U.S. Tax I.D. Numbers for Canadians

Allan Madan, CA
 Jan 13, 2017
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I will explain what an ITIN is and how you can apply for one. This number is not a replacement for the Social Security Number (SSN)

What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a number that is assigned to non-resident aliens of the U.S. who earn income in the U.S. This number is not a replacement for the Social Security Number (SSN) and does not grant any residency status in the U.S. (unlike a green card or work visa). There are new requirements for Canadians obtaining a U.S. tax I.D. number.

Previously, the IRS would issue an ITIN applicant an ITIN card. However, due to the confusion and similarity to an SSN card, the IRS has amended this policy and now only issues a confirmation letter to Canadians applying for a tax I.D. number in the U.S.

If you are eligible for an SSN, you must first apply for one. Persons eligible to receive a Social Security Number are not eligible to receive an ITIN. If the Social Security Administration denies the applicant’s request for an SSN they will issue a letter of denial. That letter must be attached to the Form W-7 (application for an ITIN) when it is submitted to the IRS.

Can apply for a U.S. Tax ID Number help with taxes?
As a Canadian earning income in the U.S., the tax I.D. number provides several key benefits. This include:

In addition to these benefits, the IRS stipulates that the ITIN is required to file your US Non-Resident Tax Return (1040-NR), process a tax refund, and withhold taxes on certain types of income in the U.S.

How can Canadians get a tax identification number (ITIN)?
In order to properly apply for your ITIN, you must prepare Form W-7 and present proof of residence in Canada.

The IRS streamlined the number of documents it accepts as proof of identity and foreign status to obtain an ITIN. There are 13 acceptable documents.

  • Each document must be current and contain an expiration date. The IRS will accept documents issued within 12 months of the application if no expiration date is normally available.
  • Documents must also show your name and photograph, and support your claim of foreign status. The most commonly used document by Canadians applying for ITIN is a Canadian Passport.
  • Notarized copies from a lawyer are not acceptable. The IRS will only accept copies that are certified by the issuing agency.

If you do not provide these documents, your ITIN Application will be denied.
As a cross-border tax specialist operating in the Mississauga, we can help you with:

  • Getting a tax identification number
  • Co-ordinate your ITIN application to minimize delays
  • Identifying withholding tax requirements in the U.S. and opportunities to minimize these taxes.

Please note that Form W-7 for your tax ID number is usually only accepted when it is submitted with your Non-Resident U.S. tax return. However, there are certain exceptions to this rule that can help expedite the application process.

Also, If you are planning to file your U.S Taxes with Madan CA, please do not hesitate to contact us for a quick consultation or you can Fill out US Tax Return Checklist and Email is back to us.

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

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Comments 16

  1. How long would it take for me to obtain a ITIN and what do I require as a Canadian? What is the cost for processing and do you complete these applications. This matter is time sensitive. Your prompt response is appreciated.

    1. Hi Bonnie,

      The cost to obtain an ITIN is $150 plus taxes and disbursements. Generally speaking, the IRS will only approve an ITIN application (W7) if it’s attached to a US return (e.g. 1040-NR). Can you provide more details on your situation?

  2. Hi

    We are Canadians residents and have recently purchased a winter home in the US. We are trying to put a mortgage on the property and our US bank has told us we need a ITIN before they will release funds. Will the IRS give us a number in this event and is so what do I have to file?

    Thanks
    Mike Seifert

  3. To file income in the US, would an SSN number work? Used to be employed in the US a few years ago and have a SSN number, could that be used instead of getting an ITIN number. I presume the SSN never expires and can be used at any time for IRS to identify an individual for tax purposes?

  4. I receive distributions from a company I have shares with in the U.S. and my taxes are done by an accountant in the U.S. He has told me that my wife should get an ITIN number to increase my tax refund. If she applies for her ITIN number will my tax return work for her when we submit her W-7?

  5. Hi Allan,
    We bought a vacant lot in Florida and have now sold it (closing May 31, 2017) and we are subject to FIRPTA. We want to get back this withholding amount. We didn’t earn any income in the US and we actually sold the vacant lot for less than what we bought it for. Can you advise on the steps my wife and I would need to take. I know we both need ITINs and you mentioned in your video that the best way to get an ITIN is at the same time as filing your US Tax Return. But couldn’t we send in our W7’s with our Passports now and then file our US Tax Return for 2017 in early 2018? And if this is acceptable what address do we send the W7’s and Passports to in the US? Sorry for so many questions. Please advise

    1. Hi, Andrew. If you are selling a property and require an ITIN because of the withholding taxes to be deducted from the sales proceeds, then you can file form W7 (application for an ITIN) with the IRS BEFORE you file your US tax return. On Form W7, write “Exception 4” next to box “h” and attach forms 8288 and 8288-A along with the sales agreement.

  6. We are planning to sell our home in Florida which we bought in March 2014. You mentioned in an earlier post that the IRS will not approve the W7 application without an attached 1040NR. I’m anticipating a gain of around $40K US from the sale of our house but don’t want to pay the $25K withholding tax. How can we get an ITIN to reduce or avoid the withholding tax?

    1. Hi Tom, the tax can be reduced from 15% of the selling price to the estimated taxes owing on the gain and recapture of depreciation (if any) by filing form 8288-B with the IRS. A copy of this form must also be provided to the title company. In addition, form W7 (application for an ITIN) can be filed with the IRS without a US Tax Return, because one of the exceptions is met – i.e. form 8288-B is requires an ITIN be available.

  7. Hi,

    I have a foreign passport, Canadian PR card and Ontario photo ID(no drivers license yet). Are these documents sufficient to apply for an ITIN? Thank you.

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