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WHAT IS ITIN?

How to appLy for AN ITIN IN 2023 ?

                           TABLE OF CONTENTS:

Everyone and anyone who isn’t a US citizen, long-term resident not eligible for a social security number(SSN), and has a US tax filing requirement, can apply for an ITIN (Individual tax identification number). The application form W-7 looks like a simple IRS tax form to complete. 

The reality is that it’s also one of the easiest forms to screw up which can get your ITIN rejected. In this blog, we explain why your application must be best left to a CAA, or a Certified Acceptance Agent and everything else you must know about it.

What EXACTLY is ITIN?

An ITIN or (Individual Tax Identification Number) is nothing but a Tax ID issued by the IRS to certain residents, non-resident aliens, their spouses & kids. It’s a nine-digit number beginning with “9”. It is formatted just like the SSN. The ITIN is only issued by the IRS to individuals who aren’t eligible for the SSN and have a US Tax filing requirement. The ITIN doesn’t give you the right to work in the US and is issued without any regard to your immigration status.

WHAT PURPOSE DOES AN ITIN SERVE?

The IRS issues you an ITIN with the primary objective being to file your US Tax return. However, it has several other uses as well. You can open a US bank account, get a US credit card, obtain a US driving license, etc. As a Foreign-student studying in the US, who isn’t eligible for an SSN yet, and has tax filing requirements, the ITINs can be very useful.

WHO NEEDS AN ITIN?

An individual who isn’t eligible for an SSN and has a US tax filing requirement can apply for an ITIN. The valid US Tax return and ITIN application must be submitted with original photo IDs or certified copies of the passport to the IRS to get one.

Foreign nationals who are owners of US LLCs, C-Corps, US Partnerships, own real estate in the US while living abroad or living in the US, their spouses or dependents may need ITIN. Spouses and dependents must provide a tax benefit to be eligible to get one. Even Foreign Students in the US may need ITIN.

Who can apply for one?

As previously mentioned, if you are not eligible for an SSN and have a tax filing requirement in the US and if you have a valid passport from a country the United States recognizes, you are eligible for an ITIN. 

If you are a non-resident who is eligible to obtain the benefit of reduced withholding under a tax treaty – you may apply for ITIN.

Similarly, if you are a Foreign teacher, professor, or student who needs to file a tax return and is not eligible for an SSN can apply for one..

ITIN APPLICATION, ITIN FORM W7, ITIN FROM INDIA, ITIN MUMBAI
Having a US LLC is the best way to apply for ITIN

HOW DO I APPLY ? WHAT IS FORM W-7?

You must complete form W-7 and attach a valid US tax return (unless an exception applies), include original or certified copies of your identity documents, and include an SSN denial letter (if applicable) to the IRS.

All of these documents must be mailed to:

Internal Revenue Service (IRS)

ITIN Operations

P.O.Box 149342

Austin, TX 78714-9342

CAN SPOUSES & DEPENDENTS APPLY FOR THEM?

According to the IRS, spouses, and dependents for the tax years from 2018-2025 should not apply for an ITIN unless they qualify for an allowable tax benefit. These individuals must be listed on the attached US tax return with a schedule or a form that applies to that benefit.

DOES ITIN EXPIRE? HOW DO I RENEW THEM?

ITINs which have not been used on the US Tax return at least once in the past 3 consecutive years will expire. If you didn’t use your ITIN in 2019, 2020, and 2021, they will expire on 31st December 2022. ITINs which have expired must be renewed if you have a tax filing requirement. These are generally renewed in the same way as your original ITIN application.  For spouses and dependent renewal, they must file their tax return with their renewal application to show that they have a tax benefit on the tax return.

ITIN applications are complex. Let’s move on.

WHO ARE CERTIFIED ACCEPTANCE AGENTS (CAA)?

Certified acceptance agents are accountants (CPA, EA) who are under an agreement with the IRS, authorized to verify the applicant’s claim of identity and foreign status by reviewing supporting documentation, authenticity, accuracy, and completeness for the taxpayer, spouse, its dependents (if included on the tax return with W-7 Application).

Working with CAA is the best way to apply for one. Not only you don’t need to submit your original documents to the IRS, but you can also process your ITIN application faster since your documents are already verified by the CAA. The CAA will make sure that your Form W-7 is completed accurately. The CAA will certify the accuracy of the ID documents on the W-7 COA and send it to the IRS with your tax return, and W-7 application including IDs.

For dependents, the CAA can only verify passports and birth certificates. Once they are issued, the CAA also receives the number directly from the IRS.

WHAT DOCUMENTS ARE NEEDED?

Along with a completed Form W-7, ITIN applicants must file a US Tax return. One of the main reasons why ITIN applications get rejected is because there was no Tax return attached to the application. Unless an exception applies not to file a US Tax return, a completed US Tax return must be attached to your W-7 ITIN application. 

If you are planning to apply on your own, you must either send your original passport to the IRS with your application or a certified copy of your passport.

 A certified copy of your passport is not a notarized copy. A certified copy is the one that is issued by the issuing agency, in the case of passports it’s the passport office in your home country, if you are living in the US, it’s the embassy of your country in the US. If you don’t want to get into this mess of mailing original documents, work with CAA to get your number.

The passport is the only standalone document for foreign status and identity. If you do not have a passport, you will have to produce 2 other listed documents and one of them should have a photo id on it. (For dependents, requirements are different).

If the dependent’s passport doesn’t have a date of entry, they will have to provide “original” documents to verify their US residency. There are different requirements for dependents under age 6 and older than age 6 but under 18.

If dependents(under 14 or students under 18) don’t have a passport then one of the supporting documents to prove “foreign status” and “identity” must be a birth certificate.

HOW LONG DOES IT TAKE TO GET IT?

Assuming you qualify for an ITIN and your application is complete, you will get your number in 10-14 weeks. If you send your application through a CAA, the processing time is reduced by several weeks. If you haven’t received a response within the specified time, you can call the IRS at 1-800-829-1040 (toll-free in the US), and if overseas you can call 1-267-941-1000 (not toll-free).

Exceptions to filing a US Tax return

Almost all applicants have to file a US Tax return to apply for ITIN unless they fall under the criteria discussed below:

  • Exception 1: Third-party withholding on passive income
  • Exception 2: Wages, Salary, compensation with tax treaty benefits. 
  • Exception 3: Third-party reporting of Mortgage Interest
  • Exception 4: Withholding – Sale of US Real property by Foreign person
  • Exception 5: IRS reporting under Treasury Decision 9363, Form 13350

Most applicants will not meet these exceptions.

CAN FOREIGN STUDENTS GET ONE?

The rules for employment for foreign or international students in the US are set by the United States Customs and Immigration Services (USCIS) laws and regulations. Foreign students eligible for employment must apply for SSN. If SSN is denied they can use that as proof for their ITIN application, assuming they meet the other requirements for eligibility of ITIN.

FINAL THOUGHTS

By now, it’s pretty clear that getting an ITIN is far from simple. There is too much work that goes into getting that 9-digit number. In most cases, it’s usually someone requesting that number from you so that they can meet their tax compliance needs with the IRS. Banks, brokerage firms, universities, credit card payment processors, and e-commerce stores might request it from you. In some cases, you may not need an ITIN at all. Working with a CAA acts as a 1st line of defense on whether you need an ITIN or if you are even eligible for one. Given the technicalities of filing a US Tax return, certifying passports, and completing Form W-7, most folks who apply by themselves end up with a rejection letter several months later. 

Working with a CAA takes care of the preparation, certifying, mailing, and tracking of the application. As a cherry on the top, all of this is done in the fastest way possible. Still, have ITIN issues? Give us a call today or connect with us.