Discover Who Needs an ITIN in the USA for Tax Compliance

Introduction

The term ITIN registration refers to the process of obtaining an individual taxpayer identification number from the Internal Revenue Service (IRS) in the United States for individuals who have a tax reporting requirement but are not eligible for a Social Security Number (SSN). In this article, we will provide a comprehensive guide to who needs an ITIN in the USA and how to apply for one.

What is an ITIN?

An ITIN, or Individual Taxpayer Identification Number, is a unique tax identification number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number (SSN). Non-US citizens who have US tax obligations, such as filing a tax return or paying taxes, are required to have an ITIN. The ITIN allows individuals to comply with US tax laws and file their tax returns, even if they are not eligible for an SSN.

Who needs an ITIN in the USA?

1. Non-US Citizens with US Tax Requirements: Non-US citizens are obliged to have an ITIN if they have US tax requirements, such as filing tax returns or paying taxes. Non-citizens who get income from US-based sources, such as rental income, dividends, interest, or wages, are included in this.

2. Dependent Spouses and Children of US Citizens or Residents: If a dependent spouse or child of a US citizen or resident has US tax obligations but is not eligible for an SSN, they must also have an ITIN.

3. Foreign Students and Scholars: Students and scholars from other countries who earn taxable income in the United States but are not U.S. citizens must apply for an ITIN. This includes individuals who receive scholarships, fellowships, or grants from U.S. institutions.

4. Treaty Beneficiaries: NRAs who are required to file a U.S. tax return and are entitled to treaty benefits must apply for an ITIN. This consists of those who are eligible for lower withholding or exemption from U.S. tax on particular categories of income under a tax treaty.

5. Non-US Citizens Owning US Property: Non-US citizens who own US property, such as real estate, are required to have an ITIN to file their tax returns.

Why is an ITIN required in the USA?

ITINs are used exclusively for tax purposes; they are not meant to be used for identification. The IRS can identify people who are not qualified for an SSN but who still owe taxes in the United States thanks to ITINs. You might require an ITIN in the USA for the following reasons:

1. To File a U.S. Tax Return: If you have a U.S. tax obligation but are not eligible for an SSN, you must apply for an ITIN to file a U.S. tax return. This includes NRAs who receive income from the U.S. and are subject to U.S. tax laws.

2. To Claim a Tax Refund: If you are entitled to a tax refund but do not have an SSN, you must apply for an ITIN to claim your refund.

3. To Open a U.S. Bank Account: Some U.S. banks may require an ITIN to open an account, especially for NRAs who do not have an SSN.

4. To Apply for a Mortgage: If you are an NRA who wants to buy a property in the U.S., you may need an ITIN to apply for a mortgage.

Conclusion

An Individual Taxpayer Identification Number plays a crucial role in the United States for individuals who are not eligible for a Social Security Number (SSN) but need to fulfill tax obligations. ITINs are specifically designed to provide a unique identification number for tax purposes, allowing individuals to comply with tax laws and regulations.

Suggested read: FAQs on ITIN Registration