Apr 19, 2021
As you may know, we have supported a request to the CRA to extend the April 30 deadline to June 15. But if the deadline is NOT extended, here are some practical tips to reduce the burden of a COVID tax season.
The IRS estimates that almost 2 million individual taxpayer identification numbers (ITINs) will expire as of December 31, 2019. These ITINs have the middle digits of 83, 84, 85, 86 and 87 (XXX-83-XXXX for example). In addition, any ITIN that has not been used on a U.S. tax return for the past 3 years will also expire.
ITINs with middle digits of 70 through 82 have previously expired. Taxpayers with these ITINs can still renew at any time, if they have not renewed already.
Spouses and dependents residing outside of the U.S. only need to renew their ITIN if filing an individual tax return, or if they qualify for an allowable tax benefit (e.g., a dependent parent who qualifies the primary taxpayer to claim head of household filing status.)
Designed specifically for tax-administration purposes, ITINs are issued by the Internal Revenue Service only to those people who are not eligible to obtain a United States Social Security Number (SSN). ITINs assist the IRS with the collection of taxes from foreign nationals, nonresident aliens and others who have filing or payment obligations under U.S. law. Taxpayers who are eligible for a United States SSN must apply for a SSN through the United States Social Security Administration, they are not eligible for an ITIN.
The IRS encourages affected taxpayers to renew their ITIN as soon as possible in order to reduce potential delays in obtaining potential refunds. Federal tax returns that are submitted in 2020 with an expired ITIN will be processed. However, certain tax credits and any exemptions will be disallowed. Taxpayers will receive a notice in the mail advising them of the change to their tax return and their need to renew their ITIN. Once the ITIN is renewed, applicable credits and exemptions will be restored, and any refunds will be issued.
ITINs are renewed by filing Form W-7, “Application for IRS Individual Taxpayer Identification Number”, along with the necessary documentation. Based on our experience the best documentation is a certified copy of their passport. Documents can only be certified by the issuing agency/department.
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The material provided in this U.S. Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither Cadesky Tax nor Cadesky U.S. Tax can accept any liability for the tax consequences that may result from acting based on the contents hereof.