Individual Tax Identification Number (ITIN): What You Need to Know
The Individual Tax Identification Number is a tax processing number issued by the Internal Revenue Service to ensure that people (including unauthorized immigrants) pay taxes even if they do not have a Social Security Number. ITINs allow the IRS to bring in billions of dollars the federal government would otherwise have no way of collecting.
What is an ITIN?
- It was created for tax purposes – The ITIN was created in July 1996 by the IRS so that foreign nationals and other individuals who are not eligible to apply for a Social Security Number 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.
- Many immigrants have ITINs – People who do not have lawful status in the U.S. may obtain an ITIN. In addition, the following people that are lawfully in the country and must pay taxes, but may not be eligible for a SSN and may apply for an ITIN include:
- 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 U.S. (based on days present in the U.S.);
- A dependent or spouse of a U.S. citizen or lawful permanent resident; or
- 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 U.S.
- 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 each year.
- Unauthorized immigrants paid $11.8 billion in state and local taxes in 2012. This ranged from roughly $3.2 million in Montana (home to 6,000 unauthorized immigrants) to $3.3 billion in California (with an unauthorized population of 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. 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 SSN 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 IRS does not share applicants’ private information with immigration enforcement agencies.
- 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 often arises during legislative debates.
How do I apply for an ITIN?
To learn how to apply for an ITIN, please visit our previous blog on this topic here.
If you are a foreign national and have questions on living or working in the United States, please contact our office to schedule a consultation with one of our attorneys today!