ITIN: 13 FAQs Answered for Migrants
Let’s say you’re working and earning money in the United States but you don’t qualify for a Social Security Number (SSN). An ITIN (Individual Taxpayer Identification Number, Tax ID or Taxpayer Identification) will serve as an identification number for filing tax returns. If you do not qualify for an SSN, you will need to apply for an ITIN.
The IRS issues ITIN to help people comply with U.S. tax laws and to provide people who do not qualify for a Social Security number with a way to process their tax returns. They are issued regardless of immigration status, since both resident and nonresident aliens may be required to file a tax return.
ITIN do not serve any purpose other than filing tax returns.
But ITIN does not:
(1) Authorize you to work in the United States.
(2) Entitle you to Social Security benefits.
(3) Qualify a dependent for earned income credit purposes.
You can apply for an ITIN using IRS Form W-7. Form W-7 is the IRS application for an Individual Taxpayer Identification Number (ITIN), which must be filed with your federal income tax return.
The ITIN can be processed using the following methods:
By mailing your Form W-7, along with the tax return, proof of identity, and documents relating to your alien status to the IRS office.
Internal Revenue Service
Austin Service Center
P.O. Box 149342
Austin, TX 78714-9342
Applying in person for an ITIN using the services of a Certified Acceptance Agent (CAA), which must be authorized by the IRS. With this option, you can avoid having to mail your documents proving your identity and foreign status.
Yes, ITIN expires. If you are planning file a tax return in 2020 and ITIN has expired or will expire before you file it, the IRS recommends that you submit your renewal request (Form W-7) as soon as possible.
If you use an expired ITIN, the return will be processed and treated as timely filed, but without any credits and/or exemptions you claim and no refund will be paid at that time. You will receive a notice explaining the delay with the refund and warning you of the overdue ITIN.
It can take from two to six months for an ITIN number to be approved, depending on how quickly the process is streamlined – as well as how long it takes to analyze the data provided and validate that the documents are real.
In many cases it happens that some people have a “false SNN” in order to be able to work, because they cannot obtain an authentic one for different reasons, the most frequent of which is that they are an undocumented immigrant. For the same reason, the IRS issued the ITIN so that people could legally pay their taxes.
While many people may be nervous about the ITIN, it is proven to be very safe. Immigration services or any police department are prohibited by law from giving that information to anyone. The ITIN is intended to allow individuals to pay both federal and state taxes and, in particular, to receive refunds of money withheld or even to qualify for extra funding, such as some federal programs, such as Child Tax Credit.
There are no limits to getting an ITIN. Very often entire families apply for the ITIN all at once when they have to pay taxes. The only way to get a new ITIN is to pay a federal tax. This payment can be for previous years or for the current year.
Refund: The most important is to allow federal and state taxes to be paid or, to qualify for a tax refund! Often a person is entitled to refunds, if money has been withheld from payments during the work year. The only way to collect those refunds is to pay taxes through the ITIN number, especially federal and state taxes. Nearly 75% of all taxpayers are entitled to a refund, so it is important to receive that money if you are entitled to it.
Citizenship: If someone works in the United States, they have to pay taxes. While the U.S. government is still working on Comprehensive Immigration Reform, in recent years laws have been proposed that have not been passed, but they can help to understand what that Reform might contain. In all cases, these bills require between three and five years of tax payments in order to begin the immigration process. Someone who wants to become a U.S. citizen needs to prove first that he or she has been ‘acting’ as a responsible citizen to pay taxes.
Child Tax Credit (CTC): In addition, a parent with children under the age of 19 will probably qualify for the Child Tax Credit (CTC), which provides $1,000 in tax credit for each child. The CTC applies to all taxes owed, but when those debts are paid, the money withheld is given to the taxpayer in full. If a worker earns more than $8,000, then the family may qualify for the Additional Tax Credit, which the federal government pays to all taxpayers, even if they do not owe taxes. This is extra money paid by the United States to help families with their expenses.
Getting Credit/Driving License/Auto Insurance: The ITIN is also used to get credit for your phone, credit cards, bank accounts, cell phones, and some car dealerships. Obtaining credit from a business increases the likelihood of obtaining more credits, if the taxpayer earns them. In some states, it is possible to get a driver’s license or auto insurance just by presenting the ITIN.
Some states only accept the SSN, but others accept ITIN.
Starting a business: If the taxpayer wants to start his or her own business, he or she can get an ITIN (Individual Taxpayer Identification Number) from the IRS. This number allows, in many states, the person to apply for a business license or form LLC, LLP, or S corporations.
In short, there are very good reasons to apply for an ITIN. Encourage people who don’t have it to get it for themselves as well as, if possible, for the whole family.
In many cases it happens that some people (especially undocumented immigrant) have a “false SSN”, because they can’t get a real one for different reasons and they can’t pay taxes. For the same reason, the IRS issued the ITIN so that people could legally pay their taxes.
ITIN number has many benefits:
(1) You can prove that you have lived in the United States
(2) Tax Filing Considered “Good Moral Character” by USCIS
(3) You comply with U.S. tax laws by filing and paying taxes
(4) Tax returns may be requested by banks and mortgage companies when applying for a credit.
(5) Filing taxes can help you apply for residency in the future
(6) Some banks and credit card companies allow you to open an account with an ITIN, rather than a Social Security Number.
(7) By obtaining an ITIN and filing a tax return you establish a credit history.
(8) Filing taxes with an ITIN can help you apply for legal immigration status, if the proposed Immigration Amnesty is approved by the U.S. government.
Yes. In fact, more and more entities are being required to apply for the ITIN number on their job applications, since this ensures that employees who do not have a social security number have an identification number to prove that they pay taxes.
The ITIN number is a number given by the IRS for tax purposes. This number has other functions that generate great benefits. For example, some apartments accept the ITIN as an identification number when signing apartment contract.
Telephone is essential nowadays, to communicate with our loved ones, or for the simple fact of looking for a job. Fortunately, some phone companies in the area accept customers who put an ITIN number as their identification number. There are also some cell phone companies that accept the ITIN for contracts.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 20+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries.
He has authored many articles on this site (allonmoney.com).