Attention taxpayers, here’s why you should renew your expiring ITIN prior to filing tax returns in 2020.
Individual Taxpayer Identification Number (ITIN)
The ITIN is a U.S. tax processing number used to file a U.S. tax return with the IRS, if required and is available to certain nonresident and resident individuals, their spouses and dependents who do not meet the eligibility criteria for a Social Security Number (SSN). You are not permitted to have an SSN and an active ITIN simultaneously. The ITIN has 9 digits that come in the following form; XXX-XX-XXXX.
Unlike an SSN, ITINs are given regardless of U.S. immigration status, as non-resident and resident aliens may have U.S. reporting or filing requirements under the Internal Revenue Code (IRC).
What doesn’t an ITIN do?
The ITIN is used solely for federal tax reporting purposes. It does not permit a person to work in the United States, does not provide Social Security benefits nor does it permit a dependent to qualify for the Earned Income Tax Credit.
Who needs to have an ITIN?
- The following is a brief list of reasons why you might require an ITIN:
- You do not possess a SSN nor do you meet the eligibility criteria to get one; or
- You must submit a U.S. federal income tax return and are required to provide a federal tax ID number for that purpose; and
- You fall under one of these subcategories;
- U.S. resident alien who is required to file a U.S. income tax return;
- Spouse or dependent of a nonresident individual who holds a U.S. visa;
- Spouse or dependent of an U.S. citizen or resident alien;
- Nonresident alien claiming a tax treaty benefit; or
- Nonresident alien student, professor or researcher filing a U.S. income tax return or claiming an exemption.
How will I know if my ITIN is due to expire?
The IRS has indicated that all ITINs not used on a U.S. federal income tax return at least once in the last three years will expire on December 31, 2019. Moreover, ITINs with middle numbers 83, 84, 85, 86 or 87 (provided before 2013) will also expire on that same date.
When don’t I need to renew my ITIN?
If the ITIN:
- doesn’t have the middle numbers 83 to 87;
- is used only on certain information returns, such as the Form 1099 series of forms;
- is used by an individual who has been issued a SSN; or
- is expiring and the individual does not expect to have a tax return filing requirement.
Since personal exemptions have been suspended for the 2018-2025 tax years, as a result of the Tax Cuts and Jobs Act, dependents residing outside the United States won’t need to renew their expiring ITIN.
Why should I renew my ITIN?
With nearly 2 million ITINs expiring this year, you should double check to ensure that your ITIN does not fall into this category. If you fail to renew it, you might encounter frustrating refund processing delays or potential penalties when you file your income tax return next year.
If you file your returns using an invalid ITIN, the IRS records will indicate that your return was filed on time, however, you cannot utilize certain exemptions or credits.
How do I renew my ITIN?
The IRS has already begun issuing notices to those taxpayers whose ITINs are expiring. As per the CP48 Notice; Complete and submit Form W 7 to the address mentioned in Form W 7 instruction manual, along with the requested supporting documentation.
Here’s how to go about doing that;
- Include original identification documents or a certified copy from the original issuing agency.
- Select the “Renew ITIN” box at the top right-hand corner of the form.
- Choose the reason you are submitting the ITIN application as stated in the instruction manual.
- In the designated area (lines 6e-f), include your ITIN and the name under which it was issued.
You do not need to provide a tax return when you send in the renewal request. For ITINs that are already invalid, you can still renew in time for next year’s tax season.