ITIN Exemptions

How To Apply For ITIN Number Without A Tax Return

In this world nothing can be said to be certain, except death and taxes.
-Benjamin Franklin

Taxes are what upset most people, but still, the IRS always remain on its toes to collect taxes from the residents of the USA, and from anyone who derives their income from the source present in the USA. For instance, the trader in London has to pay taxes on the capital gain made by trading on the Chicago Mercantile Exchange (CME). Not paying your taxes or trying to evade them can cause a lot of trouble for you. This is why it is recommended that you quit the aspiration to be Al Capone and start being a responsible resident of this country, one who respects the rules and laws and pays taxes on time.

One question that occupies the minds of most people that are not residents of this country, but are deriving their income from USA, is how to apply for ITIN number without a tax return. So if you are clueless on how to apply for ITIN number without a tax return then this article will serve as a definitive guide that will lift you out of the veil of doubt.

What on Earth is an ITIN?

ITIN is an acronym for Individual Taxpayer Identification Number. This identification number is allotted to every individual who does not have, or is not eligible to have a Social Security Number (SSN). The Internal Revenue Service (IRS), which is a government agency responsible for the collection of tax, issues this tax processing number to these selected individuals so that they can file for tax on the income generated.

It is imperative that you apply for ITIN number even without a tax return mainly because residents, as well as non-residents of US, may have a liability towards the Internal Revenue Service (IRS) if they are deriving their income from the source based in the United States. This subject is discussed in great detail in the Internal Revenue Code of the United States.

Why Having an ITIN Number is Important?

First of all, let us make this thing absolutely clear that if you are not a resident of United States, and have never ever set foot on the soil of US, then this does not necessarily mean that you are exempted from paying tax on income that you derived from the USA. For instance, if you are a consultant, and have provided services to you US based client then you have to pay tax on the money that you have charged your client for the services rendered. In such a case applying for ITIN number even without a tax return becomes imperative.

What documents are required in order to apply for ITIN number without a tax return?

Applying for ITIN number without a tax return is a process that the only documents required is your passport, and supporting documents for exemption.  Exemptions will be discussed below.  However, if you do not have a passport then the following two or more documents will be required to process your application for ITIN number without a tax return.

  • Your birth certificate
  • US or Foreign Drivers License
  • School Record (in case you are studying in USA)
  • Your medical records
  • Your Visa
  • US or Foreign military identification card
  • National Identification Card of your country (must contain your full name, photograph, date of birth, current address and expiration date)
  • Voter registration card of your country.

All the above documents are to be attached with your fully completed W-7 form that can be downloaded here.

How and from where can I get help from regarding my application for ITIN number without a tax return?

If you want to seek help regarding the procedure of application for ITIN number without having a tax return, or to inquire about the status of your application for the issuance of ITIN number, then you can contact Internal Revenue Service (IRS) on their toll-free number for the US residents at 1-800-829-1040. If you are outside the United States then you can contact Internal Revenue Service (IRS) on their non-toll-free number at 267-941-1000.

If you are residing in United States, then you can also visit Taxpayer Assistance Center to avail any in-person help with the application of ITIN number without a tax return. Click here for a list of Taxpayers Assistance Centers that are located across the United States.

You can always contact us as well at 407-344-1012, or email us at info@freedomtaxfl.com . We can take care of all the ITIN application process for you.

What is Form W-7 and how do I Have to Fill It?

W-7 is a form through which you request Internal Revenue Service (IRS) to issue you an Individual Taxpayer Identification Number (ITIN). Before you start filling your W-7 form it is important to remember that you do not have to leave any blank space in the form W-7. If anything does not apply to you, then simply write N/A (i.e. not applicable) on that line but don’t leave it blank.

Below is a step by step guide for filing a W-7 form in order to apply for ITIN number without a tax return:

The first section of W-7 asks for the reason for applying for Individual Taxpayer Identification Number.

Tick option ‘c’ if you are living in the United States but are not eligible for a Social Security Number (SSN), as discussed above. However, if you are living in the United States and attending academic institution here then you should check box ‘g’.

As you may notice that the caution in the below image of W-7 Form reads that you will be required to file a tax return if you check the options ‘c’ or ‘g’, but no need to fret on this we will discuss how you can avail the exemption and apply for ITIN without a tax return.

itin application

 

The second section of Form W-7 requires the applicant to fill his/her name. Remember that if you do not have a middle name, do not leave the space blank instead write N/A.

In case your name on the birth certificate is different from name that you have used in your National Identity Card, passport and other documents, then write the name written on your birth certificate, in section 1b of the form W-7.

itin number application form

In the third section of form W-7 you have to fill your complete mailing address. This is the address on which Internal Revenue Service (IRS) will mail you back your original documents that you have submitted while applying for ITIN number without a tax return.

Section 3 ITIN application form

In the fourth section, the applicant is required to enter his/her foreign address where he/she normally resides. If you have moved to United States and do not live in your home country anymore, then simply write the name of your country and write N/A in the second line of fourth section.

section 4 on itin number application form

The fifth section of Form W-7 is pretty obvious. Just enter your date of birth and your gender and move on to sixth section.

section 5 itin application form

The sixth section of Form W-7 consists of seven different boxes. In box 6c enter the type of US visa on which you have entered this country. In box 6d, if you have checked passport then you need to submit no other documents with Form W-7. In box 6f you have to enter the Internal Revenue Service Number (IRSN) or the Employer Identification Number (EIN). Finally, the last box is only for individuals who had checked option ‘f’ in the first section of Form W-7.

section 6 itin application form

The last section of Form W-7 requires an individual who is applying for ITIN number with or without a tax return to sign their W-7 form. In case the applicant is under 18 years of age, the parents of the child or the court appointed guardian can sign this W-7 form. The relationship of delegate who has signed the Form W-7 on behalf of original applicant also needs to be specified in the form W-7.

section 7 itin number application form

Congratulations, now you know how to fill the most important form that is needed to be filled and submitted in order to apply for ITIN number with or even without a tax return. Now we delve deep into exemptions that will allow us to apply for ITIN number without having a tax return.

So, here are the conditions under which we will be allowed to apply for ITIN number without a tax return.

Exemption # 1 – Third Party Withholding on Passive Income

  1. Any individual who is a partner in any foreign or US-based partnership firm that invests in the the United States to generate profit or to generate income can apply for ITIN number without a tax return.

Documents needed to be submitted to claim this exemption

A partnership document or an LLC agreement that proves you are a partner in a partnership that conducts business and invests in the United States.

  1. Individuals who have an interest-bearing bank account in the United States that generates income for them and is also connected with the US business or trade.

Documents needed to be submitted to claim this exemption

A duly signed letter from the bank official on the letterhead of the bank that displays individual’s name and affirm that you have opened a business bank account that is subject to federal tax withholding and/or IRS information reporting on the interest generated during the given tax year.

  1. Individuals that have opened an interest bearing bank account and classifies under the category of ‘resident aliens’ can also apply for ITIN number without having a tax return by proving that the interest income generated is subject to federal tax withholding and/or IRS information reporting.

Documents needed to be submitted to claim this exemption

A duly signed letter from the bank official on the letterhead of the bank that displays individual’s name and affirming that you have opened an individual bank account that is subject to federal tax withholding and/or IRS information reporting on the interest generated during the given tax year.

  1. Individuals that required providing Individual Taxpayer Identification Number to the withholding party (i.e. a financial broker, insurance company or any other financial institution) because they are drawing income such as rental income, annuities, dividends, royalties, pensions etc. can also apply for ITIN number without a tax return.

Documents needed to be submitted to claim this exemption

A duly signed letter from the withholding agent on the letterhead of the company that displays individual’s name and verifies that Individual Taxpayer Identification Number is required to disburse such income generated by an individual that are subject to federal tax withholding and/or IRS information reporting.

Exemption # 2 – Wages, Salary, Compensation and Honoraria Payments with Tax Treaty Benefits Claimed OR Gambling Winnings with Tax Treaty Benefits Claimed

Individuals can apply for ITIN number without a tax return if they are either exempted from paying a withholding tax on their compensation, salary, wages and Honoraria Payments or are subject to a reduced rate of withholding tax.

Documents needed to be submitted to claim this exemption

  • An employment contract’s copy
  • A letter of employment proving that the individual concerned was rendering his/her services for the payer of that income.
  • A copy of Form 8233 duly filled by the individual as well as withholding agent and attached along with Form W-7.

While on the subject of gambling winnings, a person or ‘non-resident alien’ who

  • have gambling winnings
  • will be availing the services offered by the gaming official as the acceptance agent of IRS ITIN
  • is claiming reduced rate of federal withholding tax on his income as a benefit of tax treaty

can apply for ITIN number without a tax return.

Documents needed to be submitted to claim this exemption

There is no additional document that is required to be submitted other than W-7 form, however, this W-7 form must be submitted through IRS ITIN acceptance agent who is also a gaming official.

Exemption # 3 – Third Party Reporting of Mortgage Interest

You are eligible to claim exemption # 3 by presenting proof of a home mortgage loan. The document required as a proof is a copy of a contract of sale showing a home mortgage loan on the property that is located in the United States.

Exemption # 4 – Third Party Withholding—Disposition by a Foreign Person of U.S. Real Property Interest

An individual can claim exemption # 4 if the individual is a foreigner who has derived profit / gain by selling a property located in United States of America. This exemption can also be claimed by the buyer of real property who is buying it from a foreigner. By availing this exemption withholding of real property can be reduced or eliminated altogether.

Documents needed to be submitted to claim this exemption

  • A duly filled and completed 8288-B form
  • A sales contract’s copy

Both of these should be attached with a W-7 form

Exemption # 5 – Reporting Obligations Under TD-9363

By claiming exemption # 5, you are required to submit a letter on the letterhead of the company stating that you have been appointed as a person responsible for ensuring conformity with information reporting requirements set forth by IRS.

All in all, if you are not a citizen of USA and do not hold a Social Security Number (SSN) then do not remain in fool’s paradise that you will be exempted from paying the tax on income that you have derived from the source based in United States.

Exemption # 6 – You Are a Member / Owner of an LLC Business in USA

If you are owner of an LLC business in the USA, then you can apply for an ITIN number without having to send a personal tax return to the IRS.  Your name must appear on the corporation documents.

Document needed to be submitted to claim this exemption

  • Copy of the Articles of Organization of the LLC, with State Seal

The information compiled in this article gives a general understanding to anyone on the subject of applying for ITIN number without having a Federal Income tax return. If you need any further assistance on this subject you may call us at 407-344-1012 and request a meeting with our qualified tax accountants who are willing to guide you through the intricacies and complexities involved in the process of applying for ITIN number without having a tax return.  You can also email us at info@freedomtaxfl.com .

 

 

 

 

 

 

 

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