Here’s everything you need to know about renewing an ITIN!
If you’re a foreign individual in the U.S., you’ve probably come across many procedures about tax, especially if you operate profitable businesses & side hustles. Since foreign people do not have social security numbers, an ITIN is issued to them. ITIN is an acronym for Individual Taxpayer Identification Number. The IRS assigns it. It is issued to those who pay taxes but don’t qualify for a Social Security Number. But, they also earn a sufficient amount of money, which fulfills the criteria of a taxpayer. Therefore, along with complying to the U.S. Federal Tax Laws, they help in swift returns and payments. In addition, They are also not associated with the Social Security Number. Those individuals who receive stipends, or scholarships from well-known universities are also eligible to apply for an ITIN. Registration to renew an ITIN number is important because, without social security or an ITIN, a tax return cannot be processed.
But First, The Difference Between TIN And ITIN
Firstly, the difference is that the Taxpayer Identification Number (TIN) is a term that consists of many further types. In contrast, ITIN is one specific type of TIN. Accordingly, it comprises different types of tax IDs. There are three important types; Social Security Number (SSN), Employer Identification Number (EIN), and Individual Taxpayer Identification Number (ITIN).
- SSN is used by individuals and relevant authorities to track income. Additionally, it also tracks the individual’s benefits in the Social Security program. Therefore, It is used for both tax and non-tax reasons.
- Then there is the EIN. It is a TIN issued to businesses and other entities for the objectives of tax reporting. It is also used to identify a business. For example, even if you’re only looking for real estate investors to capitalize on your property. As long as it’s a business, it counts. Therefore, this TIN is necessary for filing tax returns, hiring employees, and opening bank accounts and the like.
- On the other hand, ITIN is a type of TIN issued by the IRS. This usually includes Individuals requiring a U.S. taxpayer identification number but are also not eligible to obtain a social security number. This is the reason why it is used only for federal tax reporting. Similarly, they are not responsible for providing the holder with Social Security benefits. Or even the Earned Income Tax Credit. Nevertheless, it is a powerful tool for immigrant taxpayers!
When Should You Renew ITIN?
An ITIN number is subject to expiration. The IRS sends a notification and indicates that an ITIN needs to be renewed. It’s better not to wait for the notice. You should take the initiative of applying for renewal proactively. One thing to remember is that you should wait until your ITIN is scheduled to expire. Don’t worry, the IRS announces expiring ITINs every year; so it is easy to know when to apply for the renewal.
Who Should Renew an ITIN?
Firstly, those who have tax-filing requirements under US law but are not eligible for SSN (Social Security Number), use ITIN. Hence, those people whose Individual Taxpayer Identification Number has expired are the ones who should get it renewed. The IRS always issues a reminder about the expiration date. Therefore, the process of submitting a renewal application won’t prove to be too hard. Those who fail to renew by the end of the last year according to the expiration date will experience problems. These may include refund and processing delays of their monetary assets. People who know how to keep innovating their businesses will never fail to renew their ITIN on time. That’s because they’re aware of the problems a delay might cause. So, what are you waiting for? Get it done as soon as you can.
To help people renew their ITIN, the IRS issues 1.3 million letters as a reminder. Following are some details that will make it more clear,
- Renewable ITIN numbers with middle digits like 73, 74, 75,76, 77, 81, and 82 usually expire at the end of the year. Particularly, in December.
- Those who need to renew their ITIN can also renew their family’s ITIN as well. It is regardless of the fact whether their family members have an ITIN with middle digits as mentioned above or not.
- Family member categories usually refer to tax filers, spouses, or dependents on those who already have ITIN.
- Taxpayers whose ITIN expired at the end of last year might need to file a return in 2024. They must submit a renewal application.
- If the ITIN expired at the end of last year given the lack of use, then you should renew it. But, only if it has a filing requirement in 2024.
- For renewal, the taxpayers must complete a Form, otherwise known as the W-7, and submit the required documents along with it.
- You can also renew ITIN with a tax return. The taxpayers don’t need to separately attach a return because the tax return is usually attached to the Form W-7.
For ITIN renewal, there are a few requirements and certain procedures that you have to follow.
Fill in the Form for Renewal
The first step is to fill out the IRS form w-7 application form. It indicates the renewal of ITIN and then you submit it to the IRS. It is relatively easy to fill out the form. However, close attention is required because it may ask to provide additional information mandatory to be attached to the form. This additional information includes original identification documents or certified copies by the agency that issued them.
Submission of the Completed Form
When completed, the renewed ITIN form needs to be submitted to the IRS immediately. There are various ways to submit the form for renewal to the relevant department. The easiest ways are the following,
You can mail the form and additional documents to the IRS department according to the address mentioned in the form.
Another way is to get an authorized Center Acceptance Agent to get your form reached to the IRS.
Or you can even book an appointment at the IRS Taxpayer Assistance Center.
Additional Documents That You May Require for Renewal:
As said above, you need to attach additional documents, here is the list of those documents,
- Passport. It can be considered as a stand-alone document for the dependents mentioning the date of entry in the U.S.
Otherwise, an additional ID which can be from the following is required,
- National ID card
- U.S. driving license
- Birth certificate (for dependents under 18)
- Foreign driver’s license
- U.S. state ID card
- Foreign voter’s registration card
- U.S. military ID card
- Foreign military ID card
- Visa
- U.S. Citizenship and Immigration Services photo identification
- Medical records (only dependents under 6)
- School records (dependents under 14, or 18 if a student)
Online Filling is Not an Available Option:
One thing to remember regarding this form is that there is no option to renew ITIN online. Since electronic filing is not available, you have to get the prints, fill them out, and submit them to the IRS.
How Much Does It Cost To Register An ITIN Number
The good news is that getting an ITIN number is free! However, the cost to register an ITIN can also vary according to the client’s circumstantial situation. One thing is that the fee for an ITIN application is $0 only if you’re filing your tax return with the application. However, if you’re applying for an ITIN for other reasons, such as reporting income, you might be charged a fee. Hence, It is always a good idea to keep yourself updated according to the latest information on the IRS website. Likewise, you should also consult with a tax professional for the most current relevant information and professional guidance.
Update on the Renewal
Once submitted for the renewal, it can take up to seven weeks or eleven weeks. That is, till you get the notification or update about the status of your application. There is a document called CP565 which is sent by the IRS department. It indicates the confirmation of the renewal of an ITIN.
Conclusion
Although the process typically requires applicants to prove their identity and foreign status and might require effort, it is still necessary. It is important for your personal finances. So, don’t forget to renew the ITIN according to the current IRS guidelines for Form W-7 before submitting your application. This will only help ensure that you include all required documents and information. So, if your ITIN has expired, or is close to expiry, you should get it renewed soon!
