Learn what you need to know about applying for a US ITIN number from Canada with this comprehensive guide that walks you through the process step by step.
What is a U.S. Tax Identification Number (ITIN)?
A U.S Individual Tax Identification Number (ITIN) is a unique 9-digit number. It’s assigned to individuals who need a U.S. tax identification for different reasons. To be eligible, you must not have already been given the option to obtain an SSN. However, It doesn’t matter if your status in the U.S. is a resident alien or non-resident alien from abroad; both green card holders and those without will receive one too!
What’s the Difference Between an ITIN and a Social Security Number?
An ITIN provides a unique number to those who do not have or are not eligible for a Social Security Number. The IRS issues ITINs to individuals and foreign nationals whose income must be reported on a U.S. tax return but don’t qualify for a SSN (SSNs are issued by the Social Security Administration). An ITIN does not provide eligibility to work in the United States; however, it may make you eligible for certain benefits.
Reasons a Canadian Would Need an ITIN?
A Canadian who lives in the United States may need an ITIN to be able to file U.S. taxes and receive payments from certain U.S. programs. But there are many other reasons why someone might apply for this number as well! This includes Canadians wanting to start a U.S. business, or open a U.S. bank account. Students receiving US-sourced income, as well as individuals claiming certain dependents on a parent’s U.S. return may require an ITIN. Similarly, Canadians who spend too much time in the U.S., those wanting to claim treaty benefits, and completion of all the paperwork for Forms 8288-A/B withholding requirements are other reasons a Canadian may need a U.S. ITIN.
Three Steps to Applying for an ITIN from Canada
STEP 1: Complete a Form W-7, Application for IRS Individual Taxpayer Identification Number
Complete the form W-7, Application for IRS Individual Taxpayer Identification Number. Note the process of applying for an ITIN is a difficult one, and the wrong information could lead to rejection. It’s best to work with someone trained in this area so they can give accurate advice regarding how your application will be processed from start to finish.
STEP 2: Obtain proof of identity and foreign status
Proof of identity may be obtained from:
- A passport
- A national ID card that includes a photo, name, current address, date of birth, and an expiration date
- A U.S. driver’s license
- A U.S. state identification card
- A foreign voter’s registration card
- A foreign military identification card
- A visa
- U.S. Citizenship and Immigration Services (USCIS) photo identification
- Medical records (appropriate only for dependents under 6)
- School records (appropriate only for dependents under 14, or under 18 is a student)
- Keep in mind a passport is the only document considered to be acceptable proof of both identity and foreign status.
STEP 3: Submit the application to the IRS
When mailing an ITIN application, the use of a private delivery service is recommended. All documents are submitted to the IRS here:
Internal Revenue Service
ITIN Operation
Mail Stop 6090-AUSC
3651 S. Interregional, Hwy 35
Austin, TX 78741-0000
U.S. ITIN Application FAQ
1. What does ITIN stand for?
ITIN stands for Individual Taxpayer Identification Number. It is a tax processing number issued by the Internal Revenue Service (IRS) for individuals who are required to have a U.S. taxpayer identification number but do not have, and are not eligible to obtain, a Social Security number (SSN) from the Social Security Administration (SSA).
2. Why do you not share a proposal to assist everyone requesting support on an ITIN application?
While it’s true that each individual seeking assistance with an ITIN application has unique circumstances, a generalized approach may not effectively comply with IRS requirements. Every application involves different variables – such as the type of foreign ID document to be used, the validity of the document and the purpose for applying – and these factors significantly impact the correct procedural steps that we take.
The Internal Revenue Service (IRS) has established specific rules concerning the documentation required for different scenarios. The nature of the documents you need to provide is directly determined by your individual circumstances and the reasons for your application.
Our team plays a crucial role in facilitating the process of submitting your IRS applications. While we offer comprehensive guidance and assistance throughout the submission process, it’s important to understand that we do not determine the rules and regulations outlined by the IRS. These requirements are established by the IRS itself.
If a requirement set by the IRS related to the reason for the application is not met, we regrettably will not be able to assist with your application. Meeting the IRS’s prerequisites is crucial for the application process, and we are committed to upholding these standards.
3. Why use a CAA?
Using a Certified Acceptance Agent (CAA) provides numerous advantages when dealing with IRS processes. The CAA is authorized by the IRS to assist individuals in obtaining ITINs. They serve as a liaison between you and IRS, navigating the complexities of the application process. They verify your identification documents, eliminating the need to mail original documents to the IRS. Their expert knowledge ensures that your application is correctly filled out and submitted, reducing the possibility of errors that could lead to delays. By utilizing a CAA’s services, you can streamline your ITIN application process, reducing stress and saving valuable time.
4. How long does it take to receive an ITIN?
The time frame for receiving an ITIN can vary, largely dependent on how and when the application is submitted. If the application is completed correctly and submitted during the IRS’s peak processing times (January to April), it typically takes around 7 to 10 weeks to receive your ITIN. However, processing times may increase during the off-peak season (May to December). It is important to remember that these are approximate time frames and individual experiences may vary. We, as your CAA, will strive to ensure that your application process is as swift and smooth as possible.
5. How do I avoid my ITIN becoming inactive?
To avoid your ITIN from becoming inactive, it’s crucial to use it on a federal tax return at least once in the last three consecutive years. If the ITIN is not used on a federal tax return for three consecutive years, the IRS deactivates the ITIN at the end of the third consecutive tax year of non-use. Reactivating an inactive ITIN requires filing a federal tax return and may cause delays in processing. To ensure uninterrupted service, it is recommended to use your ITIN regularly in all your federal tax filings.
6. When can I renew my ITIN?
If your ITIN has already expired, you can renew it by submitting a complete Form W-7 (Application for IRS Individual Taxpayer Identification Number) along with the required supporting documentation. Please note that ITINs with middle digits 78 and 79 that expired in 2016, 2017, or 2018 can also be renewed. The IRS encourages all affected ITIN holders to submit a renewal application as soon as possible to avoid potential delays in their tax refund processing time.
7. How long is an ITIN valid?
An ITIN is valid indefinitely unless it is not used on a federal tax return for three consecutive years. If it remains unused for this period, the IRS will deactivate the ITIN at the end of the third consecutive tax year of non-use. To maintain its active status, it is recommended to use your ITIN on all your federal tax filings.
8. What is the difference between an ITIN and a Social Security Number?
While both ITIN and Social Security Number (SSN) serve as identifying numbers on tax-related documents, they are issued by different agencies and serve distinct purposes. An ITIN, or Individual Taxpayer Identification Number, is provided by the IRS to individuals who are required to have a US taxpayer identification number but are not eligible for an SSN from the Social Security Administration (SSA). These individuals may include non-resident aliens who need to file a federal tax return, as well as US residents who are the dependents or spouses of a non-resident alien visa holder. On the other hand, an SSN is issued by the SSA primarily to US citizens and eligible U.S. residents for social security purposes. It’s used to report your wages to the government and to determine eligibility for Social Security benefits.
9. What are some reasons a Canadian would need an U.S. ITIN?
A Canadian may require a U.S. ITIN (Individual Taxpayer Identification Number) for several reasons. They include:
- Investments in U.S. property or stocks: Canadian citizens who have invested in U.S. real estate properties or U.S.-based stocks may need an ITIN to file their U.S. tax returns. This number is necessary for reporting income and paying any taxes due on these investments.
- Partnerships and Trusts: If a Canadian is a member of a U.S. partnership or trust, they would likely need an ITIN for tax filing purposes.
- Spouses or dependents of a U.S. citizen: If a Canadian is a spouse or dependent of a U.S. citizen who files a U.S. tax return, they would require an ITIN.
- Scholarship or Fellowship income: Canadian students studying in the U.S. and receiving scholarship or fellowship income may need an ITIN to file a U.S. tax return.
10. Who is eligible for a U.S. ITIN?
Individuals with income subject to IRS information reporting or federal tax withholding and who are not eligible to receive a social security number may be eligible for a U.S. ITIN number. This could include wages, dividends, rents, or royalties. The IRS uses the ITIN to track your obligations and payments. Therefore, if you fall under this category and do not have a Social Security Number, it’s crucial to apply for an ITIN to comply with U.S. tax laws.
11. What documents are needed to apply for an ITIN?
To apply for an ITIN, several documents are required. First and foremost, you will need to complete the Form W-7, IRS Application for Individual Taxpayer Identification Number. The form must be accompanied by a valid federal income tax return unless you meet one of the exceptions outlined by the IRS. In addition, you will need to provide original or certified copies of identity documents that substantiate both your identity and your foreign status. This includes a passport, which can be used as a standalone document, or a combination of at least two or more of the following documents: National Identification Card, U.S. driver’s license, civil birth certificate, foreign driver’s license, U.S. state identification card, foreign voter’s registration card, U.S. military identification card, visa issued by U.S. Department of State, U.S. Citizenship and Immigration Services (USCIS) photo identification, or a medical (for dependents under 14 years old) or school records (for dependents under 18 years old). It is important to note that all documentation must be current and include an expiration date, if applicable.
In conclusion, navigating the complexities of U.S. tax laws can be daunting, especially when it involves obtaining an ITIN. However, by understanding its purpose, knowing when and why you might need it, and being aware of the necessary steps to apply for or renew your ITIN, you can ensure you’re keeping compliant with U.S. tax regulations. Remember, while the ITIN is not a substitute for an SSN, it plays a crucial role for those who are ineligible for an SSN but who are still required to file U.S. federal tax returns. The key is to stay informed and proactive in managing your U.S. tax obligations.
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Karlene J. Mulraine,
Karlene J. Mulraine, EA, CPA, CA, CPA (NH) is the President of Cross-Border Financial Professional Corporation. Follow us on Linkedin and Twitter, or hang out on Facebook.
The views expressed in this article are those of the author and should not be relied on to make decisions. Consider discussing your specific circumstances with an appropriate specialist.
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