The Internal Revenue Service (IRS) issues an Individual Taxpayer Identification Number (ITIN) for federal tax purposes. If you have the U.S. tax filing requirement and do not have a Social Security Number (SSN), you need an ITIN to file your income tax return.
The IRS does not issue ITIN to whoever applies for it. There are strict rules and processes to be followed for the ITIN to be issued. For many, the process looks daunting from the documents certifications, sending original supporting documents and preparation of U.S. income tax returns etc.
In this post, we have broken down the ITIN process into three easy steps:
Determine if you need a U.S. ITIN
First, you must determine if you need an ITIN and whether you are eligible to get the one!
It is important to note here that ITIN cannot be used outside the tax system in the U.S. You cannot simply put it in place of SSN and start filling it up for other purposes. This is not a work authorization and it does not change the immigration status of that individual.
The IRS provides the details on who might be eligible to apply for ITIN here.
Prepare the U.S. Income Tax Return (unless an exception applies)
The application for ITIN, form W-7 required a U.S. income tax return to be attached to it. You need to prepare a U.S. income tax return unless an exception applies to you.
There are certain situations where an income tax return is not required. In case, if such an exception applies, a prescribed supporting document must be attached. IRS also provides a list of exceptions and what supporting documents needed here.
For example, if your partnership in the U.S. required to withhold taxes is asking for an ITIN, you can attach a partnership agreement showing EIN and you as a partner.
Prepare Form W-7 and get documents certified
Fill up the form W-7 and attach original supporting documents proving both identification and foreign status.
The rules surrounding the identification and foreign status documents are very clear and strict. Further, you must send original documents to IRS along with your application. You can use the certified copies of these documents provided they are certified by the issuing authority or a Certifying acceptance agent. You cannot use a local notary or lawyer to certify these documents.
Prepare form w-7. Make sure to choose the right “reason” for the application for ITIN. For example, if you are claiming a treaty-based position to exempt your income from U.S. taxes choose option 1.
An incorrect form W-7 or improper certification of documents can put an applicant into a back and forth communication with IRS. An easy way is to use the Certifying Acceptance Agent in Canada, also known as CAA. CAAs provide certification of the document in agreement with the IRS. You can get your documents certified and submit the whole application package to a CAA. The CAA forwards the whole application to IRS and gets the ITIN. Using a CAA lets you keep your original passport or other documents with you.
Maroof HS CPA Professional Corporation is a Certifying Acceptance Agent in Greater Toronto Area. It provides a one-stop solution to both individuals and businesses with cross-border income tax filing requirements.
Get in touch with us!
