People belonging to treaty countries usually try to establish their business in the United States. Because of the fact that US is one of the most established States in the world and is known for lucrative business opportunities, most of the aspiring business people desire to be there either as employer or as an employee. Though, this is not as easy as one may think. From assembling sources and capital to obtaining visa for the United States, is not a piece of cake. However, it is also not impossible to acquire one.
An E2 visa is the ticket to visiting United States and start a business or get employed somewhere. After obtaining it, the struggle continues. A foreign investor who is a non-resident, they would require having a Tax ID number. Now you may ask what is it and what is an ITIN number? So, all those asking these questions, they should keep in mind that they need to pay off the taxes and for that reason; they have to either obtain an SSN, ITIN or an EIN number.
In order to know the depth of what is an ITIN number, you should read the entire blog.
What is a Tax ID Number (TIN)?
As we have mentioned above that a resident or non-resident requires a Tax ID number before they start a business in the United States. So, before we move on to explain what is an ITIN number, you must first understand what a Tax ID number is. Tax ID numbers are comprised of nine digits and issued by the Internal Revenue Service. These numbers are provided for the tax purposes as per the tax laws of the United States. The Tax ID numbers are of three types serving the same purpose, tax filing and returns.
People worried about what is an ITIN number, should know that a Tax ID number includes ITIN, SSN, EIN, ATIN, and PTIN. As we have mentioned that there are only three forms of Tax ID numbers, it means that only the first three, ITIN, SSN, and EIN number are active while the other two are no more available and are considered inactive. Those who are really trying to explore what is an ITIN number should know that an ITIN number is an Individual Taxpayer Identification Number. While an SSN stands for Social Security Number and EIN is Employer Identification Number.
Understanding each of the forms will help you in acknowledging what is an ITIN number clearly. This leads to our next section.
Understanding ITIN, SSN and EIN
What is an ITIN Number? – Individual Taxpayer Identity Number
If you want to learn the core of what is an ITIN number, you should read this carefully. An ITIN number stands for Individual Taxpayer Identity Number. As it is denoted by its name, it is granted specifically to individuals. The people who are willing to get employed in any of the firms of the United States, they may require paying taxes and returns. For this reason, they need to have an ITIN number.
Additionally, an ITIN number has nine digits. However, as per the new law and amendments, the range of the digits has been extended. All those who want to explore what is an ITIN number, may be interested in knowing that this number can be granted to them by filling Form W-7 Also, it is given by the Internal Revenue Service (IRS) to the ones who are not eligible for SSN numbers. In order to understand, what is an ITIN number and difference between the two, keep reading.
What is an SSN Number? – Social Security Number
In order to clearly understand what is an ITIN number and how does it differentiate from ITIN, you also need to know what an SSN number is. Social Security Numbers (SSNS) are also comprised of nine digits but are provided by the Social Security Authority (SSA). Those who are residents and non-residents (in some cases) require having this form of TIN number. It may be provided to temporary aliens too, depending on the situation.
This form of tax ID number is also granted to the individuals who are willing to get employed in the United States, but they are usually the residents of the United States. So, all those who are willing to have an SSN number, they have to fill Form SS-5. The permission to grant the SSN number is provided by United States Citizenship Immigration Services (USCIS). However, the entire procedure is pretty lengthy and complex, but once you obtain it, your filing process can be done easily.
What is an EIN? – Employer Identification Number
People trying to learn about and pondering over what is an ITIN number, they should also know the concept behind the Employer Identification Number (EIN). The EIN number is granted to those individuals who desire to form a business in the United States. So, ITIN and SSN numbers are for those who wish to get employed in US while EIN numbers are reserved for the entrepreneurs. EIN numbers are also followed by nine digits. EIN numbers are also called as Federal Tax Identification Numbers. It can be obtained with the help of a seasoned consultant.
Here are Some Facts You Need to Know About ITIN Number
The features and characteristics give a clear understanding about the subject. Similarly, we will discuss certain facts that will help in providing pertinent information to the ones who are asking what is an ITIN number. Here are some facts that you need to know about the ITIN number and would help in clarifying what is an ITIN number.
1. ITIN is to Fulfill Tax Obligations
The entire ITIN program is created by the Internal Revenue Service. The core reason to establish it, are the foreign investors and residents who require paying off the taxes. Additionally, provide tax identity to those who are not eligible to get a Social Security Number.
2. Immigrants have ITINs
The people who do not have a legal status in the United States, they are required to have an ITIN. People who are eligible to have an ITIN are discussed below.
- A foreign investor who invests and owns a US business and gets the taxable income from the business lawfully has the right to get an ITIN number.
- A foreign resident of the United States who is a student and based on the number of days he is can be provided ITIN number.
- A dependent of US citizen can have ITIN number.
- A foreign investor and spouse of a US citizen who have temporary visa can also have an ITIN number.
3. ITINs Does Not Grant Work Authorization
The ITIN is just a tax processing number by the Internal Revenue Service which is why it just fulfills the tax purposes and not any other. However, there are some people who think what is an ITIN number and if it can grant work authorization to them. The answer to this query is no, they cannot get any work authorization with the ITIN number.
4. ITIN Holders Do Not Qualify for All the Tax Benefits
A foreign investor or a non resident, who acquire an ITIN number, may not necessarily enjoy all the general as well as tax benefits associated with it. A United States citizen and other tax payers holding an ITIN number can enjoy multiple benefits though, because they belong to the home state. Once they become a permanent resident of the state, they will able to enjoy all the benefits, instead they can obtain SSN number then. Also, the all the earnings of the ITIN number will be considered eligible to be received by the new resident.
5. ITIN Holders are Eligible for the Child Tax Credit (CTC)
The child tax credit is around $1000 per child. Depending upon the applicant’s income, the amount can vary, though. Over 4 million children are benefited from children benefit just because the ITIN holders are qualified for the child tax credit.
Other Purposes of ITIN Numbers
In the above details, we have clearly explained that the core reason for an ITIN number is the taxes. So all those who are asking what is an ITIN number, may now have understood it but there are some other reasons too, which are also treated as ITIN’s benefits. Let’s have a look at them below.
1. ITIN Helps You Open a Bank Account
All those non residents aliens who have ITINs now, they have the lawful right to open a bank account. By opening an interest bearing account, they can use the money whenever they require.
2. ITIN Secures a Driving License
All those pondering over what is an ITIN number may know how to drive. Such individuals or foreign aliens who have an ITIN number can secure their driving license. However, this is just for some states as some of them have allowed using an ITIN number instead of SSN number to receive a driver’s permit, state identification card or driver’s license.
3. ITIN is a Proof of Residency
ITIN number is your proof of identity. No matter what, but at some point in the United States, you may have to show or proof how long you have stayed in the United States, when you have filed tax returns using an ITIN number, you will be able to show it.
Who Needs an ITIN Number?
After exploring what is an ITIN number, purpose, features and facts, you should know who needs an ITIN number, too. The Internal Revenue Service (IRS) only issues federal tax reporting and filing to the ones who do not have SSN numbers i.e. who are not residents of US which is why they do not qualify for an SSN number. So, an individual who is required to file a tax return under the provision of US treaty will need to have an ITIN number. Though, there are some individuals who require an ITIN for sure, check them out below.
- A spouse or dependent of United States or a resident alien
- A dependent or spouse of an individual who do not belong to United States and holds a visa
- A person not belonging to the United States lawfully requires filing US tax return
- A resident of United States requires filing a US tax return based on the number of days they were present in the United States
How to Obtain an ITIN Number?
As we have discussed what is an ITIN number, characteristics, features, needs, usage, and purpose, you may now be interested in knowing how you can obtain an ITIN number. Though, it is a challenge to acquire one because of too many legalities and technicalities but once obtained, you will be able to file tax returns without any problems.
Furthermore, obtaining an ITIN number comes under the list of difficult tasks as it involves several complex documentation and paperwork. For this reason, individuals who are looking forward to obtain an ITIN number, they must hire a seasoned and professional consultant who can help them in filling all the complicated documents.
Another reason to hire such pros is that they reduce the chances of mistakes and errors. Errors and problems in the application of the ITIN number will surely result in return or evasion of the application. So it is a smart decision to think smartly and hire a pro before meeting any difficulties. All those worried about what is an ITIN number, should see the steps below.
- Step # 1: Individuals must look for the latest version of Form W-7 (as per the amendments) by the Internal Revenue Service and fill it.
- Step # 2: The next step is to fill the application with the help of the lawyer. This is a technical step where you will find a lot of difficult terminologies so seeking for both, a professional and credible lawyer is a great decision.
- Step # 3: After filling the Form W-7 properly, you are required to attach the proof for the income tax return which meets the requirements for the exception.
- Step # 4: After the third step, you have to attach the copies of the foreign status and proof of identity provided by the issuing agency.
- Step # 5: After filling and attaching all the relevant documents, the last step is to send the form to the Internal Revenue Service (IRS) office’s ITIN Operations’ Department via post mail or other alternate mailing methods.
Consider the Documents for the ITIN Number
All those who are interested to explore the answer to the question what is an ITIN number, may now have understood what it is in real. When one is under the process of acquiring an ITI number, they should consider the documents too. The documentation is one of the most crucial and critical elements in obtaining an ITIN number. This is the ultimate aspect which makes the entire process difficult. There are certain documents that everyone must know. Also, you must take help from a considerable lawyer in this regard.
The following are the documents that are required to filled by the ones who need to have an ITIN number.
- Form W-7
- Medical records (it is required for dependents who are under 14 years of age)
- School records (it is required for dependents who are under 14 years of age)
- Photo identification of US Citizenship and Immigration Services
- US Department of States’ Visa
- US Driver’s License
- US Military Identification Card
- Civil Birth Certificate
- National Birth Certificate
- Foreign Driving License
- US State Identification Card
- Foreign Voter’s Registration Card
Check Out Some Alternate Ways to Obtain ITIN Number
Now that you know how to obtain an ITIN number and what is an ITIN number, it is time you should also know about the alternate ways to obtain an ITIN number. Prior to going into the details, all those who are asking what is an ITIN number must remember that no matter what so ever is the method, you will be required to use Form W-7 to obtain ITIN number. This is only form which is required associated with the other documents though. Check out the alternate methods below to know how you can acquire an ITIN Number.
1. Getting an ITIN Number Via Mail
The simplest and most common ways to get an ITIN is to get it via mail. At times, people consider this procedure time consuming as there are several other ways through which they can have an ITIN number in hands without having to go on foot or travel. We will be discussing the other methods in this section also, so keep reading.
Considering ITIN number via mail, it is one of the easiest methods, once can choose. They just need to properly fill up all the details that are being asked in the Form W-7. However, you just need to ensure that the form is latest and as per the amendments by the IRS authority. Also, make sure that you are filling it with your lawyer to avoid any mistakes. Once it is filled, you are required to send it to the provided mailing address if you are using the United States postal services.
Internal Revenue Service
P.O. Box 149342
Austin, TX 78714-9342
However, if you are using otherwise, and services such as DHL and FedEx, then you need to send it to the following address.
Internal Revenue Service
Mail Stop 6090-AUSC
3651 S. Interregional, Hwy 35
Austin, TX 78741-0000
2. Getting an ITIN Number via Acceptance Agent
People asking what is an ITIN number, they should know that there is another way which is often used by the people i.e. applying for an ITIN number with the help of an acceptance agent. The agent will help you in reviewing all the documents and filling them up on your behalf. After looking through everything properly, they will then send the application to the IRS office themselves. Also you need to register yourself in order to acquire an ITIN number via acceptance agent.
3. Getting ITIN Number in Person
The last but not the least, getting an ITIN number in person can be very satisfying which is why most of the people go for it. You will be required to fill the form W-7 in front of the IRS representative who will help you in correcting things if you are not doing properly. The entire procedure is similar to other methods. Just fill and attach the form and send it to the Taxpayer Assistance Center. If you are still confused, you can call the IRS office for more guidance.
ITIN numbers are really important for non resident aliens, therefore, they must obtain one with the help of a credible consultant. We hope that you found this blog helpful in making you understand about what is an ITIN number. Good luck!