If your situation requires you to file an expat tax return, you will need a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN) in order to file. For those not eligible for a Social Security number, a nine-digit ITIN will be required, and it is only useful for tax purposes. The IRS updated the ITIN process last year, providing additional options for obtaining this form of identification. Learn more below.
Why You May Need an ITIN
You may be wondering what purpose the ITIN serves – and the answer is: not much other than for use on your expat tax return. It provides no legal status in the US, unlike a Social Security number. However, some states allow the use of an ITIN for obtaining a driver’s license, and certain banks will allow the use of an ITIN for opening financial accounts.
In an instance where a foreigner is in the US and has a tax filing obligation but no SSN, they will need an ITIN to file. The following situations may require filing a US Tax Return:
- Students – For reporting scholarship and grant receipts.
- Dependents – These include resident US foreigners who a taxpayer wishes to claim as a dependent.
- Consultant/Contractor – This is anyone working for a foreign company in the US (with US-sourced wages).
If you must file taxes in the US but don’t have an SSN, it’s essential to have an ITIN in order to stay up-to-date on filing obligations.
How to Apply for an ITIN
In the past, the only ways to apply for an ITIN were to complete and mail the Form W-7 “Application for IRS Individual Taxpayer Identification Number” along with required identification documents or to visit an IRS Taxpayer Assistance Center in the US. However, the IRS recently added a new method for obtaining an ITIN! Taxpayers now have the option to visit a US-based Certified Acceptance Agent (CAA) or a CAA located overseas. A CAA is a person or entity that is authorized by the IRS to assist individuals and foreign persons who are not eligible for an SSN but still need a taxpayer identification number to file a US tax return. Many CAA offices are located abroad, and you can find a full list here.
Check Your ITIN Expiration Date
Because of how important an ITIN is if you need to file an expat tax return, you should verify that yours is valid.
- ITINs that have not been used on a Federal Tax Return at least once over the past three years are no longer valid for use on your US expat taxes as of January 1, 2017.
- All ITINs issued before 2013 with middle digits of 78 and 79 (example: XXX-78-XXXX) have expired.
If you need to file an expat tax return and your ITIN has expired, we recommend that you submit your ITIN renewal application along with your expat tax return in order to avoid delays. While using an expired ITIN on a Federal Tax Return means your taxes will be treated as timely filed, your return will be processed without any exemptions and/or credits that you’ve claimed, and no refund will be paid until the ITIN is renewed.
Have Questions About Obtaining or Renewing Your ITIN and Filing an Expat Tax Return?
One of our expat-expert accountants can help you navigate the often-complex nature of filing US expat taxes – contact us today for the expat tax assistance you need!