The Internal Revenue Service (“IRS”) has announced that it would start accepting U.S. tax individual tax returns on Monday, January 27, 2020. This officially started the 2020 tax season.
The Individual Taxpayer Identification Number (“ITIN”) is a unique taxpayer identifier that allows non-U.S. resident individuals to file their federal taxes. ITIN is intended for certain U.S. residents and nonresidents, their spouses and dependents who have tax filing obligations in the United States and who are not eligible to apply for a Social Security Number (SSN).
You can either have an ITIN or an SSN, but not both at the same time. Your ITIN is a 9-digit number that will look something like this: 9XX-83-XXXX.
ITINs are different from SSNs in that they do not authorize the taxpayer to do work in the United States, but key for one’s ability to file U.S. tax returns or applicable claims with the IRS.
If your ITIN has expired in 2019, it is important to renew your ITIN before filing your U.S. tax return in 2020. To renew your ITIN, you will need to file with the IRS ITIN Operation properly completed Form W-7 (ITIN renewal application), along with a certified copy of your passport or two other government issued documents based on specific IRS requirements. We’ve outlined the process below.
Who needs to have an ITIN?
You need to have an ITIN if you meet one or more of the following criteria (this list is non-exhaustive and you should contact a qualified U.S. tax advisor to review your particular facts):
- You are ineligible for an SSN, but are required to file a U.S. tax return or need ITIN for other purposes (note that if you have a valid U.S. work visa (TN, L1, E2, and other U.S. work visa types), you are eligible for SSN, and if you apply for ITIN, the IRS is likely to reject your ITIN application).
- You are required to file a federal tax return, whether you owe any taxes or are claiming a refund for any overpaid or overwithheld taxes (note that this equally applies to U.S. resident alien individuals and nonresident alien individuals). For example, as a Canadian individual, you may have sold your U.S. real property in Florida in 2019 and due to Foreign Investment in Real Property Tax Act (“FIRPTA”) withholding, 15 percent of the gross sales proceeds has been withheld on the closing date. The amount of FIRPTA withholding is usually substantially higher than the amount of the taxpayer’s ultimate tax liability. As a result, your 2019 tax return would likely show a refund for the taxes overwithheld. In the absence of ITIN, the IRS would not accept your U.S. tax return and refund claim. (To reduce or eliminate your FIRPTA withholding on the closing date, you may be able to apply for IRS Withholding Certificate. Please visit this link where we describe the process and schedule an initial consultation if you are interested in working with us. Please make sure to do so before the closing date and give yourselves enough time to complete all required filings).
- The U.S. withholding agent (payee) has requested an ITIN to release a payment to you. This could happen, for example, if you are a partner in a partnership and the partnership is making a distribution to you or if you have an interest-bearing bank account and the bank requires ITIN to comply with applicable tax and withholding reporting requirements.
- You are a spouse or dependent of a nonresident alien individual with a valid U.S. visa who is required to file a U.S. tax return and may be able to claim you as dependents on their tax return.
- You are a spouse or dependent of a U.S. citizen or resident alien who is required to file a U.S. tax return and may be able to claim you as dependents on their tax return.
- You are a nonresident alien who wants to claim treaty benefits. For example, you have a 401(K) plan and the plan administrator requested an ITIN so that you can claim a reduced withholding tax rate.
- You are a nonresident alien student, professor or researcher filing a U.S. income tax return or claiming an exemption.
- You have been asked to provide ITIN for any other purposes that may include receiving U.S. source income, being subject to U.S. tax withholding on passive income, and other circumstances.
- You have a deceased taxpayer on whose behalf you need to claim a refund or file a U.S. tax return. Indeed, ITIN can be obtained for a deceased individual, but there are specific requirements to follow.
All of these reasons seem to be simple, but more often than not “the devil is in detail.” Each reason for applying for ITIN requires specific supporting documentation without which the IRS would reject your Form W-7 submission. This usually leads to delays and further complications. ITIN renewal applications do not require supporting documentation, other than identity documents listed later in this article. Even then, there are situations when the IRS ITIN Operation requires supporting documentation to renew ITIN.
The easiest and most straightforward way to obtain an ITIN is to file a U.S. tax return along with your ITIN application. Provided that you have correctly completed Form W-7 and provided proof of identity and foreign status, as required by the IRS, you should not experience unnecessary delays and rejection by the IRS.
How do I get an ITIN in Canada?
To apply for your ITIN in Canada, you will have to fill out Form W-7 and provide proof of residence in Canada. The IRS has stipulated a list of 13 acceptable documents as proof of identity and foreign status to acquire an ITIN. These documents include;
- Passport (the only standalone document);
- National Identification Card;
- U.S. driver’s license;
- Civil birth certificate (mandatory for dependents under 18 years old);
- Foreign driver’s license;
- U.S. state identification card;
- U.S. military identification card;
- Foreign voter’s registration card;
- Foreign military identification card;
- U.S. Citizenship and Immigration Services (USCIS) photo identification;
- Medical records (for dependents under age 6 only);
- School records (for dependents only – under age 14, under age 18, if a student).
Bear in mind that:
- The document must be current and show an expiration date. The IRS only accepts the document if it was issued no more than 12 months of the application (if the expiration date isn’t available).
- Your name, photograph and claim of foreign status must be supported in the document. Canadians usually provide their Canadian passport when applying for the ITIN.
- The IRS only accepts copies that are certified by the agency that issued the document. Notarized copies by a lawyer will not suffice. In addition, the IRS accepts passport or birth certificate copy certified by a Certifying Acceptance Agent (CAA).
In Canada, you can get your passport certified with the Canada Passport office. This way, you do not have to mail your original passport to the IRS and likely would save some money. Alternatively, you can work with a CAA, which may be especially advisable if you are not sure how to go about the process and what supporting documentation you need to provide. If you are in the United States or are willing to make a trip, you can visit the IRS Taxpayer Assistance Center (“TAC”) where an IRS agent would review your ITIN application, identity documents and other supporting documentation and accept the ITIN application, without retaining your original passport. This process would not cost you anything and all you need to do is to schedule an appointment (note that a walk-in is available in some locations also).
What ITIN numbers will expire in 2020?
ITINs not used in the most recent three-year period expired on December 31, 2019. ITINs with the middle digits “83” through “87” (issued before 2013) also expired on that date. If the middle digits of your ITIN are “70” through “82”, your ITIN has already expired, unless you renewed it before. Make sure you double-check this information before filing your tax returns in 2020.
How long does it take for an ITIN renewal?
Your ITIN application could take up to 11 weeks (on average, in our experience, the process takes anywhere from 3 to 6 weeks, when applied through a CAA) to process and this fluctuates based on the volume of applications the IRS receives. Bear in mind that this does not include the time you will need to gather the required supporting documentation. Renew your ITIN as soon as possible so that you don’t encounter any processing or refund delays when it comes time to file your taxes.
How can I check my ITIN status?
The IRS advises that you wait at least 10 weeks before expecting a change in your ITIN application status. In most cases, you will receive a response between six to eight weeks.
You could speak to a representative to check the status of your ITIN application. Call the IRS at;
– 800-829-1040 (toll-free) – for people in the U.S.
– 267-941-1000 – for people outside the U.S.
If you filed your ITIN application through a CAA, the CAA can check on the status of your application using a special channel available to CAAs. Make sure you have all the relevant information on hand as the representative can request any vital data from your application.
Renew Your ITIN ASAP and Avoid Processing Delays!
U.S. Tax IQ is a team of experienced tax attorneys and CPAs with the knowledge to guide you through complex U.S. tax law. Our goal is to make the tax reporting procedure as smooth and hassle-free as possible for you. We advise on U.S. tax and cross-border tax issues. If you need help with your ITIN, as a CAA, we will be happy to assist you with the process.
If you would like to work with us on applying for / renewing your ITIN, please visit our ITIN Service Center page and review all relevant information before you book an appointment.
Once you have scheduled the appointment, we will send you a link to an online ITIN Questionnaire that you will be required to fill out prior to the meeting. You will also be required to upload your passport copy so that we can prepare all necessary documents for your visit. If you have already completed Form W-7, we will need to redo it. However, you can upload it when completing the ITIN Questionnaire along with a copy of your passport picture page and any applicable U.S. visa stamps. All information is being upload securely using the highest security standards