting Individual Taxpayer Identification Number (ITIN), that may also cause a number of issues.
Fail to file tax: In case you lack Individual Taxpayer Identification Number (ITIN), then you have little chance to fulfill your obligations.
You do not qualify to receive some tax-related benefits. You can be leaving money on the table as in the case of missed Earned income tax credit and Child tax credit , etc.
Possible charges : The non-payment of taxes on time may lead to the penalties and payment of the interest on taxes.
In case you need to possess an ITIN to be able to fulfill the tax requirements, the sooner you obtain it, the better.
7. The renewal of Individual Taxpayer Identification Number (ITIN)
In case Individual Taxpayer Identification Number (ITIN) expired over 3 successive years, they must be replaced. You should also renew your ITIN in case you did not file a return using your ITIN within the last three years. To renew your ITIN, you are able to file a form W-7 and the supporting documents.
8. FAQs (Frequently Asked Question)
Q1 – I want to know whether I can work in the U.S with an ITIN?
No. Individual Taxpayer Identification Number (ITIN) will not allow an individual to work in America and is only used in taxes. In case you want to work in America, you need to acquire a Social Security Number.
Q2 – What is the duration it will take me to get an ITIN number?
It is estimated that IRS normally spends between 7-11 weeks to do the processing of ITINs applications.
Am I supposed to have an ITIN to make my taxes?
You are required to do so should you require submitting tax returns but are not entitled to SSN.
Q4 – Can I use ITIN number to claim dependents?
And in case you are making claims of dependents, who are not living in the U.S., or rather in a case in which they do not qualify, an SSN on your part, then you can make use of your ITIN.
Is there a fee to apply Individual Taxpayer Identification Number (ITIN)?
It is free to apply to the IRS to get an Individual Taxpayer Identification Number (ITIN).
For more insights about Individual Taxpayer Identification Number (ITIN) and other laws, visit our website Tax Laws in the USA
