Everything Your Clients Need to Know about ITINs

The Individual Tax Identification Number allows people in the U.S. without Social Security numbers to pay taxes regardless of their immigration status. ITINs are available to people who are ineligible for SSNs but must pay taxes, such as:

  • Documented/undocumented immigrants
  • Non-resident aliens and resident aliens and their dependents/spouses
  • Non-resident aliens claiming tax treaty benefits
  • Dependents/spouses of U.S. citizens or lawful permanent residents
  • Dependents/spouses of foreign nationals on temporary visas
  • Non-resident foreign nationals who own or invest and receive taxable income from a U.S. business
  • Foreign national students, professors, or researchers who qualify as residents of the U.S. based on days present in the country

The diversity of ITIN holders almost guarantees that a few are already in your client base. The American Immigration Council reports that in 2015, over 4 million ITIN holders paid more than $13 billion in taxes. As a tax professional, you are offering a vital service to these taxpayers in your communities by assisting with the ITIN application and renewal process at tax time.

Benefits of an ITIN for your clients

While an ITIN does not provide legal immigration status or work authorization for the I-9 form, it does bring the taxpayer other benefits. For example, if the taxpayer becomes eligible for Social Security by becoming a lawful permanent resident, their ITIN earnings may be counted towards their total earnings for these benefits.

Also, some ITIN holders that meet income requirements are eligible to claim the Child Tax Credit. Your clients may see a tax refund from this refundable credit. They might also qualify for the Family Tax Credit, which is nonrefundable but can lower their tax liability.

Tax returns filed with an ITIN can also be used to prove residency in the U.S. For example, the ITIN is sufficient in some states to obtain a driver’s license, permit, or state ID card. Your clients may also use their ITINs to open bank accounts.

How to help your clients apply for an ITIN

Your clients can apply for an ITIN at the time of preparation, making your office an important stop for taxpayers seeking to improve their quality of life. The complete Form W-7 with proof of identity and foreign status documents must be submitted along with the tax return. Your clients will receive their ITINs in the mail after their applications are approved. The approval process usually takes about seven weeks.

How to help your clients renew an ITIN

Missing information in the W-7 or insufficient supporting documents cause snags in the ITIN renewal process. Make sure that you and your clients review these common oversights that can delay applications:

  • Complete a new Form W-7 and submit it with original supporting documents or certified copies. Include the ITIN already assigned to the client, the name under which it was issued, and official documents regarding name changes, if applicable.
  • Select the reason for the client needing an ITIN when applying on Form W-7.
  • Include a complete foreign address if the client is a non-resident alien.
  • Always attach the Form W-7 application to the appropriate federal tax return.

Expiring ITINs

Over 2 million taxpaying households have an ITIN that will expire this tax season. Any ITIN that has not been used on a tax return in the past three years will need to be renewed. Filing a return with an expired ITIN will significantly delay that return’s acceptance and any refunds due. The IRS is recommending that anyone who may be affected complete their renewal application as soon as possible to avoid processing delays. Get answers from the IRS most frequently asked questions on expiring ITINs.