Expert U.S. Tax Filing Solutions for Business Owners in Burlington and Across Ontario
Canadians who are required to submit a U.S. tax return but are not eligible for a US Social Security Number must first obtain an Individual Taxpayer Identification Number (ITIN) from the IRS. The process of acquiring an ITIN is both arduous and time-consuming. However, as a Certifying Acceptance Agent, the U.S. tax experts at Edelkoort Smethurst CPAs LLP can help you through this complex process and save you time and aggravation.
What is an Individual Taxpayer Identification Number (ITIN)?
There are times when Canadians earn income from the U.S., whether through employment, rental properties, or other means, resulting in tax filing obligations. However, in order to complete a tax return with the IRS, individuals will require a tax processing identification number issued from the IRS. The Individual Taxpayer Identification Number (ITIN) allows individuals to complete a U.S. tax return without a Social Security number. Filing a return with the appropriate ITIN allows the IRS to process tax refunds to non-residents.
Who Needs an ITIN?
There are a number of reasons an individual might require an ITIN, including:
- Individuals who must file a tax return but are not eligible for a Social Security Number
- A spouse or dependent reporting income or being claimed as a dependant on a U.S. tax return
- Individuals with a U.S. interest-bearing bank account that is also subject to withholding or Internal Revenue Service (IRS) reporting
- Individuals selling a real property interest in the US
What Can’t an ITIN Do?
An ITIN is only used for U.S. income tax reporting. It does not authorize individuals to work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.
ITIN or EIN
The ITIN is only for individuals and not Canadian Corporations doing business in the U.S. Corporations that require a tax identification number for U.S. corporate income taxes will need an Employer Identification Number (EIN).
How to Obtain an ITIN
Individuals who require an ITIN must first complete a W-7 form to apply to the IRS and prove their foreign status by providing original and valid identification, usually an unexpired Canadian passport. Along with the W-7 and identification, the IRS will require an individual tax return, 1040NR, as well.
The W-7 is detailed and must be completed accurately. Normally an ITIN can only be applied for at the time an individual files their first income tax return with the IRS. However, there are exceptions to this timing:
- Passive income, third-party withholding or tax treaty benefits
- Other income, including: Wages, Salary, Compensation, and Honoraria Payments, Scholarships, Fellowships, and Grants, and Gambling Income
- Third-Party Reporting of Mortgage Interest
- Third-Party Withholding— Disposition by a Foreign Person of U.S. Real Property Interest
If a taxpayer is receiving one of the income types listed above they are able to apply for the ITIN at the time of withholding, rather than waiting to apply with their first tax return.
A Certifying Acceptance Agent
For many individuals applying for their ITIN, filling out the complex W-7 form and completing their tax return is daunting, and sending away their original passport for an extended amount of time only to be returned by regular mail is less than ideal. Some people are uncomfortable sending off their original documents, while others can not be without their documents for a length of time. That’s where we come in.
Edelkoort Smethurst CPAs LLP is a Certifying Acceptance Agent for the IRS, meaning we have entered into a formal agreement with the IRS authorizing us to assist with the ITIN application process and verify an applicant’s identity and foreign status. Passports are certified at our office in Burlington, Ontario, and returned immediately to the owner. We also complete and submit the application and all supporting documents to the IRS. You can expect the IRS to review and assign the ITIN in approximately ten to twelve weeks.
Contact Edelkoort Smethurst CPAs LLP in Burlington for Cross-Border Personal & Corporate Tax Services
The experienced Chartered Professional Accountants at Edelkoort Smethurst CPAs LLP deliver expert cross-border and U.S.-based tax solutions to individuals and businesses in Burlington, Halton, and across Ontario. To speak with one of our highly skilled experts, please contact us online or by telephone at 905-517-2297.
