W-7 and ITIN Training

What will you learn today? Purpose of ITIN Accurate completion of Form W-7 ITIN application process Certifying Acceptance Agent role

What is an ITIN? Individual Taxpayer Identification Number Same format as SSN; begins with number 9 Issued by IRS May be a card, may be a letter

What is purpose of an ITIN? File federal income taxes May be used by other entities (loans, mortgage, bank account, rent apartment, etc.) DOES NOT give permission to work in U.S. DOES NOT change immigration status DOES NOT imply illegal presence

Who may apply for an ITIN? Anyone without valid social security number who is required to file U.S. taxes and meets substantial presence test (183 days residence) Spouse without SSN who lives anywhere Dependents without SSN who live in U.S., Canada or Mexico

How do you apply for an ITIN? Original tax return Form(s) W-7 Prove identity and foreign status

ITIN Renewals ITINs now expire on a rolling basis Also expire if not used on a tax return for any of the three most recent years (2015, 2016, or 2017) ITIN assigned to person does not change Same process as application, only that can submit renewal without a tax return

Timeline for renewing an ITIN Expires on 12/31 of the tax year Can renew before or after ITIN expires Quicker to renew before expires on 12/31 Once expired, must renew before filing a return for any year

What numbers are expired? Expired 12/31/16: Middle digits 78, 79 Expired 12/31/17: Middle digits 70, 71, 72, 80 Expired 12/31/18: Middle digits 73, 74, 75, 76, 77, 81, 82 In summary, middle digits 70 – 82 have expired.

Completing Form W-7 ONLY three reasons for applying in CTC: U.S. citizen/resident alien filing tax return, dependent or spouse of U.S. citizen/resident alien. Never nonresident alien - out of scope Name configuration Do not click box for birth name different than application name unless birth certificate present Mailing address – ITINs sent here Foreign address – only if applicant lives outside U.S.

Completing Form W-7 cont. Gender Required entries for country, city and state of birth. Enter “unknown” if client unsure Country of citizenship required; usually home country Required entries for ID documents. May enter “unknown” except for document type. Date of entry in U.S. impt. Help estimate date if needed. Determines Substantial Presence Test.

Resident or nonresident alien? Substantial Presence Test: U.S. resident for tax purposes if physically present in U.S. for at least: 31 days during tax year and 183 days during 3-year period of tax year and 2 years immediately before tax year, counting: All days present in 2018 1/3 of days present in 2017 1/6 of days present in 2016

Resident or nonresident alien? Seriously?? In plain English: Your client tells you she entered the US on August 1, 2017, and has lived here ever since. Jan 1, 2018 – Dec 31, 2018 = 365 days Aug 1, 2017 – Dec 31, 2017 = 152 days 152 days divided by 1/3rd = 51 days What if she entered on August 1, 2018? Aug 1, 2018 – Dec 31, 2018 = 152 days

Nonresident aliens Some people are exempt from the substantial presence test for a period of time. Ex. students, teachers, scholars here on visas If taxpayer is exempt from or fails the Substantial Presence Test, must file Form 1040NR (non- resident). We do not prepare these.

Completing Form W-7 cont. Most never had foreign tax ID nor previous TIN or EIN. If they say they have a number, call ITIN hotline first rather than applying again (800- 908-9982) If student or scholar, refer to UT International Office.

Applicant signature Each applicant signs their own W-7 If applicant not in U.S., W-7 must be mailed for signature If applicant under 14 years, parent or legal guardian may sign. Note: if niece or nephew, parent of child must sign, not primary TP. Do not date signature; may only be valid for 5 days Ensure don’t sign in Acceptance Agent’s Use box

Common mistakes Must be PAPER return – no e-file Incorrect reason selected. Never use nonresident alien filing a U.S. tax return Failing to prepare separate W-7 for each applicant Failing to explain signature requirements Giving client pre-addressed envelope to IRS processing center. These returns are NOT mailed to processing center; must be sent to ITIN Dept.

Documents required Original signed (by both if MFJ) tax return Signed Form W-7 for each applicant Proof of identity and foreign status Passport only stand-alone document; otherwise Two original unexpired documents from list in CTC flyer ID documents must be originals and cannot be expired. School and medical records are current only if date on document within 1 year of ITIN application. For adults one document must include a photo.

ITIN submission options Acceptance Agent – CTC is one! Must mail original documents to IRS Certified Acceptance Agent CAA authenticates IDs, mails copies Make in-person appointment with IRS Present original documents during appt Each applicant must be present

This year: W-7s in TaxSlayer Pro Complete W-7 in software only for applications Okay if W-7 not complete or correct Complete the tax return Always recommend taxpayers to come see Janet and Dinorah before submitting to IRS We will complete W7s, answer questions, and help client complete the process

Our process Janet mails in W7, tax return, and original ID docs. Client goes to CFCS Tues 3-7pm or CFCN Wed 3-7pm. Client goes to any CTC site to get tax return completed. Client takes W7, tax return, and original ID docs to IRS appt.

What do we give to the client?

CTC process Use 000-00-0000 for every applicant – primary, spouse and dependents Do NOT claim EIC Must file as PAPER return Print 2 copies Must NOT be mailed to IRS. Instruct client to take package to Certified Acceptance Agent, Acceptance Agent, or IRS office.

Protocol Client goes to any CTC site for tax return prep. Original ID documents NOT required to prepare return. Volunteer preparing return also completes Form(s) W-7 Print 2 copies Explain signature requirement Explain ID document requirement and ensure client has ITIN flyer Instruct client to visit one of the Community Financial Centers during designated ITIN hours or IRS office on Rundberg (appointment required)

Resources “Understanding Your IRS-Individual Taxpayer Identification Number” Publication 1915 www.irs.gov ITIN Taxpayer Hotline 800-908-9982 www.communitytaxcenters.org Janet Herrgesell, 512-610-7378 Janet.Herrgesell@foundcom.org

CTC Resource Page

Questions?