The Internal Revenue Service announced in 2014 that effective immediately, “Individual Taxpayer Identification Numbers (ITINs) will expire if not used on a federal income tax return for five consecutive years.”
This announcement generated some confusion. People wondered if it means that an individual's Social Security Number (SSN) or a business's Employer Identification Number (EIN) will expire if it is never used. To answer that question, we have to know what an ITIN is and how it differs from an SSN or an EIN.
We've also built a handy reference sheet outlining who needs what number. Download our free guide to The Difference Between SSN, ITIN, & EIN Explained.
An SSN is a Social Security Number. SSNs are nine digits (xxx-xx-xxxx) and belong to US citizens and authorized residents.
Individuals who are employed and receive wages must have an SSN or apply for one. Every employer who sets up payroll and pays an individual wages must request the employee's SSN and report the employee's wages using that number. Parents must also obtain an SSN for any child that the parent(s) claim on an income tax return.
SSNs are issued by the Social Security Administration (SSA), and anyone who is eligible to have an SSN may apply for one by completing an application known as the Form SS-5. Any taxpayer with an SSN must use the SSN as an identifying number on their tax returns.
An EIN is an Employer Identification Number. EINs are also nine digits, but formatted differently (xx-xxxxxxx).
Every business that pays employees or is required to file any business tax returns is required to obtain an EIN.
EINs can be obtained from the Internal Revenue Service by following the instructions in IRS Publication 1635, Understanding Your EIN.
An ITIN is a tax processing number that is issued by the IRS for individuals who are not eligible for an SSN, such as a foreign national or nonresident alien, but are required to file certain federal tax or information returns.
Like an SSN, an ITIN number is nine digits in the format xxx-xx-xxx. But the first digit will always be a 9, and the second section of the number will be in the range of 70-88 (e.g., 9xx-88-xxxx). As of 2012, the IRS had issued 21 million ITINs to taxpayers and their dependents.
To obtain an ITIN, an alien with foreign status should complete Form W-7, Application for IRS Individual Taxpayer Identification Number. No one should have both an ITIN and an SSN. For example, if an SSN application is pending, an ITIN will not be issued even if the individual completes and submits a Form W-7.
How Do I Apply for an ITIN Number?
Mail your W-7, tax return, proof of identity, and foreign status documents to the IRS Austin Service Center.
Apply for an ITIN in-person using the services of an IRS-authorized Certifying Acceptance Agent. This will prevent you from having to mail your proof of identity and foreign status documents.
Make an appointment at a designated IRS Taxpayer Assistance Center. This will also prevent you from having to mail your proof of identity and foreign status document.
After processing, the IRS will issue your ITIN through the mail.
To get the full application instructions, visit the IRS’s webpage on how to apply for an ITIN.
According to the IRS, usually within 7 weeks after qualifying for an ITIN and your application is complete, you should receive a letter from the IRS assigning your tax identification number.
If you’re unsure about the status of your ITIN, you may call the IRS toll free line at 1-800-829-1040. Visit the IRS’s ITIN Expiration FAQs page for more details.
As for ITIN renewals, if you receive the CP-48 Notice after you have submitted your Form W-7 to renew your ITIN, you may disregard the notice. No additional action is required. You should not renew an ITIN if the ITIN holder now has or is qualified to get a social security number (SSN).
The IRS will send the applicant a notice CP565 , Confirmation of your Individual Taxpayer Identification Number, when an ITIN is renewed.
For startups and new business owners tackling the tax-related due diligence that comes with starting to pay employees, it’s worth having the right business experts and support on your siide. Check out how Justworks can support your employer-related tax and labor law needs.
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