ITIN. Number : What ,Why & How of It ?

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ITIN. number

ITIN. number or Individual Tax Identification Number (ITIN) is a unique number allotted by IRS to persons who apply for it. Section 6109 of 26 US Code provides law for issue of Individual Taxpayer Identification Number (ITIN) to certain tax payers . Why people need to apply or who needs to apply for ITIN are explained below in this article. The purpose of allotting ITIN by the IRS to applicant is applicant is uniquely identify a tax payer. IRS identity a taxpayer either with a Social Security Number ( SSN) or an ITIN number.

6 Reasons Why You Need an ITIN ?

The filing tax return in USA or comply with various kinds of reporting requirements, you need to mention ITIN. number or SSN (social security number. So if you do not have an SSN and are not eligible to obtain one and you satisfy any of the four kinds of status , you must apply for ITIN

  1. You are a nonresident alien and is required to file a tax return with IRS
  2. You are a U.S. resident alien and you are required to file tax return in US based on physical presence test.
  3. You are a dependent or spouse of a U.S. citizen or resident alien person
  4. You are a dependent or spouse of a nonresident alien visa holder person.
  5. Nonresident alien claiming a tax treaty benefit; and/or
  6. Nonresident alien student, professor or researcher filing a US tax return or claiming an exception

You can also use IRS online interactive tool to determine if you really require an ITIN . Keep your VISA ready while answering the IRS interactive tool for ITIN.

What does ITIN not serve ?

The ITINs do not serve any purpose other than federal tax reporting . It neither substitute or make you eligible for allotment of Social Security Number (SSN ) nor does it entitle you a right to work in USA nor entitles a dependent for Earned Income Tax Credit

How to obtain ITIN ?

The rule to obtain an ITIN, number is simple . Complete a Form W-7 , attach it on the front of your properly filled tax return (1040 ) along the the supporting documentation that proves your identity . Send the whole set to the IRS ITIN Operations Center by mail as given below :

Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

It’s important to note that the documentation filed with the Form W-7 must be original or certified.

Alternatively use Certified Acceptance Agent (CAA) service for ITIN. number?

An alternative is for you to seek help from an IRS-authorized Certified Acceptance Agent (CAA) . These authorized agents will review your documentation and return it to you before submitting your completed Form W-7 to the ITIN Operations Center. You can find the nearest authorized agents from our specially created searchable database which is prepared from the name and address given on IRS website.

Does ITIN expire?

Yes, the ITIN. number can expire . The law of expiry of ITIN is written in Section 203 of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), enacted on December 18, 2015, modified section 6109 of the Internal Revenue Code . Section 6109 is law related to issue of Individual Taxpayer Identification Number (ITIN) . As per the PATH Act , the ITIN expires in following circumstances :

  1. If the ITIN was issued before 2013 will begin expiring this year, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX).
  2. If ITIN is not used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return as of Jan. 1, 2017.
  3. All expired ITIN. numbers must be renewed before being used on a U.S. tax return. No action is needed by ITIN holders who don’t need to file a tax return next year. Also, there are new documentation requirements when applying for or renewing an ITIN for certain dependents. So , you must have understood clearly who  needs to renew ITIN ?

Can You File Tax Return Even if Not Having a New ITIN ?

Yes, there is no problem as far as filing tax return is concerned with the old ITIN . But since old ITIN expired , following consequances may follow as per IRS communication 

Returns filed by these individuals will be accepted by the IRS; however, there may be a delay in processing these returns, and certain credits, such as the Child Tax Credit and the American Opportunity Tax Credit, may not be allowed unless the ITIN is renewed. This could result in a reduced refund or additional penalties and interest. The IRS will notify these filers about the delay and any reduction in refunds and credits claimed and will inform them about the need to file Form W-7 to renew their ITIN.

To sum up the consequences , these are

  1. Delay in processing your return
  2. Certain credits may not be allowed
  3. Reduced refund

 

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