How to apply for an Individual Taxpayer Identification Numbers (ITIN)

If you are considering getting an Individual Taxpayer Identification Numbers (ITIN), it’s important to understand what it is and how to apply for one. It’s important to note that an ITIN is not a replacement for a Social Security Number (SSN). An ITIN is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but are not eligible for an SSN.

If you are a Canadian resident and don’t have an SSN, you may need an ITIN if you receive income from a U.S. source that is subject to U.S. tax. To apply for an ITIN, you need to complete Form W-7, Application for IRS Individual Taxpayer Identification Numbers.

---

Tax Preparation and Tax Filing in Chatham >>

---

You can apply for an ITIN in several ways, including by mail, in-person, or through an IRS-authorized Acceptance Agent. The application process requires you to provide documentation that proves your identity and foreign status.

Once your application is processed, the IRS will issue you an ITIN, which you can use for tax purposes only. It’s important to keep in mind that an ITIN does not authorize you to work in the U.S. or qualify you for Social Security benefits.

What is an ITIN?

An Individual Taxpayer Identification Number (ITIN) is a unique number assigned to non-resident aliens in the U.S. who earn income in the country. It is important to note that the ITIN is not a substitute for a Social Security Number (SSN), nor does it grant any residency status in the U.S. like a green card or work visa. If you are a Canadian resident and need to obtain a U.S. tax I.D. number, there are new requirements that you must fulfill.

Previously, the IRS would issue an ITIN card to applicants, but due to the potential for confusion with an SSN card, the IRS now only issues a confirmation letter to Canadians applying for a tax I.D. number in the U.S.

It’s worth noting that if you are eligible for an SSN, you should apply for one before seeking an ITIN. Individuals who are eligible for a Social Security Number are not eligible to receive an ITIN. If an applicant is denied an SSN by the Social Security Administration, they will receive a letter of denial, which must be included with the Form W-7 (the application for an ITIN) when it is submitted to the IRS.

---

Also Read: Key Dates for the Canadian Tax Year 2023

---

Who is Eligible to Apply for an ITIN?

Foreign U.S. taxpayers who are not eligible for a Social Security number and need to provide a taxpayer identification number may apply for an Individual Taxpayer Identification Number (ITIN). Examples of those who may need an ITIN include individuals required to file a U.S. income tax return, dependents of someone claiming them to qualify for eligible tax credits and deductions, individuals subject to certain third-party withholding tax, and nonresident alien individuals claiming reduced withholding under an applicable income tax treaty.

In addition, if a taxpayer is selling U.S. real property, they may need an ITIN in the following situations: when withholding taxes are being paid with the filing of Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests; if the taxpayers want to request reduced withholding while filing Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests: or when filing the income tax return required under the Foreign Investment in Real Property Tax Act (FIRPTA) upon disposing of U.S. property.

 

Can applying for a U.S. Tax ID Number help with your taxes?

If you are a Canadian who earns income in the United States, having a U.S. Tax ID Number (ITIN) can offer several advantages for your taxes. These benefits include reducing the amount of withholding taxes on U.S. income earned, claiming foreign tax credits on your Canadian tax return for U.S. taxes paid, and decreasing the likelihood of double taxation. Moreover, the IRS mandates that an ITIN is necessary for filing your U.S. Non-Resident Tax Return (1040-NR), getting a tax refund, and withholding taxes on specific types of income in the U.S.

 

How can Canadians apply for an ITIN to help with their U.S. taxes?

To apply for an ITIN, Canadians must complete Form W-7 and provide proof of residency in Canada. The IRS has streamlined the list of acceptable documents to 13, all of which must be current and include an expiration date. The documents must also contain the applicant’s name, photograph, and support their claim of foreign status. The most commonly used document by Canadians is a Canadian Passport. Notarized copies are not acceptable, and only copies certified by the issuing agency will be accepted by the IRS. Failure to provide the required documents will result in a denial of the ITIN application.

As a cross-border tax specialist in Mississauga, we can help with obtaining a tax identification number, coordinating the application process to minimize delays, and identifying withholding tax requirements in the U.S. and opportunities to minimize these taxes. It’s important to note that Form W-7 is typically only accepted when submitted with a non-resident U.S. tax return, but there are some exceptions that can expedite the application process.

---

Also Read: Understanding Personal Real Estate Corporation (PREC)

---

How Canadians Can Obtain a U.S Tax Identification Number (ITIN)

As a Canadian earning income in the U.S., obtaining an Individual Tax Identification Number (ITIN) is crucial. An ITIN is a type of tax identification numbers for individuals who are not eligible for a Social Security Number. With an ITIN, you can open a U.S. bank account, a PayPal, Stripe, or Amazon account, file a tax return, and obtain a credit score.

To apply for an ITIN, you need to prepare Form W-7 and provide proof of residency in Canada. The IRS accepts 13 types of documents as proof of identity and foreign status, with a Canadian passport being the most commonly used. The IRS will only accept certified copies of these documents issued by the issuing agency, not notarized copies.

Having an ITIN is necessary for filing a U.S. tax return and receiving tax refunds. It can also reduce the chance of double taxation and lower withholding taxes on U.S. income earned. To determine if you need to apply for an ITIN, you can use the IRS’s Interactive Tax Assistant tool.

 

How to Obtain a US Tax ID as a Canadian Citizen?

As a Canadian citizen, to obtain a US Tax ID or ITIN, you need to submit Form W-7 and proof of residency in Canada. The IRS has streamlined the documentation process and now accepts only 13 acceptable documents as proof of identity and foreign status. Each document should contain an expiration date and show your name, photograph, and support your claim of foreign status. Canadian Passport is the most commonly used document by Canadians to obtain an ITIN.

How to Check the Status of your ITIN Application?

You can contact the IRS via phone at 1-800-829-1040 to check your ITIN status. Notify the IRS immediately if any information appears incorrect.

Does Everyone Need a Tax ID Number?

Individuals who file tax returns with the IRS are assigned a Tax ID or ITIN number. However, there are exemptions such as owners of something other than the actual owner or individuals engaged in an international scheme. For sole proprietors doing business, an Employer Identification Numbers (EIN) is required.