Undocumented immigrants use Individual Taxpayer Identification Number service from the IRS to file taxes via tax-processing numbers while keeping their immigration details confidential. The document describes ITIN usage including the affected population types and application procedures.

Defining ITIN: What Is It?

The ITIN exists mainly to help non-US citizens fulfill their tax requirements. The IRS introduced the ITIN during July 1996 to assist ineligible foreign nationals along with other individuals who cannot receive an SSN for tax compliance.

SSNs are not ITINs. Foreign taxpayers obtain the ITIN which begins with number nine then continues with nine additional digits. The ITIN contains fourth and fifth digits which range between numbers 50 to 65, 70 to 88, 90 to 92, and 94 to 99. Just like an SSN format the ITIN number follows pattern 9XX-XX-XXXX.

Several immigrants currently have ITINs. Anyone who lacks proper U.S. immigration status can still receive an ITIN. Not all people with U.S. legal status require a Social Security Number since they need an ITIN for tax compliance purposes. Therefore anyone who is taxpayers and legally residing in the United States qualifies to obtain an ITIN.

• A taxpayer who submits U.S. tax filings and lives permanently in America according to their time of residence.
• A student lecturer or researcher who does not have an SSN can submit a U.S. tax return when studying in the United States.
• A spouse or dependent of a citizen or lawful permanent resident of the U.S.
• The tax residency status of a dependent person depends on their cohabitation with someone carrying a temporary visa.

ITINs Do Not Grant Legal Status and Work Permit

An ITIN cannot be used to demonstrate legal presence in the US and does not grant legal immigration status.

An ITIN cannot be used to demonstrate work authorization on an I-9 form, and it does not grant work authorization.

The Tax Obligation Falls on ITIN Holding Individuals.

Taxes are payable through ITINs by individuals who do not possess SSNs.

In 2015 the IRS estimated that 4.4 million ITIN filers paid their taxes by paying $5.5 billion in payroll taxes, Medicare taxes and $23.6 billion in total taxes.

Several types of tax benefits as well as public programs which U.S. citizens can access are restricted for taxpayers who hold ITINs.

An ITIN holder does not qualify for two important programs: the Earned Income Tax Credit (EITC) and Social Security benefits. The wages reported with an ITIN will help determine the Social Security benefits when that person becomes eligible for Social Security through lawful permanent residence.

Citizens with an ITIN Can Utilize the Identification Number for Multiple Other Applications.

• You can open an interest-bearing bank account when you have an ITIN. A person holding an ITIN without a Social Security number maintains eligibility for interest-bearing bank accounts.
• Obtaining a driver's license. States across the nation now accept the ITIN instead of the Social Security Number to secure driver's licenses and state identity cards as well as driving permits.
• Presenting documentation of residency. Using an ITIN with filed tax returns becomes an official method for immigrants to show their period of residency in this country.

Can the Government Trace Unauthorized Immigrants Using the ITIN?

Immigration enforcement does not use the ITIN.

The IRS typically does not provide applicants' private information to immigration enforcement agencies, which is crucial for tax compliance. The application procedure is intended to make tax payments more manageable.

A fundamental principle of the American tax system is taxpayer privacy.

The effectiveness of the program depends on privacy because applicants give the IRS a lot of personal information. The IRS is not permitted to disclose taxpayer information to other government agencies, according to Section 6103 of the Internal Revenue Code, with the exception of the information supplied to the Treasury Department for tax administration investigations or in response to a federal court order pertaining to a criminal investigation that is not related to taxes. A new statute would be needed to expand information-sharing beyond this, a topic that frequently comes up during legislative discussions.

Who are the Qualified Applicants for ITIN?

The Internal Tax Identification Number service is available to both U.S. residents and nonresidents since it requires no consideration of immigration status. Nonresident and resident aliens together with their spouses and dependents must request an ITIN because they cannot obtain an SSN. The following individuals require an ITIN according to the specified criteria:

• Foreign nationals who have to file taxes yet are not United States residents can obtain an ITIN
• The US tax requirements oblige any resident alien to file taxes no matter how long he stays in the country.
• Dependents or a U.S. citizen or resident alien's spouse
• Spouses or dependents of those with nonresident alien visas
• People filing taxes from overseas locations can obtain an ITIN.

How Individuals Can Apply for ITIN?

• Candidates need to submit their W-7 application form together with their completed tax return to the IRS.
• Tax candidates need to show the IRS both their identity proof and evidence of being a non-US citizen. The IRS identifies thirteen documents that they accept for the identification process.
• There is no requirement for candidates to present themselves physically to apply as they have multiple choices for fulfillment through postal service or private delivery methods. When applying through the mail process the candidates are required to send their original documents and certified copies to the IRS which then needs to return these documents to them.
• IRS approval has given Acceptance Agents (AAs) the responsibility to help applicants complete and send their W-7 form. A certified acceptance agent oversees the delivery of original documents and their certified copies to the relevant agency.
• The Internal Revenue Service allows Certifying Acceptance Agents (CAAs) to verify documentation for candidates who wish to submit their applications.
• The documents submitted by applicants remain in their possession when they obtain services from a CAA.
• People submitting applications to Taxpayer Assistance Centers (TAC) have the authorization to validate candidates' documentation while they execute their W-7 filings. After applying for an ITIN at a TAC office the applicants can receive back their original documents.
• After the IRS confirms an application they will send the ITIN to the applicant through mail.

An ITIN becomes invalid and needs revalidation once it remains unreported on federal tax returns throughout three consecutive years. ITINs that have a middle digit from 70 to 87 have expired.

When Non-US Citizens Require an ITIN

1. Non-residents of the United States who must file taxes in the country need an ITIN to process their federal tax returns. Treating income from US sources that meet IRS filing requirements commonly presents this situation to foreign citizens or non-residents of the United States.
2. Multiple countries that have established tax treaties with the United States enable both dual tax-avoidance benefits and primary advantages through these agreements. Non-residents who receive benefits from tax treaties need to obtain an ITIN to submit treaty provisions during their tax filing process. The benefits under such treaties include partial tax exemptions and special reduced income tax rates for specified revenue streams.
3. Individuals who are non-residents must get an ITIN in order to receive income from US sources with tax withholding obligations including interest, dividends, royalties and pension income. The ITIN system allows the IRS to track withholding taxes and report income properly alongside tax reporting duties.
4. A few American banking institutions demand an ITIN when providing banking services to non-resident clients. WithIN. People do banking within the US through their bank service access which allows them to run and maintain their accounts while making payments.
5. Non-resident US citizens need ITINs to fulfill tax regulations of both federal and state tax authorities for recording rental property income and state tax payments and investment participation. Non-residents who possess an ITIN can ensure that they report and pay taxes correctly on every type of income.

Why Non-U.S. Residents Need an ITIN

1. Getting an ITIN represents the primary reason non-U.S. residents obtain it because it helps them meet U.S. tax standards. A valid ITIN enables foreign residents to prepare correct tax declarations and meet their tax requirements which protects them from facing penalties along with other legal consequences due to non-compliance.
2. Tax benefits together with refunds become available to non-U.S. residents when they have an Individual Taxpayer Identification Number. The Child Tax Credit joins the American Opportunity Tax Credit among other tax incentives in the list of benefits that can be claimed with an ITIN. Non-U.S. residents who filed their tax return can obtain refunds for any income tax overpayments they experienced through their withholding.
3. Through the issuance of an ITIN, foreigners living in the United States receive permission to operate bank accounts and apply for financial loans. Acquiring an ITIN enables people to build their American credit history and this foundation becomes crucial for acquiring mortgages along with credit cards and all sorts of financial products.
4. Non-U.S. residents who need to file taxes for their dependents or spouses must first obtain ITINs to enable those individuals to get included in their tax returns. Through obtaining ITINs they qualify to receive dependent tax exclusions along with additional related tax opportunities.
5. Those engaging in U.S. business or investment operations who are foreign residents need an ITIN to fulfill their taxation obligations. The Internal Revenue Service requires ITINs from U.S. partnership members and shareholders in U.S. corporations and persons who generate earnings from rental property.

Conclusion

The Internal Taxpayer Identification Number stands as a necessary requirement for all non-U.S. residents to fulfill their U.S. tax obligations and avail themselves of tax advantages and monetary services. Non-U.S. residents can successfully meet their IRS tax obligations by comprehending when and why they require an ITIN. The ITIN application process requires professional help which you can access by consulting with a qualified tax expert.