An Individual Taxpayer Identification Number issued by the IRS to non-U.S. residents and others who are not eligible for a Social Security Number, used primarily for federal tax purposes.
What is the Individual Taxpayer Identification Number?
An ITIN (Individual Taxpayer Identification Number) is a nine-digit number issued by the U.S. Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number but do not qualify for a Social Security Number (SSN). It is designed for tax purposes only—meaning it does not grant work authorization or immigration benefits—but it can be an important tool for non-U.S. residents who interact with the U.S. tax and financial system.
For non-U.S. residents with U.S. business interests, an ITIN offers several benefits:
- Fulfilling U.S. Tax Obligations: Enables you to file a personal U.S. federal tax return, pay taxes, and comply with IRS reporting requirements as an individual.
- Claiming Tax Treaty Benefits: If your home country has a tax treaty with the U.S., an ITIN allows you to claim reduced withholding rates or exemptions on U.S.-source income such as dividends, royalties, or certain service payments.
- Avoiding Excessive Withholding: Without an ITIN, payments to foreign individuals from U.S. sources are often subject to a default 30% withholding. With an ITIN and the right treaty documentation, you can potentially lower or eliminate this withholding.
- Opening Financial Accounts: Some U.S. banks, credit unions, and brokerage firms require an ITIN for non-U.S. persons to open accounts, particularly for investment or interest-bearing products.
- Receiving Certain U.S.-Source Income: If you earn rental income from U.S. property, royalties from U.S.-based intellectual property, or other taxable U.S.-source income, an ITIN ensures you can file the necessary returns and claim any over-withheld amounts as refunds.
- Building a U.S. Tax History: Maintaining an ITIN and filing returns can help establish a U.S. tax record, which may be useful in certain business, financial, or even visa-related contexts in the future.
An ITIN remains valid as long as it is used on a federal tax return at least once in the past three years; otherwise, it will expire and need renewal. The application process is completed via IRS Form W-7, along with required proof of identity and foreign status (such as a passport).
For international founders and investors, an ITIN is not just a compliance tool—it is often the key to unlocking smoother cross-border business operations, minimizing tax leakage, and maintaining good standing with U.S. tax authorities.
