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

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:

• 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 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.

How do I get a certified copy of my passport?

To obtain a certified copy of your passport, please complete the form “Request for certified true copy of Canadian travel document [PPTC 516]”.  Next, book an appointment with your local Canadian Passport Office and bring your passport with you.

With appointment:
You can book your appointment online

Or

Without an appointment (walk-in):
Go to a passport office or a Service Canada Centre with 10-day processing .
Check walk-in wait times before you go.

Fees:
Certified True copy of one page of a passport (1 to 3 copies) – CAD 45

Where do I mail the ITIN Application?

Mail Form W-7 along with your passport (or a certified copy of your passport) to:

Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342, U.S.A

For courier or private delivery service (e.g., FedEx, UPS, DHL), use the following address:

Internal Revenue Service
ITIN Operation
Mail Stop 6090-AUSC
3651 S. Interregional, Hwy
Austin, TX 78741-0000, U.S.A

How long does the IRS take to process my ITIN Application?

The IRS advises that you wait at least 10 weeks before expecting a change in your ITIN application status. In most cases, you will receive a response between six to eight weeks.

Can I digitally sign form W7, ITIN Application?

An original signature is required.  A digital signature is not acceptable.

What documents do I need to provide with my ITIN application?

You need to provide the following documents:

1. A certified copy of your passport
2. US tax return (1040 or 1040-NR)
3. Form W7

The IRS will not process an ITIN Application (form W7) without a US tax return in most cases.

Can I get an ITIN number to open a US bank account?

The IRS will reject form W7 if you are submitting it for the purpose of opening a US bank account.

I am selling my US property and require an ITIN.  What exception do I select on form W7?

Select the box “h. Others” under reasons, and will write down the Exception 4. “Dispositions by a foreign person of U.S. real property interest—third-party withholding”.

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.

ABOUT THE AUTHOR

ALLAN MADAN

CPA, CA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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