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

Allan Madan, CA
 Jan 13, 2017
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Are you curious about applying for an Individual Taxpayer Identification Number? Keep reading to find out what an ITIN (Individual Taxpayer Identification Number) is and how you can apply for one. Please note, 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 applying 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. These include:

In addition to these benefits, the IRS stipulates that the ITIN is required to file your U.S. 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 a U.S. Tax Return Checklist and email it back to us at amadan@madanca.com.

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 39

  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.

  8. Hello. I have obtained a TN Visa and employment in the US. I am maintaining my residence in Canada. I need some consultation. I have made application for a SS# but after discovering info here on your website I suspect my new employer may have been wrong to direct me to get an SS# and instead I should obtain a TIN# from the US as a Canadian.

  9. Good Morning Allan,
    Great information here – thank you. I do work for a company in Toronto whereas all my invoices are sent to the USA for process and are paid in Canadian funds via cheque (mailed to us). I am currently filling out an application for Electronic Fund Transfer (EFT) with this company regarding payment direct to our bank here in Canada. The application shows a spot where to add an ITIN. Is this something I need when all the invoiced work is done here in Canada (none in USA)?

    Thank you Kindly — Bob

  10. Hello I am wondering if it is the fw7 I require to fill out, my husband currently is on a TN visa working in the states and he was told I need a temp SSN for tax purposes.
    Thank you

  11. Hello,
    I recently visted Vegas and won some money on the slots. They witheld 30% of funds. Besides the W7 and the 1042-S, is there anything else I will require?

  12. Hi Allan

    I am a Canadian and trade stocks/options on RBC. However, I want to trade in US on-line trading accounts for advanced option strategies. The application forms who require a government issued ID. I have no US income other than those generated by stocks & dividends which are withheld at the moment a trade is activated . I have never submitted a US tax form.

    What to do and can you help?

    Thank you

    Fulvio

  13. Hi Allan,

    Amazing informations on your site! I have a question related to ITIN, w7 form and dividends. I am a canadian and I bought recently some US listed ETFs holding US corporations. I will hopefully receive dividends from a US source this or next year.

    I some of those ETFs in my and RRSP, in my TFSA, and I was planning to buy some more shares using my cash account from TD. I was wondering if I could benefit having an ITIN for any of those three accounts? From what I understood, the US dividends in my RRSP won’t be taxed by the IRS, the ones in my TFSA will be taxes and lost and the I might need that ITIN to receive a return for the ones in my cash account, since they will be taxed too? Finally, I was wondering if I will be alerted in any way when/if I am taxed by the IRS on those dividends (by our gov, by my accountant, on my online broker monthly receipt), unless I do the math myself and realized I have been taxed!… Thank you so much!

    Kind regards,

    Dolce

    1. Hi Dolce, it appears that you are a resident of Canada and a non-resident of the US. In this case, the IRS cannot tax the funds held in your RRSP or TFSA. However, withholding taxes will apply on dividend payments on US stock held by your TFSA, RRSP or non-registered accounts. The tax cannot exceed 15% pursuant to the Canada-US tax treaty. There should not be any tax on capital gains according to the treaty.

      You should complete form W8-BEN and provide to your bank / financial institution to take advantage of treaty benefits as described above.

  14. Hi, I’m currently a Canadian resident and earning some money from online resale business that sells to the USA customers. I’m trying to obtain the ITIN as a Canadian. If i fill the form W-7, would you guys be able to provide service to apply for the ITIN? A friend and I are both interested in paying for the service.

    1. Hi, the only way an ITIN can be obtained is by attaching form W7 (ITIN application) with your first US tax filing (1040-NR) and submitting both to the IRS. The ITIN application cannot be processed separately.

  15. Hi there,
    I have a question. I have a canadian company pased in Montreal. I want to sell in US market for like 2 weeks or 1 month. To be able to sell in this market ad collect tax in NY, the organizer asked me for a Tax Identification Number.

    Does anyone have a solution?

    Thanks a lot

  16. Hi Allan,
    I am Canadian and bought in Florida. I am thinking of selling my current Florida property and buying a more expensive Florida property. The sale price of my existing property will be USD$200,000 and my original cost was USD$130,000 with USD gain approx $70,000 . The new property I will purchase is USD$300,000. My 2 questions: 1. Because I’m immediately purchasing another USA home with the proceeds of my first USA home, can I get any tax relief? 2 We also spent $10,000 in repairs. Are repairs and closing costs deductible?

    Thank you.

    1. H Lindy, in the US, you can defer capital gains tax on the sale of a US property by purchasing another property within a specified time period. This is called a 1031 exchange. However, as a Canadian, you are taxed on your worldwide income, and in Canada a 1031 exchange is not available. As a result, you will pay capital gains taxes in Canada on the sale of your US property even if you enter into a 1031 exchange in the US. Therefore, I do not recommend that Canadians complete 1031 exchanges.

      Repairs and closing costs are tax deductible.

  17. Generally speaking, the IRS will only approve an ITIN application (W7) if it’s attached to a US return (e.g. 1040-NR)… How can I file for taxes when i cant make money in the states as a Canadian without a tax number? If I dont have a tax number, I cant make money in the states. if I cant make money in the states, I cant file taxes….seems like a vicious circle to me. Plz advise

    1. Hi Michael, it is a vicious cycle. Agreed. There are certain exceptions where an ITIN can be issued without a US tax return. These are listed on the instructions to form W7.

  18. Hello Sir,
    I work for a company with HQ in the US and part of my compensation package is stock of said company. Can I/Should I/am I illegible to apply for an ITIN? An ITIN would make it easier to apply for credit in the US (e.g. a credit card with my U.S. bank).

    I’d be happy to contract your services for such application.

    1. Hi Eddie, it depends on whether you will receive a W2 slip or other US slip from the US company reporting the stock option benefit that is taxable to you. If you do, then you should apply for a US ITIN.

      Note: An ITIN will not help you build your US credit.

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