The Internal Revenue Service (IRS) uses different tax identification numbers to regulate tax collection. There are three types of Tax Identification Numbers (TINs) used by the IRS, namely the Employer ID Number (EIN), the Social Security Number (SSN) and the Individual Tax Identification Number (ITIN).
What is Individual Tax Identification Number (ITIN)?
An Individual Tax Identification Number (ITIN) is a number assigned by the IRS for the purpose of processing taxes. It was created as a tool for IRS to charge taxes to individuals who can pay taxes but, did not have a SSN. An ITIN does not entitle the individual to any sort of legal status.
What Does an ITIN Look Like?
You can identify an ITIN by four simple ways:
- It has 9 digits
- Always starts with the number 9
- Has the number 7 or 8 in the fourth digit
- It is formatted similar to a SSN (e.g. 9XX-7X-XXXX)
Who Needs or Uses an ITIN?
Individual Tax Identification Numbers (ITINs) are used by a number of legal migrants who do not qualify for the SSN. These could be resident aliens, non-residents aliens and their spouses and dependants.
Simply put, ITINs are for:
- A non-resident alien – People who do not get through two tests, namely the green card and the substantial presence tests are not U.S citizens and considered as non-resident aliens. If these individuals have for instance, some investment or ownership in a U.S business and get some income from it while living in another country, they have to file taxes for the income generated and it done through an ITIN.
- Resident alien – People who live in the U.S, cannot have a SSN but need to file for a tax return.
- The spouse of or dependent of a permanent legal resident or a U.S citizen.
- The spouse or dependent of a legal immigrant who is on a temporary visa.
How ITINs Help?
Without the use of Individual Tax Identification Numbers (ITINs), a lot of taxes that should have been collected went undocumented. With the help of ITINs, the amount of taxes collected have increased, enhancing the tax base and aiding the system.
What Benefits do ITIN Holders Get?
ITIN is used solely for the purpose of collecting taxes, it does not entitle the ITIN holder to any benefits or any quasi-legal status as generally assumed.
Benefits including social security benefits, tax benefits, public benefits and the Earned Income Tax Credit (EITC) are for U.S citizens alone. ITIN holders do not get to benefit from these benefits, until his/her status is legalized in the future and they are issued a SSN.
There is no edge given to ITIN holders with immigration as well. An ITIN can be used to:
- Provide proof for a legal immigration status or presence in the U.S
- Provide proof for work authorization
How to Apply for an ITIN?
Anyone requiring an ITIN and meeting the mentioned criteria can do so by filling out a W-7 application form and submit it to the IRS.
Along with the form, the applicants needs to attach about 12 supporting documents accepted by the IRS to prove and verify his/her identification and foreign status, along with a completed tax return.
You can also seek the help of acceptance agents present at the taxpayer assistance centers for further details.
For any other queries about Individual Tax Identification Number (ITIN), please comment below.
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