An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who are not eligible to obtain a Social Security number (SSN) from the Social Security Administration. This includes non-United States citizens and individuals who have not been admitted by the United States for permanent residence or received authorization for employment. The IRS Acceptance Agent Program allows certain individuals and entities to assist applicants in obtaining ITINs by verifying their identification documents and submitting applications on their behalf.
The IRS issues ITINs to help individuals comply with the U.S. tax laws and to provide a means to efficiently process and account for tax returns and payments. ITINs are issued to both resident and nonresident aliens, regardless of immigration status.
ITINs do not serve any purpose other than federal tax reporting. An ITIN does not indicate entitlement to social security benefits. It also does not change immigration status or provide the right to work in the United States.
What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax ID number issued by the United States Internal Revenue Service (IRS) to individuals who are not eligible to obtain a Social Security Number (SSN). The primary purpose of an ITIN is to facilitate tax returns and reporting, ensuring compliance with U.S. tax laws. An ITIN is a nine-digit number that begins with the number 9 and has a range of numbers from 50 to 65, 70 to 88, 90 to 92, and 94 to 99 for the fourth and fifth digits. It is formatted similarly to a Social Security number, making it easy to use in tax-related documentation.
Who Needs an ITIN?
If you are a non-U.S. citizen and are required to file a U.S. federal income tax return but are not eligible for a Social Security Number, you will need an ITIN. This includes individuals who earn money in the United States, such as nonresident aliens, as well as spouses and dependents of U.S. citizens or resident aliens. Additionally, you may need an ITIN if you are a nonresident alien who is not required to file a U.S. federal income tax return but needs to file Form 8843 (Statement for Exempt Individuals) or Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts).
Here are examples of situations where an ITIN is needed:
- A nonresident alien individual claiming reduced withholding under an applicable income tax treaty.
- A nonresident alien individual not eligible for an SSN who is required to file a U.S. federal tax return, or who is filing a U.S. federal tax return only to claim a refund.
- A nonresident alien individual not eligible for an SSN who elects to file a joint U.S. federal tax return with a spouse who is a U.S. citizen or resident alien.
- A U.S. resident alien who files a U.S. federal tax return but who isn’t eligible for an SSN.
Additionally, the IRS conducts physical and correspondence reviews to ensure compliance with ITIN requirements, and failure to cooperate with these reviews can result in the termination of the ITIN.
How to Get an ITIN: Form W-7
The applicant completes and mails Form W-7 to the IRS in order to apply for an ITIN.
Documentation must be mailed to the IRS along with Form W-7 to establish identity and foreign status. This includes an original or certified copy of a passport or a combination of other specified documents. To qualify as a certified copy, the document must be from the original agency that issued the document and contains an official stamped seal from the agency. Notarized copies will not be accepted. All documents mailed to the IRS with Form W-7 must be current (meaning, not expired). Certified Acceptance Agents undergo formal forensic document training to equip them with the skills necessary to assess the authenticity of various identification documents, ensuring that fraudulent items are identified and rejected.
Unless certain exceptions apply, a completed US federal income tax return must also be mailed to the IRS with Form W-7.
Benefits of Using a Certified Acceptance Agent (CAA)
Using a Certified Acceptance Agent (CAA) can significantly streamline the ITIN application process. A CAA is authorized by the IRS to assist non-U.S. citizens in obtaining ITINs correctly. They can verify your original identification documents, such as passports, and submit your ITIN application on your behalf.
This service can save you time and reduce the risk of errors and application rejections. Additionally, a CAA provides expert guidance throughout the application process, ensuring that you meet all necessary requirements and avoid common pitfalls.
ITIN Expiration and Renewal
As of June 30, 2014, if you file your tax return using your ITIN at least once during the last three years, your ITIN will not expire. However, if you have an ITIN that was not used on any tax returns for three consecutive years, it will automatically expire, and you will need to re-apply for a new ITIN.
The renewal process is the same as the initial application process. You will need to submit a new Form W-7 (Application for IRS Individual Taxpayer Identification Number) and attach a valid U.S. federal income tax return, unless you meet one of the exceptions.
Tax Implications of an ITIN
Having an ITIN can have various tax implications. For instance, you may be eligible for certain tax credits, such as the Child Tax Credit or Other Dependent Tax Credit. However, you may not qualify for other tax credits, like the Earned Income Tax Credit. Additionally, if your ITIN has expired, it may delay your tax refund and make you ineligible for certain tax credits. It is crucial to understand the tax implications of an ITIN and seek professional advice if you are unsure about your tax obligations.
ITIN Application Process
Once Form W-7 is submitted to the government, including all supporting documentation and a tax return, the IRS will return the original documents to the applicant within 60 days. However, being without a passport or other valuable documents is often a major concern to applicants for an ITIN. In such cases, there are solutions.
While the IRS usually responds to ITIN applications in about 7 weeks, processing time increases to 9-11 weeks for applications submitted during peak processing periods (January 15 through April 30) or for those filing from overseas.
Applying for ITIN In Person
If an ITIN applicant does not want to mail their passport and other documents to the IRS and wait 60 days for their return, then the applicant may go to a designated IRS Taxpayer Assistance Centers. These centers are located in major cities throughout the United States, including Atlanta and Chicago. The staff at the center will verify passports and other documents and return them to the applicant immediately. Service at the centers is by appointment only. The in person procedure is not available to applicants who do not live near a center or who are not in the United States.
Using a Certified Acceptance Agent
A Certified Acceptance Agent (CAA) is able to verify passports and other documents and prepare and submit Form W-7 on behalf of the ITIN applicant. Certified Acceptance Agents can be found in cities around the world. The IRS Acceptance Agent Program provides a structured framework for Certified Acceptance Agents to assist applicants in obtaining ITINs efficiently and accurately.
ITIN Certified Acceptance Agent Fees
The fee structure for Certified Acceptance Agents (CAAs) can vary significantly based on several factors, including CPA or EA status, geographic location, the complexity of the ITIN application, and the level of service provided. On average, the fees for a CAA to assist with an ITIN application can range from $275 to $900. This fee typically covers the verification of original identification documents, completion and submission of Form W-7, and any additional guidance needed throughout the application process.
It’s important to note that while CAAs charge a fee for their services, their expertise can help ensure the ITIN application is completed accurately and efficiently, potentially saving applicants time and reducing the risk of application rejections due to errors.
Ultimately, while the cost of hiring a CAA may be an additional expense, the investment can provide valuable peace of mind and confidence in navigating the complexities of the ITIN application process.
Hiring Massey and Company CPA to be Your Certified Acceptance Agent
Massey and Company CPA provides unique ITIN Application Services. Because we are a tax CPA firm firm with a Certified Acceptance Agent, we are able to do the following for our clients in countries around the world:
- Prepare the ITIN application
- Review passports and other certified documents for authenticity
- Return the documents immediately to the applicant
- Prepare the US tax return to submit with the ITIN application
- Submit the ITIN application to the IRS
In our experience, this is the most efficient and cost effective solution for most ITIN applicants. And it avoids the problem of mailing valuable documents to the government and having them out of the applicant’s possession for months at a time.
At Massey and Company CPA, we understand the complexities involved in the ITIN application process and are committed to providing personalized support to ensure a seamless experience for our clients. Our team is well-versed in the intricacies of the IRS Acceptance Agent Program and stays up-to-date with the latest changes in tax laws and regulations. This allows us to offer tailored solutions that cater to the unique needs of each applicant, ensuring compliance with U.S. tax laws while maximizing potential tax credits and benefits.
By choosing Massey and Company CPA as your Certified Acceptance Agent, you benefit from our extensive experience, reputation, dedication to client satisfaction, and commitment to excellence. We strive to make the ITIN application process as straightforward and stress-free as possible, providing peace of mind and confidence in navigating the complexities of the U.S. tax system.
In addition to assisting with ITIN applications, Massey and Company CPA offers comprehensive tax return preparation services. You will likely need this service once you are earning income in the US. Our experienced team is adept at handling federal and state income tax returns for individuals and small businesses, ensuring compliance with the latest tax laws and regulations. We meticulously review each tax return to maximize potential tax credits and deductions, such as the Child Tax Credit, to optimize our clients’ financial outcomes.
For additional information on US tax issues, check out our article on Nonresident Alien vs Resident Alien. We also have an article on Immigration and Taxes that you may find useful.
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