Many Canadians have been investing in the U.S. real estate market or starting work in the U.S. Similar to Canada, you will need to have a tax ID with the Internal Revenue Service (IRS). This ID number is referred to as a U.S. Individual Taxpayer Identification Number (ITIN). We would like to take some time to go over several of the specifics regarding the ITIN.
What must I do to get an ITIN?
- First is that you must have a reason to need or apply for an ITIN that meets the application requirements. The most common reason is to file a U.S. non-resident tax return and the application is submitted with your return.
- There are of course many other reasons to apply for an ITIN and other options have additional documentation that must be submitted if the ITIN application is not being sent in with a tax return. Please see the common exception information further below.
What identification documentation do I need to provide?
- The IRS used to give out the ITIN with only notarized copies of identification documents. In recent years the IRS has made changes to this and now requires certified copies or originals to be submitted.
- We recommend a certified copy of your passport. To get a certified copy of your passport, you must drop your passport at the Canada passport office, they will hold the passport for approximately 10 business days, and then you will receive your passport and certified copy. We also recommend getting two copies just in case.
Below is the list of identification documentation:
|Supporting Documentation||Can be used to establish:|
|Passport (the only stand-alone document)||X||X|
|U.S. Citizenship and Immigration Services photo identification||X||X|
|Visa issued by US department of State||X||X|
|US driver’s license||X|
|US military identification card||X|
|Foreign driver’s license||X|
|Foreign military identification card||X||X|
|National identification card
(must be current and contain name, photograph, address, date of birth, and expiration date)
|US state identification card||X|
|Foreign voter’s registration card||X||X|
|Civil birth certificate||X*||X|
|Medical records (valid only for dependents under age 14 (under age 18 if a student))||X*||X|
|School records (valid only for dependents under age 14 (under age 18 if a student))||X*||X|
|*Can be used to establish foreign status only if they are foreign documents|
What are the other exceptions to apply for an ITIN?
Here are some of the most common reasons for an ITIN other than filing a U.S. non-resident tax return and the additional information you will need to provide:
|Reason||Persons who are eligible to claim Exception||Documentation you must submit if you are eligible to claim Exception|
|Third Party Withholding on Passive Income||Individuals who are receiving distributions during the current tax year of income such as pensions, annuities, rental income, royalties, dividends, etc., and are required to provide an ITIN to the withholding agent (for example, an investment company, insurance company, or financial institution, etc.) for the purposes of tax withholding and/or reporting requirements.||A signed letter or document from the withholding agent, on official letterhead, showing your name and verifying that an ITIN is required to make distributions to you during the current tax year that are subject to IRS information reporting or federal tax withholding.|
|Third Party Withholding—Disposition by a Foreign Person of U.S. Real Property Interest||A withholding obligation generally is imposed on a buyer or other transferee (withholding agent) when the buyer acquires a U.S. real property interest from a foreign person. In some instances, the foreign person may apply for a withholding certificate to reduce or eliminate withholding on the disposition of real property.||
WE CAN HELP
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts who can help you with your US and Canadian Tax preparation, Cross-Border Tax consulting and all of the necessary accounting to satisfy both Canadian and US regulations.
Our specialists at Aylett Grant Tax LLP are trusted advisors and have considerable experience helping clients in many different complex tax needs. We will work with you to balance the business, investment, and tax considerations to achieve a result that best suits your individual situation. We want to work with you to ensure that you are properly complying with the various tax jurisdictions and are neither underpaying nor overpaying tax.
IRS Circular 230 Disclaimer: Please note that this document is to be considered other written advice. Any tax advice in this document was not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer under the Internal Revenue Code or applicable state or local tax law provisions.
Furthermore, the information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.