What is ITIN (or Individual Tax ID Number)?

Every company has a tax identification number in the US, just as any other state in the world. It is primarily for an official recognition of the company.

Just as a company, everybody who has tax liabilities to the US Government must have a tax identification number. There are two kinds of tax identification numbers in the United States. The first is the Social Security Number which can be obtained only if the person is a US citizen, has a Green Card or has a visa that provides him/her with a temporary residency in the US. The other number is Individual Tax Identification Number; which is abbreviated as ITIN. Instead of explaining who can obtain an ITIN, it is easier to define who cannot. Basically, anyone who cannot obtain a SSN, needs to obtain ITIN for tax purposes.

Every ITIN has nine digits and starts with 9; therefore, it is easy to identify these numbers. People who got this number are not automatically eligible for residency in the US. This is a common misunderstanding about the ITIN. Also, these people cannot benefit from the social security rights in the US, as well. This number is provided by the IRS (Internal Revenue Services) and only used for tax purposes.

Below is a list of people who can obtain ITIN:

  • Foreign individuals who are not eligible for a Social Security Number but have a tax liability to the US Government
  • Individuals who do not live in the US, who are not eligible to obtain SSN; but, need a tax ID number for tax returns
  • Individuals who came to the US for residency purpose and need to have a tax ID number for tax return
  • Spouses and dependents of the US citizens and foreign individuals who came to the US for residency purposes and are not eligible to obtain a SSN and required to pay taxes
  • Spouses and dependents of individuals who are not residents of the US but required to file taxes

 

ITIN does not have a long history. It has been put on practice by the government in 1996. Its purpose has been to provide an opportunity for people who are not eligible to obtain SSN to file taxes lawfully. Please remember, ITIN does not provide you residency or work permit in the US. Also, it is not related to any social security rights in the US.

If you are eligible to obtain ITIN according to the list above, you first need to apply for it to IRS. An important note here is that all the individuals who fit to the list above must apply separately for an ITIN. That means, all family members must apply on their own. Therefore, every member of a family including the spouse and the dependents must have a different ITIN.

 

Why should I apply for ITIN?

There are a few situations in which you need to have an ITIN and these all are related to tax purposes. For example, when you want to open a bank account for your company in the US, you need to provide a tax identification number for your company to the bank. Also, the bank might ask for the individual tax identification numbers when opening bank accounts for business depending on the state laws and the security regulations of the banks. In this case, you need to have an ITIN.

There are also situations for which you cannot use your ITIN. As the name suggest, ITIN is a tax identification number; therefore, it is used only for tax purposes. It cannot be used by any government or state or county office for any other purpose than taxation. For instance, the Citizenship and Immigration Services (USCIS) does not request this number for any of its processes and transactions.

If you have already obtained your ITIN, please be careful to comply with your taxation status. If you do not use this number for 5 consecutive year, its validity will automatically expire. However you can renew it.

 

How to obtain ITIN

If you need an Individual Tax Identification Number (ITIN) you can apply for it via IRS’s web-site after filing a form. However, this process may be complicated. If you need a professional help or want to handle your official processes more smoothly and faster please do not hesitate to contact us.