While most taxpayers may be familiar with the need to file tax returns, they may not give too much thought to how the IRS tracks who has filed and who hasn’t. If you said “by Social Security Number,” you’d be right. But what if a taxpayer doesn’t have or cannot obtain a Social Security Number? Can they still be part of a US tax filing? The answer is yes – in some instances.
What is an ITIN?
According to the IRS, an Individual Taxpayer Identification Number (or ITIN for short) is a tax processing number issued by the Internal Revenue Service. The IRS issues ITINs to individuals who are required to have a US taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security number (SSN) from the Social Security Administration (SSA). It is important to note that ITINs do not serve any purpose other than federal tax reporting.
As such, an ITIN does not:
- Authorize work in the US
- Provide eligibility for Social Security benefits
- Qualify a dependent for Earned Income Tax Credit purposes
When Would I Need an ITIN?
You may need an ITIN when you don’t have a Social Security Number, are not eligible to obtain one, and you have a requirement to furnish a federal tax identification number or file a federal tax return. Most commonly, this would be in situations if you are a:
- Nonresident alien who is required to file a US tax return
- US resident alien who is (based on days present in the United States) filing a US tax return
- Dependent or spouse of a US citizen/resident alien (one note: non-resident alien spouses who make this election are not required to report his or her individual non-US financial accounts on an FBAR, but if the US spouse meets the filing threshold, then foreign assets of the non-resident spouse must be included to joint form 8938)
- Dependent or spouse of a nonresident alien visa holder
- Nonresident alien claiming a tax treaty benefit; and/or
- Nonresident alien student, professor or researcher filing a US tax return or claiming an exception
If I Need an ITIN, How do I Obtain One?
In order to obtain an ITIN while overseas, you can complete a Form W-7 (along with required supporting documentation that proves identity), attach it to your US tax return, and send the return and Form W-7 to the IRS ITIN Operations Center. It’s important to note that the documentation filed with the Form W-7 must be original or certified. The address is:
Internal Revenue Service
Austin Service Center
P.O. Box 149342
Austin, TX 78714-9342
An alternative is for you to work with an IRS-authorized Certified Acceptance Agent (CAA) who will review your documentation and return it to you before submitting your completed Form W-7 to the ITIN Operations Center. This can be helpful in saving time and headaches, as by utilizing the services of a Certifying Acceptance Agent no original passport or certified copy of passports are required to be submitted to the IRS. Instead, the CAA issues a “Certificate of Accuracy” (COA) certificate to be submitted to the IRS in lieu of the original documents.
Luckily, Greenback can act as a Certified Acceptance Agent and walk you through this process with ease and confidence.
Does an ITIN Ever Expire?
In general, ITINs expire if the ITIN holder does not file a tax return or wasn’t included as a dependent on the tax return of another taxpayer for three consecutive years. In this case, the ITIN will expire on the last day of the third consecutive year.
In the event that you receive a notice that you, your spouse, or your dependent’s ITIN is scheduled to expire, and you will be filing a tax return or claim for refund in a subsequent year, you should begin the renewal process as quickly as you can in order to avoid delays. Once your renewal application is accepted, the IRS issues notice CP565 to the applicant, which serves as confirmation of your Individual Taxpayer Identification Number when an ITIN is renewed.
Do You Need an ITIN? We Can Help!
Our expat-expert team of accountants can provide the advice you need in order to become and stay compliant on your expat tax obligations, including assisting with Form W-7 as a Certified Acceptance Agent. Contact us today and we’ll be happy to help!