If you’re a non-US entrepreneur looking to do business in the United States, getting an ITIN (Individual Taxpayer Identification Number) is a key step. This IRS-issued number is necessary for tax compliance, opening US bank accounts, and accessing tax treaty benefits. Here’s what you need to know:
- What is an ITIN? A 9-digit number issued by the IRS for individuals who aren’t eligible for a Social Security Number (SSN) but need to meet US tax requirements.
- Why do you need it? It’s required for filing US tax returns, claiming tax treaty benefits, and opening business bank accounts.
- Who qualifies? Non-resident entrepreneurs, foreign investors, and others earning US-sourced income who don’t qualify for an SSN.
- How to apply? Fill out IRS Form W-7, provide proof of identity and foreign status (e.g., passport), and submit your application either by mail, through a Certified Acceptance Agent (CAA), or in person at an IRS center.
Processing times range from 7 to 11 weeks, so plan ahead to avoid delays. Once issued, your ITIN will help you meet tax obligations and establish your business presence in the US.
Read on to learn about eligibility, the application process, and common mistakes to avoid.
Eligibility Requirements for ITIN Applications
The IRS has specific criteria for applying for an ITIN (Individual Taxpayer Identification Number), and not everyone qualifies. Knowing these requirements ahead of time can save you from unnecessary delays and complications, especially when setting up your business.
Who Can Apply for an ITIN?
To qualify for an ITIN, you must have a valid federal tax purpose and be ineligible for a Social Security Number (SSN). Essentially, you should only apply if you have an immediate tax-related need that requires compliance with IRS regulations.
Most ITIN applicants are non-US citizens or non-resident aliens. This includes individuals such as:
- Foreign entrepreneurs starting businesses in the US.
- International investors earning US-sourced income.
- People claiming tax treaty benefits between their home country and the United States.
Additionally, spouses and dependents of ITIN holders may qualify if they are listed on a US tax return, even if they don’t earn income from US sources. This is particularly relevant for entrepreneurs filing joint returns or claiming dependents as part of their tax filings. With these basics in mind, let’s explore the tax purposes that justify applying for an ITIN.
Valid Tax Purposes for Non-US Entrepreneurs
The IRS recognizes several tax-related reasons for obtaining an ITIN, many of which are especially relevant for international entrepreneurs:
- Filing a US tax return: This is one of the most common reasons. For instance, you may need to report income from US sources such as business profits, rental properties, or investment earnings.
- Claiming tax treaty benefits: Many countries have tax treaties with the US that can reduce or eliminate withholding taxes on certain types of income. To claim these benefits, you’ll need an ITIN to properly identify yourself on the required forms.
- Third-party withholding requirements: If you’re receiving payments from US companies that withhold taxes – such as royalties, dividends, or other business-related payments – an ITIN is necessary for accurate reporting and potential tax refund claims.
- Opening a US bank account: While banking itself isn’t considered a tax purpose, the business activities that generate taxable income often require an ITIN, making it essential for entrepreneurs looking to establish a financial presence in the US.
- State tax compliance: Some states require tax filings even if no federal return is needed. In such cases, an ITIN may be necessary to meet state tax obligations.
What to Prepare Before Applying
Once you’ve confirmed your eligibility, it’s time to gather the necessary documents. Keep in mind that ITIN processing typically takes about seven weeks, or up to 9–11 weeks during peak seasons, so plan accordingly.
Here’s what you’ll need:
- Proof of identity and foreign status: The IRS requires either original documents or government-certified copies from the issuing agency. Photocopies or notarized copies are not accepted.
- Tax return or supporting documents: You must demonstrate your valid tax purpose by including the relevant tax forms or documentation with your ITIN application.
- Plan around your business timeline: If you need an ITIN to open a business bank account or complete other setup tasks, factor in the processing time to avoid delays in launching your operations.
How to Complete Form W-7
Form W-7 is the official IRS application for obtaining an ITIN. Filling it out accurately is essential to avoid delays or rejections. The form is divided into several sections, and all information must match your supporting documents to ensure smooth processing.
For Lines 2 and 3, leave Line 2 blank (this is for the ITIN you’re applying for) and complete Line 3 only if you’ve had a Social Security Number (SSN) in the past.
On Line 4, enter your date of birth in the MM/DD/YYYY format, and on Line 5, provide your country of birth. Line 6a asks for your foreign tax identification number (if your country issues one), which helps the IRS confirm your identity.
When you get to Line 6h, select the reason for your application. For example, choose option (a), "Nonresident alien required to file a U.S. tax return", if you’re filing due to U.S. business income. If you’re applying to reduce withholding taxes under a tax treaty, select option (c), "Nonresident alien claiming tax treaty benefits."
Lines 7 and 8 cover additional personal details, including your gender and mailing address. Your mailing address doesn’t have to be in the U.S., but double-check its accuracy since the IRS will send your ITIN notice there.
Required Supporting Documents
Once you’ve completed Form W-7, gather the necessary documents to support your application. These documents are used to verify both your identity and your foreign status. A valid passport is the only document that satisfies both requirements on its own. If you don’t have a passport, you’ll need to submit at least two documents – one to confirm your identity and another to establish your foreign status. At least one of these should include your photograph (exceptions apply for dependents under 14 years old or, if they’re students, under 18).
All documents must be current (not expired) when you submit your application. The IRS accepts only original documents or certified copies issued by the relevant agency; notarized copies are not accepted unless you’re a dependent or spouse of U.S. military personnel applying from overseas or through APO/FPO addresses.
If any of your documents are in a foreign language, include a certified English translation along with a signed statement from the translator confirming their qualifications and the accuracy of the translation.
For faster return of your original documents, consider applying through a Certifying Acceptance Agent or visiting an IRS Taxpayer Assistance Center. These options can speed up the authentication process, often allowing you to get your documents back immediately.
Mistakes to Avoid
Avoid these common errors to prevent delays in your ITIN application:
- Name mismatches: Ensure the name on Form W-7 matches exactly with the name on your supporting documents. For instance, if your passport says "María José González" but the form reads "Maria Jose Gonzalez", the discrepancy could cause delays.
- Incomplete forms: Double-check that all required fields are filled out. Missing signatures, dates, or other details can lead to rejection.
- Unclear documents: Make sure your supporting documents are clear, complete, and legible. If you’re submitting copies, confirm that all text is readable.
- Submitting Form W-7 alone: Always include your tax return or other documentation showing a valid tax purpose. Submitting the form by itself will result in rejection.
- Incorrect reason on Line 6h: Choose the reason that accurately reflects your situation. Selecting the wrong option can lead to delays or require you to resubmit your application.
How to Submit Your ITIN Application
Once you’ve completed your Form W-7 and gathered the necessary documents, the next step is to decide how to submit your application. You have three options, each with its pros and cons. Your choice will depend on your location, how quickly you need your ITIN, and how comfortable you are with mailing sensitive documents.
Mailing to the IRS
You can send your application directly to the IRS processing center in Austin, Texas. Your package should include Form W-7, supporting documents, and your tax return (if applicable). Here’s the address:
Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 73301-4942
Keep in mind, you’ll need to mail original documents or certified copies issued by the relevant agency. The IRS does not accept notarized copies for mailed applications, meaning you’ll have to send your actual passport or other identification documents through the mail.
Processing typically takes 7–11 weeks, but delays are common during tax season. The IRS will return your original documents separately, usually within 60 days after processing your application. To minimize the risk of losing your documents, consider using certified mail with a return receipt, which costs about $8. This method is cost-effective but comes with the risk of mailing sensitive documents.
Using a Certified Acceptance Agent (CAA)
Certified Acceptance Agents (CAAs) offer a safer alternative that avoids mailing your original documents. These IRS-authorized individuals or organizations verify your identity and documents in person, then submit your application electronically or by mail.
CAAs can authenticate your documents on the spot and return them immediately. Many also provide services like application assistance and document review, which can simplify the process. Processing times are generally faster – 4–6 weeks compared to the standard 7–11 weeks.
However, CAAs charge for their services, with fees ranging from $50 to $200, depending on the location and level of support. While CAAs are convenient, they’re not available everywhere. You’ll often find them at accounting firms, tax preparation offices, or immigration service providers in larger cities.
In-Person Submission at IRS Centers
If you prefer face-to-face verification, you can visit an IRS Taxpayer Assistance Center (TAC). These centers allow you to submit your ITIN application in person, ensuring the safety of your original documents.
You’ll need to schedule an appointment in advance by visiting the IRS website or calling 844-545-5640. Walk-ins are not accepted for ITIN applications. During your appointment, an IRS employee will review your documents, make certified copies, and submit your application directly into the system.
Like the CAA option, you’ll keep your original documents throughout the process. Processing times are typically 4–6 weeks. However, TACs are only available in select metropolitan areas, and appointment slots can fill up quickly, especially during busy periods. If you live in a rural area, the nearest center might be several hours away.
Comparing Your Options
Here’s a quick breakdown of the key differences between the three submission methods:
| Submission Method | Processing Time | Document Risk | Cost | Availability |
|---|---|---|---|---|
| Mail to IRS | 7–11 weeks | High (originals mailed) | Free (plus postage) | Universal |
| Certified Acceptance Agent | 4–6 weeks | Low (verified in person) | $50–$200 | Limited by location |
| IRS Taxpayer Assistance Center | 4–6 weeks | Low (verified in person) | Free | Major cities only |
For most non-US entrepreneurs, using a CAA strikes the best balance between security, speed, and convenience. While it may cost more, the peace of mind and quicker processing times are often worth it. If cost is a concern and you’re okay with the risks of mailing original documents, sending your application directly to the IRS is still a solid option.
No matter which method you choose, always keep copies of everything you submit. These copies can be a lifesaver if you need to follow up on your application or resolve any issues during processing.
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What to Do After Getting Your ITIN
Now that you have your ITIN, it’s time to put it to use for your U.S. tax and banking needs. The IRS will send you an official notice confirming your ITIN, and knowing how to manage it properly is essential for staying compliant and making the most of your business opportunities in the U.S.
Understanding Your ITIN Notice and Keeping It Secure
Once your ITIN is issued, the IRS will send you a CP 575 Notice, which serves as your official ITIN assignment letter. This document confirms your ITIN, the date it was assigned, and instructions on how to use it. Think of it as your proof of issuance.
Your ITIN will follow the format 9XX-XX-XXXX. Keep this notice in a safe place and make backup copies. Many people scan it and store it securely in cloud storage for easy access, especially when traveling. You’ll need this number for filing taxes, opening bank accounts, and handling other financial or business transactions.
It’s important to note that while your ITIN is essential for tax reporting, it cannot be used for employment authorization or to claim Social Security benefits. If you run into issues with banks or financial institutions unfamiliar with ITINs, especially smaller ones, be prepared to explain that ITINs are legitimate tax identification numbers issued by the IRS for individuals who don’t qualify for Social Security Numbers.
ITIN Renewal Requirements
ITINs don’t last forever, so keeping track of their validity is crucial. If you don’t use your ITIN on a federal tax return for three consecutive years, the IRS will automatically mark it as expired. For example, if you don’t file a tax return by December 31 of the third year, your ITIN will no longer be active.
The IRS typically sends expiration notices during the summer before the ITIN expires, giving you time to renew. To renew, you’ll need to submit Form W-7 again, along with the necessary supporting documents. The renewal process usually takes 7–11 weeks, so it’s smart to plan ahead.
If your ITIN expires and you need to file a tax return, you can renew it at the same time you file. However, the IRS will process your return only after the renewal is complete, which could delay any refunds you’re expecting. To avoid this, many non-U.S. entrepreneurs file annual tax returns, even if their U.S. income is minimal or zero, to keep their ITIN active.
Using ITIN with an EIN
For many non-U.S. entrepreneurs, having both an ITIN and an Employer Identification Number (EIN) is essential for running a business in the U.S. These numbers serve different purposes but work together to simplify your tax and financial operations.
- Your ITIN identifies you personally for tax purposes.
- Your EIN identifies your business entity for tax and banking purposes.
When forming an LLC or corporation, you’ll use your ITIN as the “responsible party” on Form SS-4 to obtain an EIN. The responsible party is usually the business owner or someone with control over the company’s finances.
For single-member LLCs, the IRS generally treats the entity as a “disregarded entity,” meaning you’ll use your ITIN for tax reporting. However, an EIN is still necessary for opening business bank accounts and other financial activities, as many banks require it.
If you choose S-Corporation tax status for your LLC or corporation, you’ll need both numbers. Your business will file Form 1120S using the EIN, while the K-1 form issued to you will be reported on your personal tax return using your ITIN.
Keep both numbers accessible in your records. You’ll use your EIN for business-related tasks like banking, vendor applications, and tax filings, while your ITIN is needed for personal tax returns and other financial applications. This setup is especially helpful for non-U.S. entrepreneurs looking to build credibility with U.S. banks, suppliers, and clients.
While your ITIN requires periodic renewal, your EIN remains valid as long as your business exists. If you close your business and start a new one, you’ll typically need to apply for a new EIN rather than reusing the old one.
Solving Common Problems for Non-US Entrepreneurs
Securing an ITIN (Individual Taxpayer Identification Number) can be tricky, especially when it comes to strict document certification rules and handling potential rejection notices. Here’s how to navigate these common challenges.
Document Certification Issues
One major roadblock is ensuring your identification documents are properly certified. For ITIN applications, the IRS requires certified copies, which are exact replicas of the original documents, verified and stamped by the issuing agency. Keep in mind, notarized copies are not accepted – except in specific cases like dependents and spouses of U.S. military personnel applying from overseas or through APO/FPO addresses.
To get certified copies, reach out to the agency that issued your documents, such as your country’s passport office. Confirm their process, fees, and how long it will take. Also, double-check that the documents will still be valid on the date you submit your ITIN application.
If you’re overseas, U.S. embassies and consulates often provide certification services for foreign passports. Contact the Consular Section’s American Citizens Services ahead of time to confirm their hours and schedule an appointment. Bringing your original document for verification can help speed things up.
For a smoother process, consider working with an IRS Certifying Acceptance Agent (CAA). CAAs are authorized to verify identification documents for primary and secondary applicants, which means you won’t need to send your original documents or certified copies directly to the IRS. However, for dependents, CAAs can only authenticate passports and civil birth certificates – other documents must still be sent as originals or certified copies to the IRS.
If certification delays your application, be ready to address any issues if you receive a rejection notice.
Handling Rejection Notices
If your application gets rejected, the IRS will send you a CP567 notice explaining why. The most common reasons for rejection include ineligibility for an ITIN, invalid or incomplete documents, or failure to respond to IRS requests for additional information. Often, the issue boils down to improperly certified or expired documents.
When you receive a CP567 notice, read it carefully to understand the problem. If the rejection is due to document issues, the IRS will return your original documents within 60 days along with the notice. Before reapplying, make sure you’re eligible for an ITIN and confirm that you don’t qualify for an SSN. While you can resubmit your application as many times as needed, remember that each attempt resets the processing timeline.
If you submitted a tax return with your ITIN application, the IRS will still process the return. However, any credits or refunds tied to the individual requiring the ITIN will be held until the ITIN is issued. To avoid tax filing delays, it’s a good idea to apply for your ITIN well before the tax deadline.
Tackling these common problems early can help keep your ITIN application on track, making the process of setting up your U.S. business smoother.
Conclusion
Applying for an ITIN requires careful attention to detail, especially when completing Form W-7 and gathering the necessary certified, up-to-date documents. Mistakes in the process can lead to rejections and delays, so double-check that all certifications meet IRS standards and ensure your information is consistent across all forms. Taking these steps can help streamline the application process.
Decide on the submission method that works best for your situation. You can mail your application directly to the IRS, work with a Certified Acceptance Agent (CAA) to authenticate your documents, or visit an IRS center in person for assistance.
Your ITIN plays a key role in managing U.S. business operations. Once issued, store it securely, stay informed about renewal requirements, and coordinate its use with your business’s EIN for tax filings. Applying early and planning ahead can save you from unnecessary complications when tax deadlines approach.
Starting your ITIN application process on the right foot helps you stay compliant with U.S. tax regulations and keeps your business running smoothly.
FAQs
Why should I use a Certified Acceptance Agent (CAA) for my ITIN application?
Using a Certified Acceptance Agent (CAA) simplifies the ITIN application process, making it quicker and more straightforward. With a CAA, you can ensure your paperwork is accurate and complete, significantly lowering the chances of delays or rejections from the IRS.
One of the biggest perks? You don’t have to send your original identity documents to the IRS. CAAs verify your documents themselves, saving you the hassle and providing extra convenience. They also offer expert advice, helping to resolve any application issues that might come up. This service is particularly helpful for non-U.S. entrepreneurs who need to navigate the often-complicated tax system.
What steps should I take to ensure my ITIN application documents are certified correctly and not rejected?
To make sure your ITIN application is processed smoothly and avoids rejection, you need to submit either original documents or certified copies provided directly by the issuing agency. Certified copies must come with an official stamp or seal from the agency or be verified by an IRS-certified Acceptance Agent.
If you’re submitting a passport, it’s a good idea to work with a Certified Acceptance Agent (CAA) to handle the certification process. Steer clear of sending photocopies or scanned printouts, as these won’t be accepted. Take the time to carefully review all documents to ensure they are accurate, current, and meet the IRS certification standards before submitting them.
What should I do if my ITIN application is rejected due to issues with my documents?
If your ITIN application is turned down due to document issues, the first step is to carefully go through the rejection notice (like CP567) to pinpoint why it was denied. Common reasons include incomplete forms, outdated or uncertified documents, or missing details.
To resolve the issue, double-check that all required documents are current, fully completed, and, if needed, properly certified or notarized. Once everything is corrected, resubmit Form W-7 along with the updated documents. You can do this by mail or through an IRS-authorized acceptance agent. Make sure to directly address the problem mentioned in the rejection notice to prevent further delays in getting your application processed.
