The Process of Obtaining Taxpayer ID Number and its Importance

Being a citizen of your country, there are many rules and regulations which you need to follow and one of them is paying income tax once in a year. There are different types of taxes which you pay off, but out of all income tax is very important and to pay it you will need a Taxpayer ID Number. It is a type of identification number which is used by internal revenue service in administration of tax laws. It is issued by IRS or SSA Social Security Department. While on other side, all other TIN is issued by IRS.

Internal revenue service issue TIN to those individuals who want to have US taxpayer identification number, but are not eligible for obtaining from Social Security Administration. This kind of identification number is issued regardless of immigration status as both nonresident and resident aliens have US reporting or filling under Internal Revenue Code. It is 9 digit number and first number will always be 9 and most importantly, formatted like social security number.

Do you also need taxpayer identification number?

To get your taxpayer identification number you need to fill W7 form which is indeed the most important aspect for filling the income tax number. But, before applying for it, you must know whether you really need this identification number or not. A TIN should be furnished on tax statements, tax returns and other kind of tax related documents. A number should be furnished when claiming for treaty benefits and for filing tax returns. It must be on withholding certificate, especially if beneficial owner want to claim for the following benefits:

  • Exemption for certain type of Annuities.
  • Exemption for effectively connected Income.
  • Tax treaty benefits like income from securities or marketable Securities.

Process of applying for Taxpayer Identification Number – There are many things which are noticed while applying for taxpayer identification number, but filing for Itin on your own can be really stressful and time consuming. So, in such situation you can take help of professionals because they are specialized in their work and help out in many other ways. While on other hand, you can also apply online by visiting the official site. Following are the steps which are involved in this process:

Determining need of ITIN -The first and foremost thing which comes in this process include determining the need of ITIN. You should know that whether you really need it or not. Although, taxpayer Id number will offer you number of benefits but still it is important to consider its need.

Determining your Eligibility – The person applying for ITIN online should have valid taxpayer identification number. Along with this, you can apply for EIN if your business is located in US territories or in United States when you are limited for only one EIN per day per responsible party.

Understanding Online Application – Next step will be to understand the online application and completing it in one session because you will not be able to return and save at later time. You sessionwill get expire after 15 minutes due to inactivity and you have to start again.