MLG Guide to ITIN – Individual Tax Identification Numbers (ITINs)
The Individual Tax Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) to ensure that people – including unauthorized immigrants – pay taxes even if they do not have a Social Security number and regardless of their immigration status.
ITINs allow the IRS to bring in billions of dollars the federal government otherwise would have no way of collecting. This fact sheet explains what ITINs are, who has them, and the purposes for which they are used.
What is an ITIN?
▪ It was created for tax purposes. The ITIN program was created by the IRS in July 1996 so that foreign nationals and other individuals who are NOT eligible for a Social Security number (SSN) can pay the taxes they are legally required to pay.
▪ ITINs are not SSNs: The ITIN is a nine-digit number that always begins with the number 9 and has a 7 or 8 in the fourth digit, for example 9XX-7X-XXXX. They are not Social Security Numbers (SSNs) and as such ITINs do not bestow allow the owner access to social welfare benefits.
▪ Many immigrants have ITINs. People who do not have a lawful status in the United States may obtain an ITIN. In addition, the following people may obtain an ITIN even though they are lawfully in the U.S and must pay taxes but may not be eligible for a SSN:
▪ A non-resident foreign national who owns or invests in a U.S. business and receives taxable income from that U.S. business, but lives in another country.
▪ A foreign national student who qualifies as a resident of the United States (based on days present in the United States).
▪ A dependent or spouse of a U.S. citizen or lawful permanent resident.
▪ A dependent or spouse of a foreign national on a temporary visa.
ITINs do NOT provide legal status or work authorization.
▪ An ITIN does not provide legal immigration status and cannot be used to prove legal presence in the United States –on the other hand, it can prove length of presence in the U.S and more critically – the Good Moral Character (GMC) requirement that most Aliens must show in the process of adjusting their immigrant status.
▪ An ITIN does not provide work authorization and cannot be used to prove work authorization on an I-9 form.
ITIN holders pay taxes.
▪ ITINs let more people pay into the system, which builds the tax base. In 2010, over 3 million people paid over $870 million in income taxes using an ITIN, and according to the IRS, ITIN filers pay $9 billion in payroll taxes annually.
▪ Unauthorized immigrants paid $11.8 billion in state and local taxes in 2012. This ranged from roughly $3.2 million in Montana (home to only 6,000 unauthorized immigrants) to $3.3 billion in California (with an unauthorized population numbering 3.1 million).
▪ ITIN holders are not eligible for all of the tax benefits and public benefits that U.S. citizens and other taxpayers can receive. For example, an ITIN holder is not eligible for Social Security benefits or the Earned Income Tax Credit (EITC). However, if that person becomes eligible for Social Security in the future (for example, by becoming a lawful permanent resident), the earnings reported with an ITIN may be counted toward the amount he or she is eligible to receive.
▪ ITIN holders are eligible for the Child Tax Credit (CTC). The CTC tax credit may be worth as much as $1,000 per qualifying child, depending upon the applicant’s income. Because ITIN holders are eligible for the CTC, over 4 million U.S. citizen children benefit from the tax credit.
What other purposes can an ITIN serve?
▪ Opening an interest-bearing bank account. Individuals who do not have a SNN but do have an ITIN can open interest-bearing bank accounts.
▪ Securing a driver’s license. Some states have allowed the ITIN to be used instead of a SSN in order to receive a driver’s license, driver’s permit, or state identification card.
▪ Providing proof of residency. At some point in the future an immigrant may need to prove how long he or she has been in the United States and having a tax return filed using an ITIN is one way to show that.
Is the ITIN a way for the government to track unauthorized immigrants?
▪ The ITIN is not an immigration-enforcement tool. The application process is designed to facilitate tax payment, and the fact the IRS does not share applicants’ private information with immigration enforcement agencies is key to tax compliance.
▪ Taxpayer privacy is an important cornerstone of the U.S. tax system. Because applicants provide the IRS with a great amount of personal information, privacy is highly critical to the success of the program. Section 6103 of the Internal Revenue Code states that the IRS is not authorized to release taxpayer information to other government agencies except for providing information to the Treasury Department for investigations that pertain to tax administration, or under a court order related to a non-tax criminal investigation. Expanding information-sharing beyond this would require a new law—an issue that arises often during legislative debates.
How does one apply for an ITIN?
▪ Applicants must fill out a W-7 application form and submit it to the IRS along with a completed tax return. Individuals do not need to apply in person. When the application is approved, ITINs are sent to applicants through the mail.
▪ Applicants are required to submit original documents verifying identity and “foreign status.” The IRS has issued a list of 13 documents that will be accepted for this purpose. Those documents will be returned to the applicant within 60 days of receipt and processing of the W-7 form.
▪ There are IRS Acceptance Agents and Taxpayer Assistance Centers available here to help persons apply.
In 2015, Congress enacted legislation (here in Español ) to clarify the 2012 guidance from the IRS (again here in Español ) stating that all ITINs issued after December 31, 2012 will have to be revalidated every five years. Additionally, if a person obtains an ITIN but does not use it for three consecutive years, it will expire, and will need to be revalidated. Only about a quarter of the 21 million ITINs issued since the program began in 1996 are being used on tax returns. The new policy will ensure that anyone who legitimately uses an ITIN for tax purposes can continue to do so, while at the same time resulting in the likely eventual expiration of millions of unused ITINs.