Legislation was enacted in December 2015 (PATH act) requiring some taxpayers to renew their Individual Taxpayer Identification Number (ITIN), This new lay mostly effects taxpayers who received their ITIN before January 1, 2013.
What is an ITIN?
The IRS issues and ITIN to individuals who are not eligible to obtain a Social Security Number but may need to file a U.S. tax return or pay U.S. taxes. This could include spouses and children of persons in the U.S. on a temporary work visa. Previously, and ITIN had no expiration date.
If taxpayers have an expired ITIN and don’t renew before filing a tax return next year, they could face a refund delay and may be ineligible for certain tax credits, such as the Child Tax Credit and the American Opportunity Tax Credit, until the ITIN is renewed.
Who Has to Renew an ITIN?
The IRS emphasizes that no action is needed by ITIN holders if they don’t need to file a tax return next year. There are two key groups of ITIN holders who may need to renew an ITIN so it will be in effect for returns filed in 2017:
- Unused ITINs.ITINs not used on a federal income tax return in the last three years (covering 2013, 2014, or 2015) will no longer be valid to use on a tax return as of Jan. 1, 2017. ITIN holders in this group who need to file a tax return next year will need to renew their ITINs. The renewal period begins Oct. 1, 2016.
- Expiring ITINs.ITINs issued before 2013 will begin expiring this year, and taxpayers will need to renew them on a rolling basis. The first ITINs that will expire under this schedule are those with middle digits of 78 and 79 (Example: 9XX-78-XXXX). The renewal period for these ITINs begins Oct. 1, 2016. The IRS will mail letters to this group of taxpayers starting in August to inform them of the need to renew their ITINs if they need to file a tax return and explain steps they need to take. The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced at a future date.
How to Renew an ITIN
Only ITIN holders who need to file a tax return need to renew their ITINs. Others do not need to take any action.
Starting Oct. 1, 2016, ITIN holders can begin renewing ITINs that are no longer in effect because of three years of nonuse or that have a middle digit of 78 or 79. To renew an ITIN, taxpayers must complete a Form W-7, Application for IRS Individual Taxpayer Identification Number, follow the instructions and include all information and documentation required. To reduce burden on taxpayers, the IRS will not require individuals renewing an ITIN to attach a tax return when submitting their Form W-7. Taxpayers are reminded to use the newest version of the Form W-7 available at the time of renewal which will be posted in September (Use version “Rev. 9-2016”).
Other information about ITINs
ITINs are for federal tax purposes only and are not intended to serve any other purpose. ITINs that are only used on information returns filed with the IRS by third parties do not need to be renewed. An ITIN does not authorize one to work in the United States or provide eligibility for Social Security benefits or the Earned Income Tax Credit. ITINs are not valid identification outside the tax system and do not establish immigration status.
For more information or assistance with ITIN renewal you may contact us at www.rfta.biz.