What is an ITIN (Individual Taxpayer Identification Number)?
ITIN stands for “Individual Taxpayer Identification Number,” which translates to “Número de Identificación de Contribuyente Individual” in Spanish.
It is a tax identification number typically used by foreign individuals who do not meet the requirements for a Social Security Number (SSN).
This number consists of nine digits and can be requested through the Internal Revenue Service (IRS).
Regardless of a person’s immigration status, ITIN applies to both foreigners and residents alike because the IRS is primarily concerned with ensuring that everyone declares taxes and payments without exceptions. Remember that evading taxes is a federal offense in the USA.
What is the Purpose of an ITIN?
- It serves to enable individuals who earn income or engage in financial transactions within the United States to meet their tax responsibilities and obligations.
- It also allows us to open a bank account. For example, if we do not currently qualify for a work permit, we can apply for an ITIN to obtain a U.S. bank account, which can be used for conducting business or pursuing entrepreneurial goals.
- It helps verify our residency status, as when we file our tax returns and fulfill our tax obligations, we can provide evidence of the years we have lived within the country while complying with tax responsibilities.
- Lastly, an ITIN can also be used to build credit. This depends on each bank’s specific requirements, so I recommend checking with each bank or reviewing the requirements of the bank you are interested in. Nowadays, many banks can issue you a credit card with just your ITIN, allowing you to start establishing your credit history. With this history, you can open lines of credit in the future, for example, to buy a house or a car.
Who Can Apply for an ITIN?
As mentioned earlier, a person’s immigration status doesn’t matter; anyone who earns or generates income in the USA can obtain an ITIN.
Especially in the following cases:
- U.S. citizens who marry individuals from other countries. When they want to bring that person to live in the United States, the situation can be a bit complicated based on the relationship between the USA and the foreign country. They have the right to report the person they are bringing if they are covering the expenses, so they need to apply for an ITIN to use it while resolving the legal situation of that person.
- Investors who wish to invest in businesses within the United States. There are many wealthy foreign individuals seeking to expand their businesses, such as opening clothing stores, hotels, or restaurants.
- People from their home countries who want to start a business in the USA; often, they have to travel and stay for some time in the country. Therefore, the IRS assigns them an ITIN to fulfill their tax responsibilities.
Steps to Apply for a Free ITIN
1. Fill Out Form W-7
The first step to apply for an ITIN is to fill out Form W-7, which you can find on the IRS website. You can choose between the English or Spanish version.
The documents you need to complete the form include:
- Driver’s license issued in your home country or in the USA.
- Identification document
- American or foreign military card
- Official birth certificate for individuals under 18 years of age
- ID card from a U.S. state
2. File Your Tax Return and Include It
It’s true that you need the ITIN number to file taxes. However, you can do both things simultaneously.
So, file your tax return and include the ITIN application on Form W-7.
3. Verify Your Identity
It is essential for the IRS that you prove your identity as a foreign citizen.
To verify it, you must include your original documents that demonstrate your foreign citizenship. You can use your identification document for this purpose.
4. Submit the Application
Once you have everything ready, the form filled out, your tax return attached, and your identity verified, you should then submit the application.
How can you do it?
You have two options: mail it or submit it in person.
If you choose to mail it, here is the address where you should send it:
Internal Revenue Service
Austin Service Center
P.O. Box 149342
Austin, TX 78714-9342
Alternatively, if you prefer to submit it in person, you should visit a Taxpayer Assistance Center (TAC). The advantage of submitting it in person is that they return your documents immediately.
How Long Does ITIN Processing Take?
In times of high demand (from January to April), it can take more than two months to receive your ITIN. But typically, an ITIN takes around six weeks to process.
If, in the rare case, it takes longer than usual, you can contact the IRS by mail or call the telephone line 1-800-908-9982.
How to Renew Your ITIN
If you already have an ITIN but it’s nearing its expiration date, you have the option to renew it.
When you notice that the expiration date is approaching, submit your request for the relevant renewal. Taxpayers should wait 7 weeks from the time they submitted Form W-7 to receive a response from the IRS regarding the status of their application.
During January to April, which I mentioned are peak demand times, it can take up to 10 weeks.
You Can Now Apply for Your ITIN
I hope this article has helped you understand how to apply, fill out the form, and cover the other necessary points to request your ITIN correctly.
We are Rex Legal, and we are here to assist and advise you when it comes to establishing your company in the United States. If you need help, contact us.