Regardless of whether you are a permanent resident or an alien; while residing in the US, you need to have a serious approach towards paying taxes.
US federal laws require everyone living in the country to file an income tax return. For this purpose, the government issues a particular tax identification number that differs for different individuals. For instance, if you are a US citizen then you must have a social security number to file a federal income tax return.
But if you are an immigrant having resident alien status, then a different tax identity will be issued to you that is; an individual taxpayer identification number. You will not be able to file your income tax return without this unique identity.
Resident Alien Status
You become eligible to acquire a US resident alien status if you possess a green card within a calendar year. You also fall under this category if you meet IRS’s substantial presence test requirements. Your tax filing requirements depend on your resident or non-resident alien status.
Individual Taxpayer Identification Number (ITIN)
An ITIN is a number used for the processing of tax returns by those who do not qualify to get a social security number while residing in the US. It is a 9-digit number, similar to a SSN in appearance. However, an ITIN can be used for tax purposes only.
Individual Taxpayer identification number is issued by the Internal Revenue Service for the successful collection of income tax from non-resident and certain resident aliens. An ITIN is also required for claiming exemptions for a dependent or spouse of a resident or non-resident alien and even for a spouse or dependent of a US citizen.
Taxation for US Resident Aliens
If you are a resident alien in the US, then you are subjected to the same taxes that are applicable to a citizen of America. This means you need to report all dividends, interests, wages, any compensation money for services, and other incomes on your federal income tax return. It is important to note that you need to disclose all your income even if it is received from outside the US.
It is also important to remember that you need to mention all your income on tax return in US dollars. Since you might be getting an income from an external resource in Pounds or Euros; u need to convert it into dollars before expressing it on your tax return.
A plus point for you to file a tax return as a US resident alien is that you are able to claim exemptions. These exemptions could be personal or for your spouse or dependents. But to claim an exemption for your spouse and dependents, you need to mention either their SSN or individual taxpayer identification number on the tax return.
If you still find it difficult to understand US tax regulations, then you should visit the IRS website where you will get further information and an application form for individual taxpayer identification number.
Things You Should Know Before Applying For an ITIN
While living and working in the USA, you will have to pay taxes. Thus, whether you are a US resident or a non- resident alien; you need a tax identity in order to file your tax returns. This identity could be in the form of a Social Security Number (SSN) that is issued to the citizens of US by the internal Revenue Service (IRS).
Alternatively, if you are a foreigner, then you will require a different tax identity that is Individual Taxpayer Identification Number (ITIN). It is a nine-digit tax processing number issued by the IRS to the people living in USA who are not eligible to get a SSN. An ITIN is designed to be used for paying taxes only; it does not serve any other purpose. If you are going to apply for an individual taxpayer identification number, here are few important things that you should know.
- According to IRS’s new interim procedure of issuing ITINs, you must submit your original documents or copies of these documents certified by the issuing agency.
- You need to apply using the most recent Form W-7, application for individual taxpayer identification number in English. Form W-7 (SP) is available in Spanish as well. All the correspondence regarding issuance of your ITIN will be done by the IRS in the language of the submitted form.
- You are not eligible to get an individual taxpayer identification number until you need to file a tax return. So you need to attach a valid US federal income tax return with your application, unless you meet an exception.
- If you are applying for a dependent less than 14 years of age, then the original birth certificate must be submitted as proof of identity.
- IRS only accepts your original documents as proof of your foreign status and identity. If you want your documents back before 60 days of submitting your application, you may apply in person by going to the IRS Taxpayer Assistance Center (TAC) where they will review your original passport or national IDs and will return them to you immediately.
- If you have entered the US with a green card or visa that allows you to work here, then you must apply for a SSN first. But if the Social Security Administration (SSA) denies issuing you a SSN, you should take a denial letter from the SSA and attach it with Form W-7.
- IRS requires you to submit all Powers of Attorneys in English. Although POA’s in any other language are considered invalid, they become acceptable with a certified English translation.
- If you are a guardian and requesting an ITIN for your dependent less than 18 years of age, you need to submit the documents that will prove your relationship with the applicant. These papers include adoption papers from court presenting your legal guardianship.
- You can also take assistance from Acceptance Agents for submitting your error free application. Acceptance Agents are IRS authorized individuals or organizations that help people in the application process.
Within 8-10 weeks, the IRS completes the processing of your application and issues you a letter containing your ITIN. Hopefully, this information will help you in your application procedure.
If you want to apply for an, Individual Taxpayer Identification Number, or ITIN tax number and have any other questions, please feel free to contact us at 888-509-3616. If you have any suggestions please share those with us as well. Freedomtax ITIN Number has a professional team of IRS Certifying Acceptance Agents, and tax accounting professionals with more than 16 years of experience, helping immigrants with their ITIN application. Freedomtax can also help immigrant entrepreneurs incorporate a business in the USA. Freedomtax ITIN Tax Number Online services provides Quality, Professional Service with a Family Feel.