A Tax Identification Number, or TIN, is identified by the IRS as a number that is used for the administration of tax laws. A TIN is typically issued by the IRS or the SSA. There are several different types of TINs, such as social security numbers, employer identification numbers, individual taxpayer identification numbers and tax preparer identification numbers.
With the Individual Taxpayer Identification Number, or ITIN, nonresident and resident aliens, their spouses and other dependents who are unable to get a social security number, have a way to pay their taxes.
ITIN and Business Taxes
Since it is possible for non-resident foreign nationals to open businesses in the United States, many of them would use an ITIN to file their taxes. If you have opened a business in the US over the past few months, and you are a little confused about how the tax filing process works relative to ITINs and EINs, you may want to seek affordable tax prep assistance.
Renewing an ITIN
When it comes to the ITIN, it is best to renew early. Many people assume that because their ITIN is not expiring until the end of the year, they can wait until November or December to file a renewal application. It is best to start early – even if it is still the summer or fall.
If an ITIN has not been used for federal tax return purposes at least one time in three consecutive years, it will expire at the end of the year. If the ITIN contains middle digits 70, 71, 72 or 80, it will also expire. Those who are impacted by this change in the regulations, and are set to file taxes for 2018, should submit their renewal application soon.
The renewal process is similar to the first filing, with the Form W-7 a requirement. Individuals can mail the form to the IRS, work with Certified Acceptance Agents on their form, or make an appointment with a designated IRS Taxpayer Assistance Center.
The reason why it is so important to renew your ITIN early is because you do not want the number expiring when you are set to file your most recent tax documents. It does take a few weeks for the IRS to get your information together so they can approve your renewal. In addition, it can take anywhere from seven to ten weeks for the IRS to get the ITIN mailed to your address. Allow for plenty of time so that you are not pacing the floor waiting for the ITIN to arrive days before taxes are due. Renew the moment you notice your numbers are among those that are up for renewal.
When filling out forms for tax credits, there are always eligibility requirements. For instance, the child tax credit and American opportunity credit require a valid identification number that is issued by the return’s due date to quality for those credits. If your renewal comes after the due date, you would not be able to receive those credits. That is why it is vital to get the process started early.