ITINs: A Chance to Participate in the U.S. Tax System

ITINs: A Chance to Participate in the U.S. Tax System

The influx of foreign nationals, non-resident foreign nationals, and immigrants into the United States each year is a demographic phenomenon that has been at the centerpiece of our political and economic discourse for an overwhelmingly large part of our history as a nation. There are a myriad of reasons foreign individuals come to the United States, but for most, the appeal is undeniably the economic and political opportunities available.

As a whole, we have welcomed foreign workers and students alike with open arms. The IRS in particular has created what is called an Individual Tax Identification Number (ITIN) to help foreign nationals – even undocumented immigrants – pay their taxes, or receive refunds for overpayment of federal income tax each year.

ITINs are nine digit numbers assigned to individuals who are ineligible to apply for a Social Security number, which requires citizenship and lawful status in the United States. Even though ITINs do not offer the same legal residency status as Social Security Numbers, they do still offer ample benefits and opportunities for those that would otherwise be unable to obtain a Social Security Number.

Here are the benefits of obtaining an ITIN:

  1. Open interest-bearing bank accounts
  2. Secure a driver’s license
  3. Provide proof of residency
  4. Pay into the U.S. tax system.

Although ITIN holders are not eligible to receive the same benefits as their Social Security holding counterparts, they would become eligible to collect Social Security benefits in the future if they were to receive a Social Security Number (the earnings reported under their unique ITIN may be counted toward their Social Security benefits once their SSN is obtained).

Filing for an ITIN is a pretty simple process. Applicants must fill out a form W-7 application and attach it to a completed U.S. tax return along with documents verifying “foreign status”. Processing times take anywhere between 8-10 weeks, and if the application is approved, the unique nine digit ITIN will be mailed to the applicant.

It is important to note that the ITIN is designed to collect tax payments, and is not, under any circumstances, used as a mechanism for the government to enforce immigration control. The IRS will NEVER share the private information of its taxpayers with other federal agencies.

Still have questions regarding ITIN numbers or the application process? Give Paragon Accountants a call today, and we will be there to help every step of the way!