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By Bethany Bouw, CPA

Tax season is upon us all which means it is time for those with filing requirements to file their tax returns. Filers with Social Security numbers can file their returns with no concerns about the return being processed to the correct account. The social security number means that the tax information filings and tax returns are tracked to that number. “The process is not as straightforward for those who are ineligible to receive a social security number. There is a specific process for getting an identifying number.

Ineligible for a Social Security Number (SSN)

There is an answer for those that have need of an identifying number for US tax purposes and are ineligible for a SSN. The US government allows for filing a request for an IRS Individual Taxpayer Identification Number (ITIN). The ITIN can be used in place of a SSN to file the US tax return. The applicant can be either a resident alien or a non-resident alien. Both resident and non-resident could need to file to be compliant with US tax law. This number is to be used only for federal tax purposes. The ITIN does not equate to work permission, eligibility for social security, or work for earned income tax credit purposes. Those who are eligible for a SSN are ineligible for an ITIN.

How to apply for ITIN?

The application for an ITIN is on a Form W-7 Application for IRS Individual Taxpayer Identification Number. The first step is to confirm that you are not eligible for a SSN and that you do not already have a SSN (yes, people have applied for an ITIN before and been denied because they did not remember that they had a SSN issued previously). If you do not have a SSN and are ineligible for a SSN, then you can move to the next step. If you are eligible for a SSN, then you should proceed to request a SSN.

There are several options for applying:

  • Mailing the paper application with required attachments
  • Go to a Certifying Acceptance Agent for an in-person meeting
    • This can prevent sending some of the documents.
  • Go to a designated IRS Taxpayer Assistance Center for an appointment.
    • This can prevent mailing some of the identity & foreign status documents

Assuming you are mailing the whole application with attachments, the next step is to select the reason for the ITIN application. Unless certain exceptions are met, the application must be submitted with the original tax return for which the ITIN is needed. The IRS is strict about this and will deny the application if the exceptions are not met and a tax return is not attached. It can be challenging to get the application approved once it has been denied once before.

It is crucial to complete the information requested on the form and sign the document. Missing a required section will likely result in denial. It can be a good idea to involve a qualified tax preparer with experience in ITINs to make sure you do not miss a required item.

What do I need to include?

There are various items required in addition to the W-7. The IRS requires unexpired documents to establish your identity and foreign status to process the application. Those documents must be either the original or a certified copy by the issuing agency or at an embassy/consulate. It is crucial to check that the embassy or consulate provides these services before you show up to the building. It would be wise to contact the embassy or consulate to confirm that these services are available.

Some documents can be used to provide proof of both identity and foreign status. Be mindful as you gather files to make sure you have the appropriate supporting documentation. At least one document must generally contain your picture.

If you submit an original document with the application, it will be returned to you. The IRS does not require a return envelope. You can include a prepaid courier envelope if you wish to get a faster delivery back to you.

Going Forward

You should save the ITIN documentation and provide it to your tax preparer once the ITIN is issued. The ITIN does need to be renewed every so often. Going forward, the taxpayer needs to keep track of expiration dates so that they can file to renew the ITIN in time. If the ITIN is not renewed before expiration, it can lead to a delayed tax filing which can cause penalties and interest to be assessed. ITINs can expire based on the duration of issuance or for lack of use. Keep in touch with your tax preparer to keep on top of your ITIN status. A best practice is to inform your preparer, especially if you are a new client, that you have an ITIN instead of a SSN so that they can keep you up to date with any required ITIN filings.

The International Tax Team at Ryan & Wetmore is well-experienced in ITIN applications and addressing issues related to ITINs. For questions or concerns regarding your international requirements, accounts, entities, and assets click here to email our foreign tax team.  Please be aware that tax issues are complicated and may vary based on the details of your situation. For this reason, an initial phone call is generally required to obtain the facts and address the questions.

 

Bethany Bouw CPA, is a manager at Ryan & Wetmore and has been with the firm for over eight years. She has experience with offshore voluntary compliance and assisting taxpayers with foreign asset and entity reporting requirements.

Traci Getz CPA, is a partner with Ryan & Wetmore, P.C. Traci has over fifteen years of experience providing accounting, tax, and consulting services to small and medium-sized business owners. She works with clients to understand their accounting and tax issues while specializing in international tax, healthcare, and construction.

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

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