What Is an Individual Taxpayer Identification Number?
An Individual Taxpayer Identification Number (ITIN) is a nine-digit tax processing number issued by the Internal Revenue Service (IRS) to individuals who are required to have a U.S. taxpayer identification number for federal tax purposes but who do not have, and are not eligible to obtain, a Social Security Number (SSN). This unique identifier falls under the broader financial category of taxation, specifically U.S. federal taxation for individuals. The ITIN enables individuals to comply with U.S. tax laws, report income, and fulfill their federal tax obligations, even if they are not eligible for an SSN.53
History and Origin
The Individual Taxpayer Identification Number program was established by the Internal Revenue Service (IRS) on July 1, 1996. Its creation aimed to address the growing need for a tax identification mechanism for individuals who earned income or had U.S. tax filing requirements but were not eligible for a Social Security Number. Before the ITIN, many non-citizens and others without SSNs faced significant hurdles in complying with U.S. tax laws, potentially leading to uncollected tax revenue and administrative complexities for the IRS. The ITIN provided a solution, ensuring that all individuals with U.S. tax obligations could file their tax returns and contribute to the tax system, regardless of their immigration status or eligibility for an SSN.51, 52
Key Takeaways
- An ITIN is a nine-digit tax processing number issued by the IRS for federal tax purposes only.50
- It is specifically for individuals who do not have, and are not eligible to obtain, a Social Security Number.49
- An ITIN allows individuals to comply with U.S. tax laws, file tax returns, and claim applicable tax benefits or refunds.48
- An ITIN does not provide legal immigration status, authorize work in the U.S., or qualify the holder for Social Security benefits or the Earned Income Tax Credit.45, 46, 47
- ITINs are used by various individuals, including nonresident aliens, resident aliens based on substantial presence, and dependents or spouses of U.S. citizens or resident aliens, who have a U.S. tax filing requirement.44
Interpreting the Individual Taxpayer Identification Number
The Individual Taxpayer Identification Number (ITIN) is primarily a processing number used by the IRS to identify taxpayers who are not eligible for an SSN. It ensures that these individuals can meet their U.S. tax obligations, such as reporting income tax and claiming applicable tax credits or deductions. The format of an ITIN is similar to an SSN, consisting of nine digits (XXX-XX-XXXX), but it always begins with a "9".42, 43 The fourth and fifth digits have specific ranges (50-65, 70-88, 90-92, and 94-99), distinguishing them from SSNs.41 The existence of an ITIN indicates that the individual has a U.S. federal tax purpose.40
Hypothetical Example
Consider Maria, a foreign national who owns a rental property in the United States but does not reside there and is not eligible for a Social Security Number. Maria is required to report the rental income from her U.S. property to the IRS. To fulfill this tax compliance requirement, Maria must obtain an Individual Taxpayer Identification Number. She would typically complete Form W-7, Application for IRS Individual Taxpayer Identification Number, attaching her U.S. tax return (Form 1040NR, U.S. Nonresident Alien Income Tax Return) along with original or certified copies of identity documents. Once issued, her ITIN allows the IRS to process her tax filings and ensure she meets her U.S. taxpayer responsibilities.
Practical Applications
The Individual Taxpayer Identification Number is essential for various individuals who have U.S. tax obligations but do not qualify for a Social Security Number. Key practical applications include:
- Federal Tax Filing: The primary use of an ITIN is to allow non-citizens, including nonresident aliens and certain resident aliens, to file U.S. federal tax returns. This includes individuals who receive U.S.-sourced income, claim a tax treaty benefit, or need to claim a refund of withholding tax.39
- Claiming Dependents: An ITIN enables U.S. citizens or residents to claim dependents who are not eligible for an SSN on their tax returns, potentially qualifying them for certain tax benefits.38
- Financial Transactions: While not a form of general identification, some financial institutions may accept an ITIN for opening bank accounts for tax reporting purposes. It can also be necessary for foreign investors engaging in real estate transactions in the U.S.37
- Estate and Gift Tax Reporting: Individuals with an ITIN can fulfill their obligations for U.S. estate or gift tax reporting.
To apply for an Individual Taxpayer Identification Number, applicants must submit Form W-7, Application for IRS Individual Taxpayer Identification Number, along with a valid U.S. federal income tax return (unless an exception applies) and original or certified copies of identity and foreign status documents.35, 36
Limitations and Criticisms
Despite its utility in facilitating tax compliance, the Individual Taxpayer Identification Number has significant limitations. Crucially, an ITIN does not:
- Confer Immigration Status: An ITIN does not provide any legal immigration status in the United States, nor can it be used to prove legal presence.33, 34
- Authorize Work: It does not grant the holder permission to work legally in the U.S. An SSN is generally required for employment authorization.30, 31, 32
- Qualify for Social Security Benefits: ITIN holders are not eligible for Social Security benefits.27, 28, 29
- Enable Certain Tax Credits: Individuals filing with an ITIN generally cannot claim the Earned Income Tax Credit (EITC), even if they meet other eligibility criteria.25, 26
Critics often point to the dichotomy where ITIN holders contribute significantly to the tax base but are excluded from many social safety nets and benefits typically associated with tax contributions. For instance, in 2022, approximately 3.8 million tax returns included an ITIN, contributing an estimated $6.5 billion in Social Security and Medicare taxes.24 However, these contributions do not translate into future eligibility for those benefits for the ITIN holders themselves.
Individual Taxpayer Identification Number vs. Social Security Number
The Individual Taxpayer Identification Number (ITIN) and the Social Security Number (SSN) are both nine-digit numbers used for identification purposes in the U.S., but they serve distinct roles and are issued by different agencies.
| Feature | Individual Taxpayer Identification Number (ITIN) | Social Security Number (SSN) |
|---|---|---|
| Issuing Agency | Internal Revenue Service (IRS) | Social Security Administration (SSA) |
| Primary Purpose | Federal tax processing for individuals ineligible for an SSN.23 | Tracking earnings, eligibility for Social Security benefits, and general identification.21, 22 |
| Eligibility | Individuals required to file U.S. tax returns but not eligible for an SSN (e.g., certain nonresident aliens, dependents).20 | U.S. citizens, permanent residents, and non-citizens authorized to work in the U.S.18, 19 |
| Work Authorization | Does not grant work authorization.17 | Required for legal employment in the U.S.16 |
| Benefits Access | Does not qualify for Social Security benefits or Earned Income Tax Credit (EITC).14, 15 | Qualifies for Social Security benefits, Medicare, and EITC (if eligible).13 |
| Format | Always begins with '9' (e.g., 9XX-XX-XXXX).12 | Varies (XXX-XX-XXXX). |
While both numbers are crucial for interacting with the U.S. tax system, an ITIN is solely for tax purposes, whereas an SSN has broader implications for employment, government benefits, and various financial services.9, 10, 11
FAQs
Who needs an Individual Taxpayer Identification Number?
An ITIN is needed by individuals who must file a U.S. federal tax return or have a U.S. tax reporting requirement but are not eligible for a Social Security Number (SSN). This includes certain nonresident aliens, resident aliens, and their spouses and dependents.8
Can an ITIN be used for work authorization?
No, an Individual Taxpayer Identification Number (ITIN) does not authorize an individual to work legally in the United States. It is purely for federal tax purposes.6, 7
How do I apply for an ITIN?
To apply for an ITIN, you must fill out Form W-7, Application for IRS Individual Taxpayer Identification Number. You generally need to attach a valid U.S. tax return for which the ITIN is needed, along with original or certified copies of documents proving your identity and foreign status. Applications can be mailed to the IRS, submitted through an IRS-authorized Acceptance Agent, or at certain IRS Taxpayer Assistance Centers.4, 5
Does having an ITIN affect immigration status?
No, having an Individual Taxpayer Identification Number does not provide or change an individual's immigration status in the United States.2, 3
What happens if my ITIN expires?
The IRS has an expiration policy for ITINs. If your ITIN has not been used on a U.S. federal tax return in the last three consecutive tax years, or if it was issued before a certain date and its middle digits fall into specified ranges, it may expire. An expired ITIN must be renewed using Form W-7 to be used for future U.S. tax filing requirements.1