ITINs: All You Need To Know

February 03, 2016 : Alison Flores

ITIN stands for Individual Taxpayer Identification Number. The IRS issues Individual Taxpayer Identification Numbers (ITINs) to people who need to file taxes, but who do not qualify for social security numbers. The IRS will also issue ITINs to dependents who can be claimed on a tax return, but who do not qualify for social security numbers.

So who, exactly, would that apply to? A lot of people, actually. Here are a few examples.

  1. Any nonresident that has a U.S. source of income would need an ITIN to file their United States tax return, as required by law. This means that a Canadian citizen, who lives in Canada, but has rental property in the United States, must file a tax return, using an ITIN, to report their rental income and expenses on a nonresident tax return.
  2. U.S. taxpayers may be able to claim dependents that are citizens of other countries. For example, a couple in Michigan may provide support for elderly parents in Canada. If the parents meet the qualifying relative test, they will need ITINs in order to be claimed as dependents on the couple’s return.
  3. If someone is in the U.S. on a temporary visa (like a L-1 intracompany transfer visa) and their spouse accompanies them to the country, the spouse will need an ITIN in order for the couple to file a joint resident return in the U.S.
  4. A U.S. resident (based on the days of presence test in the U.S.) who does not qualify for a Social Security Number will need an ITIN to fulfill their U.S. tax reporting requirements.

ITINs allow taxpayers to stay in compliance with United States tax law. In some cases (such as claiming a dependent or filing jointly with a spouse), ITINs allow a taxpayer to benefit from tax rules that apply to all filers and not only to those with an SSN.

What they don’t do

Taxpayers filing with an ITIN cannot claim the Earned Income Tax Credit, which requires a valid SSN. However, ITIN filers can claim the Child Tax Credit and Additional Child Tax Credit.

New for 2015: Both the taxpayer and qualifying child must have SSNs or ITINs by the due date of the 2015 tax return (including extensions) in order to claim the child tax credit and additional child tax credit. If a taxpayer or qualifying child qualifies for an SSN or ITIN but waits to apply, the taxpayer may not be able to claim this credit for 2015, even if they are otherwise eligible. Under the new rule, the credit cannot be claimed later if the taxpayer or qualifying child gets an SSN or ITIN after the due date of the 2015 tax return (including extensions).

How to get an ITIN

ITIN application rules require ITIN applicants to mail their passports and/or other qualifying documents that prove their citizenship and identification to the IRS. Individuals who are not dependents and who use a Certified Acceptance Agent (CAA) can apply for an ITIN and retain their original documents (they do not have to mail their passports and other original documents to the IRS). Other benefits of using a CAA include:

  • Help completing Form W-7, Application for IRS ITIN
  • Assistance responding to the IRS if the IRS needs more information to process the ITIN application
  • Services provided in the applicant’s preferred language (such as Spanish)
  • Aid from an expert who understands taxes and the ITIN application process

A Certified Acceptance Agent can be the helping hand needed to start the ITIN application process.

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Alison Flores

Alison Flores

The Tax Institute, H&R Block

Alison Flores, JD, is a principal tax research analyst at The Tax Institute. Alison specializes in the Patient Protection and Affordable Care Act, same-sex marriage, tax preparer regulation, and individual income tax issues.