Particular person taxpayer identification numbers, or ITINs, are used to distinguish and establish taxpayers who aren’t eligible for a Social Safety quantity.
In the event you use an ITIN, take a second to confirm whether or not it is set to run out on the finish of 2020. Greater than 1 million ITINs expire Dec. 31, and renewing your ITIN promptly by submitting a Kind W-7 will provide help to keep away from delays and get your tax refund extra rapidly and effectively.
In the event you’re confused about this course of, here is what to learn about ITINs, W-7s and the method of renewing or making use of for an ITIN.
What Is an ITIN?
A person taxpayer identification quantity is an individualized code to establish taxpayers who aren’t eligible for a Social Safety quantity.
“It is for people who’re both not allowed or not eligible to get a Social Safety quantity, or who do not want a Social Safety quantity,” says Mark Jaeger, director of tax growth at tax software program firm TaxAct.
The IRS makes use of ITINs to extra effectively course of tax returns and funds for a sure subset of taxpayers, usually noncitizens and different international people who work together with the U.S. tax system. They’re used solely for federal tax reporting, in response to the IRS.
You can’t use an ITIN for these functions:
- To authorize work in the US.
- To obtain Social Safety advantages.
- To qualify a dependent for earned earnings tax credit score functions.
An ITIN is only one of a number of identification numbers federal companies and the IRS use to distinguish taxpayers. Different identification numbers embody:
- Taxpayer identification quantity. This time period is utilized by the IRS to consult with a spread of taxpayer identification numbers, resembling Social Safety quantity, Employer Identification Quantity and ITIN.
- Social Safety quantity. It is a frequent identifier for particular person taxpayers. To use for a Social Safety quantity, you could submit proof of your age, U.S. citizenship or lawful alien standing.
- Employer identification quantity. An EIN is utilized by the IRS to establish a enterprise and a few estates and trusts.
Do I Want an ITIN?
It’s possible you’ll want an ITIN in the event you aren’t eligible for a Social Safety quantity however are required to file a federal tax return or present a federal tax identification quantity in one other scenario.
Individuals who may have an ITIN are sometimes not U.S. residents. In accordance with the IRS, ITIN holders embody of us in these conditions:
- Nonresident alien who information a federal U.S. tax return.
- U.S. resident alien (primarily based on the variety of days spend within the nation) who must file a tax return.
- Partner or dependent of a U.S. citizen or resident alien.
- Partner or dependent of a nonresident alien visa holder.
- Nonresident alien claiming a tax treaty profit.
- Nonresident alien scholar, professor or researcher who information a tax return or claims an exception to the tax-filing requirement.
In the event you’re uncertain whether or not you want an ITIN, it could possibly make sense to work with a tax preparer who makes a speciality of taxes for noncitizens.
How Do I Apply for an ITIN?
To get an ITIN, you could file the Kind W-7, which is the IRS software for a person taxpayer identification quantity. Candidates can apply by mail, by means of an acceptance agent or in individual at an IRS Taxpayer Help Middle, that are open through appointment throughout the coronavirus pandemic.
The shape itself is only one web page and asks for figuring out data resembling:
- Mailing deal with.
- Overseas deal with.
- Beginning data.
- Nation or nations of citizenship.
What’s extra sophisticated is that you’re going to have to ship supporting paperwork to confirm your id and nationality.
If you need to journey to an embassy or consulate, particularly throughout the coronavirus pandemic, it may be difficult. “Simply the method of really getting the documentation to submit with the W-7 is now extra cumbersome,” says Ryan L. Losi, licensed public accountant and government vp of Piascik, an accounting agency in Glen Allen, Virginia.
These paperwork could also be originals or licensed copies, which may require a go to to an embassy or a consulate. In the event you ship an unique copy, the IRS is meant to return it inside 60 days of your software.
Supporting paperwork it’s possible you’ll submit with the W-7 embody present variations of those:
- U.S. Citizenship and Immigration Companies photograph identification.
- Visa issued by the U.S. Division of State.
- U.S. or international driver’s license.
- U.S. or international army identification card.
- Nationwide identification card.
- U.S. state identification card.
- Overseas voter registration card.
- Civil beginning certificates.
- Medical information (legitimate just for dependents underneath age 6).
- College information (legitimate for dependent college students underneath age 18).
Which paperwork you submit will rely in your particular person scenario. Not less than one doc should comprise a picture of you except you are a dependent underneath age 14 (or 18 if a scholar).
How A lot Does It Price to Apply for an ITIN?
Candidates can obtain a W-7 for free of charge on the IRS web site. Those that work by means of a tax preparer or tax software program firm could pay a further charge.
For instance, the charge for submitting a W-7 with Losi at Piascik is a flat $1,000, with the assure that they are going to see the appliance by means of to the top, Losi says. At TaxAct, the W-7 is included in your software program charge.
It’s possible you’ll pay extra mailing charges, rush charges or delivery prices, plus potential charges for copies of essential paperwork.
Expiring ITINs and ITIN Renewals
On the finish of 2020, greater than 1 million ITINs are set to run out. Submitting your W-7 on time will provide help to keep away from tax refund delays, in response to the IRS.
The ITINs expiring on the finish of 2020 embody these:
- ITINS not used on a federal tax return within the final three consecutive years.
- ITINs issued earlier than 2013.
To establish an ITIN that may expire, take a look at your quantity. These with the center digits 88 will expire on Dec. 31, 2020. Moreover, ITINs with the center digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, which have been assigned earlier than 2013 and haven’t already been renewed, will expire on the finish of the yr.
In the event you count on to should file a U.S. tax return in 2021, and your identification quantity is expiring, submit a renewal software by finishing the Kind W-7 and together with all required paperwork.
In the event you neglect to resume your ITIN, your tax return can be processed however sure tax credit and exemptions will not be allowed. Says Losi: “Plan forward, perceive it takes a while to get these paperwork filed, to get the quantity issued, and then you definitely’re good.”