Who qualifies for an ITIN number?
On a daily basis Just Breve receives queries for people wanting to apply for an ITIN (Individual taxpayer Identification Number) for a multitude of reasons.
A lot of queries are those from people who are not qualified for an ITIN, i.e. not eligible for one.
Who is eligible for an ITIN?
Well, ITINs are primarily issued for filing a US tax return. That being a Form 1040 or a Form 1040NR.
A 1040 is filed by a US person (resident, citizen or green card holder). These filers would have an SSN issued to them but their non resident spouse or non resident dependent(s) may not have an SSN but may be eligible for an ITIN instead.
A 1040NR is filed by a non resident of the US who has reportable US income or is filing to reclaim an over payment of US taxes paid. These filers would apply for an ITIN as they more than likely are not eligible for an ITIN.
The tax return cannot be filed (and no refund issued) unless a valid US tax number is listed.
So if you are not filing a US tax return, can you get an ITIN? The answer is yes, but in limited circumstances (i.e. exceptions to filing a US tax return). This is where the eligibility for an ITIN comes becomes more complicated as relevant "proof" i.e. paperwork, must be submitted with the Form W-7 (ITIN submission/application).
What are the exceptions to filing a US tax return when applying for an ITIN?
ITINs are issued in limited circumstances for those not filing a US tax return.
- Third-Party Withholding on Passive Income:
Individuals who are partners of a U.S. or foreign partnership that invests in the United States and that owns assets that generate income subject to IRS information-reporting and federal tax withholding requirements
Individuals who have opened an interest-bearing bank deposit account that generates income that’s effectively connected with their U.S. trade or business and is subject to IRS information reporting and/or federal tax withholding
Individuals who are “resident aliens” for tax purposes and have opened an interest-bearing bank deposit account that generates income subject to IRS information reporting and/or federal tax withholding
Individuals who are receiving distributions during the current tax year of income such as pensions, annuities, rental income, royalties, dividends, etc., and are required to provide an ITIN to the withholding agent for the purposes of tax withholding and/or reporting requirements.
- Wages, Salary, Compensation, and Honoraria Payments:
Are either exempt or subject to a reduced rate of withholding of tax on their wages, salary, compensation, and honoraria payments; and
Will be submitting Form 8233 to the payer of the income
- Scholarships, Fellowships, and Grants - claiming the benefit of a tax treaty:
Are either exempt from or subject to a reduced rate of tax on their income from scholarships, fellowships, or grants (that is, foreign students, scholars, professors, researchers, foreign visitors, or any other individual), and
Will be submitting Form W-8BEN to the withholding agent.
- Scholarships, Fellowships, and Grants - not claiming a tax treaty:
Individuals (that is, foreign students, scholars, professors, researchers, or any other individuals) receiving noncompensatory income from scholarships, fellowships, or grants that’s subject to IRS information-reporting and/or withholding requirements during the current year.
- Gambling Income:
Nonresident aliens visiting the United States who:
Have gambling winnings, and
Are claiming the benefits of a tax treaty for an exempt or reduced rate of federal tax withholding on that income, and
Will be utilizing the services of a gaming official as an IRS ITIN Acceptance Agent.
OR if you don’t secure the services of a gaming official, you may still file Form 1040-NR at the end of the tax year
- Third-Party Reporting of Mortgage Interest:
Individuals with a home mortgage loan on real property located in the United States.
- Third-Party Withholding— Disposition by a Foreign Person of U.S. Real Property Interest:
An individual who is a party to the disposition of U.S. real property interest by a foreign person (buyer or other transferee such as a withholding agent) or notice of non-recognition1 under Regulations section 1.1445-2(d)(2) from the transferor.
The above are the only exceptions to filing a US tax return.
What types of non qualifying examples can you give?
Just Breve receives a lot of people who do not meet the exception. Examples of reasons you will not be eligible for an ITIN include:
opening a US bank account
opening a US brokerage or share account
filling in a W-8BEN with a UK broker for US shares held
completing From 1099-OID
claiming tax treaty benefits (most do not require this, but others may still be eligible)
dependent of a US person filing a 1040 but did not live in the US
non resident spouse of a US person not filing a joint return
remotely working from outside the US (no US days)
just bought a US property but no rental income or US agent collecting the rent
thinking of selling a US property or land (and have no other income)
wanting an ITIN BEFORE any US entity has even been created yet
needing an ITIN for an EIN application (Form SS-4 application)
obtaining an ITIN BEFORE filing a US tax return (and no other exceptions met)
and many others.
We also get people getting in touch "just because" I want one. No, unfortunately, you cannot just have an ITIN, they are issued in limited circumstances for fixed tax filing and tax reporting reasons.
Contact Just Breve for more information:
Just Breve - is a US tax accounting firm, assisting non US persons with their US tax filing requirements. This includes applying for a new ITIN or renewing an existing ITIN. We are a certifying acceptance agent (CAA) and have a contract with the IRS to help with Form W-7 ITIN applications.
T: 0208 1444632
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