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:
- Lower withholding taxes on U.S. income earned
- Claiming foreign tax credits on your Canadian tax return for U.S. taxes paid
- Reducing the chance of double taxation
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.
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.