Individual Taxpayer Identification Number (ITIN)
Individual Taxpayer Identification Number
Important Reminders
What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security number (SSN) from the Social Security Administration (SSA).
What is an ITIN used for?
IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security numbers. They are issued regardless of immigration status, because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code. ITINs do not serve any purpose other than federal tax reporting.
An ITIN does not:
- Authorize work in the U.S.
- Provide eligibility for Social Security benefits
- Qualify a dependent for Earned Income Tax Credit Purposes
The ITIN is for federal tax purposes only. An ITIN doesn’t entitle you to social security benefits and doesn’t change your immigration status or your right to work in the United States.
Do I need an ITIN?
Does the following apply to you?
- You do not have an SSN and are not eligibleto obtain one, and
- You have a requirement to furnish a federal tax identification number or file a federal tax return, and
- You are in one of the following categories:
- Nonresident alien who is required to file a U.S. tax return
- S. resident alien who is (based on days present in the United States) filing a U.S. tax return
- Dependent or spouse of a U.S. citizen/resident alien
- Dependent or spouse of a nonresident alien visa holder
- Nonresident alien claiming a tax treaty benefit
- Nonresident alien student, professor or researcher filing a U.S. tax return or claiming an exception
If so, then you must apply for an ITIN.
Do I need to renew my ITIN?
If you need to file a tax return in 2021 and your ITIN has expired or will expire before you file in 2021, IRS recommends you submit your renewal application now to prevent potential delays in the processing of your return.
Note: ITINs not used in the last 3 consecutive tax years. If your ITIN wasn’t included on a U.S. federal tax return at least once for three tax years, your ITIN will expire on December 31, of that third year. You will need to take action to renew it if it’ll be included on a U.S. federal tax return.
Example: If your ITIN wasn’t included on a U.S. federal tax return at least once for tax years 2017, 2018, or 2019, your ITIN will expire on December 31, 2020. You need to take action to renew it if it’ll be included on a U.S. federal tax return for 2020.
WHY EVEN BOTHER WITH THIS ITIN BUSINES?
Well!! There are jobs, however, that do not require you to have a work permit to earn money!!
What jobs do not require a work permit?
- No work permit is requiredfor the following jobs:
- 1) certain agricultural industry jobs,
- 2) odd jobs in private homes such as gardening and babysitting,
- 3) newspaper delivery jobs,
- 4) casual work in a family-owned business, and
- 5) self-employment. Ie: DJ’s, Cutting Dub’s, Strining-Up a sound system Mixing Tunes etc……..
Self-Employed Individuals Tax Center
Who is Self-Employed?
Generally, you are self-employed if any of the following apply to you.
- You carry on a trade or business as a sole proprietor or an independent contractor.
- You are a member of a partnership that carries on a trade or business.
- You are otherwise in business for yourself (including a part-time business)
What are My Self-Employed Tax Obligations?
As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.
Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording “self-employment tax” is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax).
Before you can determine if you are subject to self-employment tax and income tax, you must figure your net profit or net loss from your business. You do this by subtracting your business expenses from your business income. If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040. If your expenses are more than your income, the difference is a net loss. You usually can deduct your loss from gross income on page 1 of Form 1040. However, in some situations your loss is limited.
You have to file an income tax return if your net earnings from self-employment were $400 or more.
If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 and 1040-SR instructions
Benefits of paying self-employment tax
Your payments of self-employment tax contribute to your coverage under the U.S. social security system. Social security coverage provides you with old age, survivor, and disability benefits and hospital insurance. In order for you to receive credit for purposes of calculating your future social security benefits, payments must be received no later than three years, three months and 15 days after the year for which they apply – for example, payments for 2017 self-employment tax received after April 15, 2021, will not be credited to your account for purposes of calculating your future social security benefits.
NOTE: Again, ITIN’s are not social security numbers; however social security taxes paid on an ITIN is not lost and can be transferred to a social security number if acquired for future benefits!!
