As per American tax laws, all foreigners (irrespective of gender) are usually defined as any and all individuals who are neither citizens of the United States nor are they nationals of that country. For tax purposes all such foreigners are categorized as either non resident aliens or resident aliens. “Resident aliens” generally, are taxed on their worldwide income, the same as U.S. citizens. Non-resident aliens on the other hand, are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. “a nonresident alien” is someone (this cravat does not apply to a US national or US citizen) who has not passed the ‘substantial presence test’ or the’ green card’ test.
If you need help getting an ITIN number please call us at 407-344-1012, or email us at firstname.lastname@example.org.
Moreover, non resident aliens (irrespective of their country of origin) are also those people who are legally present on United States territory but are not in possession of a valid green card ( A document that entitles the holder to permanent residency anywhere in the United States, baring certain highly sensitive military areas that are restricted to civilians). Such a category includes tourists, business related visitors, students, etc. or any other visitor to United States territory, who is in possession of a valid visa for a fixed time period only.
The need for an ITIN number for foreigners
When taking into consideration the requirements of How to get an ITIN Number from India
It is pertinent to note that the same can be obtained only from the IRS or internal revenue service, for a certain type of person (including both resident as nonresident individuals) who are required by law to aquire an ID number for the purpose of tax collection but who do not possess (or for that matter, fulfill the stringent eligibility criteria for) an SSN also known as a social security number. Without an ITIN number it would be difficult to file any tax returns for a foreigner. However, such a number is required for all foreigners irrespective of their country of origin, if they are to conduct any business or trade related activities in the U.S
There may be any number of reasons due to which an individual could be classified as a a non-resident alien such as the fact that he or she may be living abroad or alternately they may be in the United State but would not be in possession of a valid green card of do not meet the requirements of the Substantial Presence Test. Furthermore valid visa holders meeting certain terms and conditions on their visas would also be required to acquire an ITIN number as well.
As per the all new ITIN procedures that became effective at the onset of the year 2013, there have been many changes to the process of applying for an ITIN (Individual Taxpayer Identification Number.) For people residing in other countries (including India) The IRS also accepts a Form W-7 by either regular mail or courier provided the aforementioned form is accompanied by all relevant “ ORIGINAL documents” or if that is not possible for any number of reasons (for one or more such documents) then only a certified copy of that particular document that would be provided ONLY by the respective issuing agency would be acceptable with regard to establishing the bona fides (including the foreign status and identity of the prospective ITIN applicant.)
When it comes to establishing How to get an ITIN Number from India you would do well to remember that your Indian foreign passport is the only document that may be considered to have ‘stand alone’ status, or in other words, it is the lone document that has the power to establish both your foreign status as well as Indian identity. This is why, once your original Indian passport has been submitted, there is no further need to submit any other documents whatsoever (with regards to your Indian identity and status as a foreign national).
However, if for some reason you are not able to submit your Indian passport then it is mandatory for you to submit a combination of at least two other documents, one of which (at least) has to contain your (recent) photograph.
Yes, the IRS is quite willing to accept copies of original documents, but only if the same have been duly certified by the government agency (located in India) which issued these documents in the first place.
Based on Section 203 of the “Protecting Americans from Tax Hikes” act, all ITIN applicants residing in India (or alternately, Indian nationals that currently reside in the U.S) have the authority to submit their W-7 Application (used for the purpose of conferring an Individual Taxpayer Identification Number) through the following two methods:
- By mailing (heir duly completed W-7 application along with all the requisite identification documentation necessary to establish their eligibility for acquiring an ITIN) to the IRS address listed in the application, or
- Making an appointment at any one of the closest IRS Taxpayer Assistance Center available in the area of residence of the prospective ITIN holder as an alternative to mailing the relevant original identification documents. However, this is only possible if the Indian applicant is physically in the United States, since it is not permitted under the law to allow next of kin to submit documents personally as physical proof of the existence of the person, whose application they may be submitting therein.
The procedure as regards How to get an ITIN Number from India
Option one: Through the embassy
- The prospective ITIN holder shall have in his possession, at least three copies as well as the original Indian passport issued to him while visiting the US embassy in India. (It would be prudent for him to be carrying other older expired passports as well, especially if they also have United States visa stamps on them. This would also help in establishing his bona fides as a regular visitor to the U.S.
- The prospective ITIN holder shall himself (or herself as the case may be) print all the relevant forms such as the ITIN application/s Federal Tax Copy, and any other document deemed relevant by the IRS. Moreover, he also has to personally sign each and every document where there is a designated space for him to affix such signatures (as per IRS Instructions).
- The applicant is responsible for posting the documents such as his full application form, all his (federal) tax returns and passport (either original or certified copy) to the actual address of the IRS office.
- As a general rule, the taxpayer would receive his ITIN within one to two months from the date of application through postal mail.
- If the (now) ITIN holding taxpayer is in a position to enable him to get a refund, he would be reimbursed within a fortnight of receiving his ITIN.
- The taxpayer shall provide the ITIN/s to the state tax authorities as well, so as to be eligible for tax returns from the state where he resides (or has conducted business or acquired any income though a U.S source based in that state only).
Option Two: Though personal visit to the local IRS office
(Note: Before going for this option it is pertinent to understand that the process may consume up to a whole business day)
- The relevant forms including the Federal Tax Return copy as well as all the other forms that constitute the ITIN application process would have the all the relevant filing instructions in the package including the real world address of the local IRS office. (Moreover, the same can be quickly searched for on Google or any other search engine if you have an internet connection)
- The applicant would need to visit the IRS office not just on his own but with all other applicants that taken together, constitute his household including both spouse as well as children. All the applicants of the family have to have dully filled ITIN forms and ORIGINAL passports or certified copies of the same in lieu of originals. Copies of original documents certified by registrars and notary publics would not be accepted and only those copies that have been certified by the issuing authority (in this case the Indian government) would be eligible for consideration.
- The IRS representative will verify all the documents (the forms, the originals and any copies that may have been submitted) and if everything is in order he would subsequently accept the tax returns. The original passport will be returned and the applicant (or applicants as the case may be) will be given an acknowledgement by the case officer.
- As with option one the taxpayer would receive his ITIN within a time period between 30 to 45 days from the date of application through postal mail.
- As with the previous option, if the ITIN holding taxpayer is in a position to enable him to benefit from a refund, he would be reimbursed within a fortnight of receiving his ITIN.
- The taxpayer shall provide the ITIN/s to the local state authorities where he resides so as to enable him to acquire the same tax benefits from the state that he or she has acquired from the federal government (if applicable) state tax authorities as well so as to be eligible for tax returns from the state where he resides (or has conducted business or acquired any income though a U.S source that is located exclusively in that state alone).
(Note: Only color photocopies would be accepted which is why it is suggested to only take color photocopies on excellent quality plain white paper so as to ensure that there is no blurring. In order to avoid disappointment and multiple trips it is considered prudent to book an appointment in advance)
The multifold taxation requirements for foreigners
For tax related purposes in the U.S, all foreigners (including Indians) are only required to pay income tax on any and all incomes that are earned only through a U.S. source (or sources). This is why it is not considered necessary for them pay tax on any income (profits wages, and revenue) earned through other sources located overseas. This is why if you have not conducted any business in the US. Or have no source of income from there it is not necessary for you to acquire an ITIN number.
Let us take the example of Mr. Ram Prakash, a foreign national residing in Goa, India. If Mr. Prakash owns a small business in his native Goa and simultaneously operates another business that is located on US territory then Mr. Prakash would have no tax liabilities as regards the former (except in India) but would however, have to file tax returns for the business that he legally owns in the U.S. In other words, his Indian business is of no concern to the IRS located in the United States. For small business people like Mr. Prakash there are many different relief measures in place such as the Protecting Americans from Tax Hikes act for instance and this is why the tax authorities in the United States would willfully allow him to claim both his spouse as well as children as dependents in certain cases, instead of filing a joint return. This holds especially true if the spouse is a ‘stay at home’ mother.
Nevertheless, it is considered prudent when trying to find out as to how to get an ITIN number from India to keep very careful records of ALL U.S. business and trade related activities so as to be able to disclose all the main sources of income earned in the United States so as to be to enable the IRS to be able to process the documents as fast as possible and in this way, the applicant would be eligible for any and all refunds and the tax authorities would also be aware of what should be taxed and what should be exempted from taxation requirements.
Most deductions are not applicable for foreigners (including residents of India as well) and that is why it is pointless for them to try and claim them. However, there is a cravat for certain categories of business apprentices as well as students from India who may be eligible to claim such a deduction under Article 21 of the “U.S.A India Income Tax Treaty.”
(Note: Here it is important to point out that this cravat applies exclusively for Indian applicants seeking tax deductions and other foreign nationals are not entitled to the same)
It should also be noted that Indian residents are allowed to subtract only those (case by case) deductions if they in receipt of any and all incomes and profits that have been acquired either though a connection with their U.S. business or from operating any business or commerce related activity that is sourced in the US. Some deductions include:
- Any form of charitable contributions that have been made to non profit organizations in the United States of America
- All state and local income taxes (wherever applicable)
- The monthly expenses that are deemed necessary (for tax purposes only) for the running of an American business or trade on a ‘day to day’ basis only. (By which it is meant operating expenses rather than capital expenditures)
- Losses that are a result of either theft or any other casualty such as an unforeseen calamity (including natural disasters; hurricanes, earthquakes violent storms or terrorist activities)
- Miscellaneous deductions (to be decided on a case to case basis)
Claiming deductions for Indian ITIN holders (wherever applicable)
For the purpose of claiming all those deductions that, as you are entitled to, as a as a foreigner holding an ITIN you should use the IRS’s Schedule A of Form 1040NR. However, if you were to decide to file your tax returns on the basis of Form 1040NR-EZ, then it is essential that you should be cognizant of the fact that you can only claim a specific deduction for local and or state income taxes (only as they exist in that particular state or district).
Claiming itemized deductions (On an case to case basis)
For the purpose of claiming such deductions you should be aware that you can only utilize the IRS’s Schedule A of Form 1040NR. Conversely, should you be filing Form 1040NR-EZ, then you should be aware that you can only claim a specific deduction for state or local income taxes as per the tax codes that prevail only in that particular state or district or county. On the other hand, should you intend to file a claim to any and all other types of deductions it is required for you to file Form 1040NR.
The seminal importance of filing tax returns for Indian residents
Many Indians simply do not bother to apply for an ITIN number under the misguided assumption that they are not actually required to do so since they do not owe anything. Nevertheless, it is seldom the case and it often happens that the amount withheld from the foreign national’s paycheck or profit form any venture is in excess of what he owes. This way, he would not be eligible for a refund and tax benefits. However if he were to acquire an ITIN number, that way he would be able to safeguard his income in a very effective manner indeed.
If you need help getting an ITIN number please call us at 407-344-1012, or email us at email@example.com.