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How to get an ITIN

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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If you’ve ever looked at Form 1040, the one individuals use to file a U.S. federal income tax return, you may have noticed that one of the first pieces of information requested is a Social Security number (SSN). The IRS asks for this number from the taxpayer, spouse and any dependents listed on the return.

Despite the seemingly straightforward fields on the form, you don’t need an SSN to file a U.S. tax return. The IRS provides individual taxpayer identification numbers (ITINs) for people who don’t qualify for an SSN but need to file a return. If you’re in that group, read on to learn more about how to get an ITIN.

Why do you need an ITIN?

U.S. citizens aren’t the only ones required to file tax returns. Nonresident aliens, U.S. resident aliens, and their dependents or spouses may be required to file. Typically, the IRS uses an SSN to process tax returns and account for tax payments. But not all taxpayers are eligible for an SSN.

According to the Social Security Administration (SSA), only noncitizens authorized to work in the U.S. can get an SSN. You’ll need to either apply in your home country before coming to the U.S., or visit a Social Security office in person once you arrive in the U.S. If you visit an SSA office in person, you’ll need to show documentation to prove your identity and work-authorized immigration status.

So, if you are required to file a return but aren’t eligible for an SSN, you need an ITIN.

Who needs an ITIN?

The IRS Instructions for Form 1040NR include detailed information on the filing requirements for nonresident aliens. This generally consists of all nonresident aliens who:

  • Do business in the U.S. or have earnings from self-employment
  • Received income from U.S. sources and did not have all of the tax they owe withheld from that income
  • Owe special taxes, such as the alternative minimum tax, additional tax on an IRA or another tax-favored account, household employment taxes, Social Security or Medicare taxes on tips
  • Received a distribution from a health savings account (HSA), Archer medical savings account (MSA) or Advantage MSA account
  • Received an advanced payment of the premium tax credit or health coverage tax credit

IRS Publication 501 includes more information on filing requirements for resident aliens, which are based on filing status, age and gross income.

How to get an ITIN

Once you’ve determined that you need to file a tax return but aren’t eligible for an SSN, there are two ways to apply for an ITIN: by mail or in person.

The application

The first step in applying for an ITIN is to complete Form W-7, Application for IRS Individual Taxpayer Identification Number.

In addition to Form W-7, you’ll need to provide documentation to prove your identity and foreign status. The instructions for Form W-7 include a list of acceptable documents, including:

  • Passport
  • U.S. Citizenship and Immigration Services photo ID
  • Visa issued by the U.S. Department of State
  • U.S. driver’s license
  • U.S. military ID card
  • Foreign driver’s license
  • Foreign military ID card
  • National ID card containing your name, photograph, address, date of birth and an expiration date
  • U.S. state identification card
  • Foreign voter’s registration card
  • Civil birth certificate
  • Medical records (for dependents under age 6)
  • School records (for dependents under age 18, if a student)

If you plan on mailing your application, the instructions say you can include either original or certified copies of the above documents, and your paperwork will be returned to you at the mailing address listed on your ITIN application within 60 days. However, you risk having your original documents lost in the mail. For that reason, it’s a good idea to either get certified copies of your original documents or apply in person.

If this is your first time applying for an ITIN, you will submit your application with your tax return. You won’t be able to file your tax return electronically without an SSN or ITIN, so simply attach Form W-7 to the front of your ITIN and leave the SSN area blank for anyone on the return who is applying for an ITIN (such as a spouse or dependent).

There are a few exceptions to the requirement to apply for an ITIN with your tax return:

  • You get third-party withholding on passive income
  • You receive salary, wages, honoraria payments, gambling winnings or other compensation that is exempt due to a tax treaty
  • A third party reports your mortgage interest
  • You’ve profited from the sale of property within the U.S.
  • You have reporting obligations under Treasury Decision 9363

These exceptions, and the additional documentation you must submit with your ITIN application, are explained in greater detail in the Exceptions Tables in the IRS Instructions for Form W-7.

Submitting the application

Once you’ve completed Form W-7 and collected the required documentation, you can apply via the following methods:

To apply by mail:

Mail Form W-7, your tax return (unless one of the above exceptions applies), and other required documents to:

Internal Revenue Service
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

To apply in person:

There are two ways to apply in person. You can use the services of an IRS-authorized Acceptance Agent or make an appointment at an IRS Taxpayer Assistance Center. The IRS maintains a list of Acceptance Agents on its website.

The IRS also maintains a list of Taxpayer Assistance Center (TAC) locations on its website. Assistance at a TAC is by appointment only, so call to schedule an appointment before showing up.

How long does it take to get an ITIN?

Once you submit your completed application and supporting documents, the IRS website states you should receive a letter assigning your ITIN within seven weeks. However, it may take longer during certain times of the year.

Most ITIN applications are filed with tax returns, so they are typically submitted during the peak processing times of January through April. During these months, IRS services often take longer, so the National Immigration Law Center cautions that it can take eight to 10 weeks to receive an ITIN during this time.

After your ITIN is approved, the IRS will process the tax return submitted with your application within six to eight weeks. If you have trouble getting a response from the IRS or believe the IRS is not respecting your taxpayer rights, you may be able to get help from the fee Taxpayer Advocate Service.

Does an ITIN expire?

ITINs remain valid as long as you file a federal return at least once every three years. If you don’t use your ITIN (or you have an ITIN issued before 2013 with middle digits of 83, 84, 85, 86 or 87), your ITIN may expire before you need it to file your tax return.

To renew your ITIN, you’ll use the same Form W-7 used to apply for a new number, but check the box for “Renew an Existing ITIN” in the upper right-hand corner of the first page. You will need to include all required documentation with your application, but you do not need to submit a tax return.

The IRS recommends applying for your ITIN renewal as soon as possible if your ITIN will expire by the end of the year and you anticipate needing to file a return. Renewing your ITIN outside of peak processing times will allow your application to be processed quickly, and having a valid ITIN at tax time may make your return eligible for electronic filing, which the IRS says is “faster, safer and more accurate than mailing your tax return.”

The bottom line

Navigating the forms and documentation requirements for getting an ITIN can be daunting. If you need help, apply in person with the help of an IRS-authorized Assistance Agent or by making an appointment at a Taxpayer Assistance Center. By getting help to ensure you have the right supporting documents and taking time to double check that all of the information on your application is correct, you’ll reduce the chance of having your application rejected by the IRS.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Janet Berry-Johnson
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Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here

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How to Save on Back-to-School Shopping

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Parents often revel in the calm and quiet that comes when kids head back to school, but they aren’t likely to enjoy the excess spending that also accompanies the back-to-school season. According to the National Retail Federation, parents will set a record in 2019, spending an average of $696.70 per household on children in elementary school through high school.

 

“It was interesting to see the across-the-board increases in spending levels,” said Mark Mathews, vice president for research development and industry analysis with the NRF. “Elevated levels of consumer sentiment, healthy household balance sheets, low inflation and recent wage gains all seem to be contributing to a confident consumer who is willing to spend money on back-to-school supplies.”

If you’re planning a trip to the store before classes start, there are a few ways to curb the spending and save some bucks.

Plan ahead

No parent should set foot out the door for back-to-school shopping without first taking stock of what they already have. Plenty of old supplies from previous years might still be usable, especially arts and crafts items like crayons, pencils and pens, as well as more expensive things like backpacks, lunch boxes and calculators.

Crossing a few items off your list is a good first step when it comes to saving, but learning how to budget is also important. It’s tempting to run down the back-to-school aisle and grab every colorful notebook and snazzy pencil case in sight, but it doesn’t make a lot of financial sense. Create a realistic budget based on the items you actually need, and try your best to stick to it. If possible, do most of your shopping online, since it’s easier to keep a running tally of how much you’re spending as you shop.

Be smart about sales

Although you’re bound to run into many back-to-school sales this time of year, you don’t need to buy 12 notebooks just because they’re cheaper right now. In fact, you shouldn’t assume the sales price is the best price at all, said consumer savings expert Andrea Woroch. Instead, always comparison shop.

“Run a quick Google search online or on your phone to see if another store is selling the same or a similar item for less,” she said. “Most big box stores will price match, so you won’t even have to drive to another store to get the better deal.” For example, Target,Staples and Walmart all have price matching policies.

Clip coupons and shop discount stores

Coupons have definitely made a digital comeback, with countless apps and websites dedicated to listing all your options in one place. “Spending a few minutes looking for coupons can help you get a better discount,” Woroch said. “Use apps like CouponSherpa, for instance. Or, use the Honey browser tool, which automatically searches and applies relevant coupons to your online order.”

Many stores also offer discounts to valued customers who sign up for their rewards program, like Walgreens and CVS, while craft stores like Michaels regularly offer discounts. Don’t knock purchasing basics like paper and writing supplies from the Dollar Tree, either — you might be surprised by what you find, and those types of items are often the same quality wherever you buy them.

Tax advantage of tax-free holidays

On select dates throughout the year, different states offer state sales tax holidays, or days where you can purchase items without having to pay sales tax on them. You can find a full list of the 2019 state sales tax holidays here, but some upcoming ones include:

  • August 18-24: Connecticut, clothing and footwear
  • August 17-18: Massachusetts, specific items costing less than $2,500 per item

Split bulk purchases

You can usually save money by buying certain items — like construction paper, pens, pencils and folders — in bulk, but you can save even more by splitting those bulk items with other families. Not only is this a great way to share savings, Woroch said, but you can earn rewards faster by charging everything on your card and then having the families pay you back.

Redeem your rewards

If you have a cash back credit card, now’s the time to use it. “Most credit cards give you the best redemption value when you opt for statement credit or have the cash rewards deposited into your bank,” Woroch said. “You can set this money aside for back-to-school shopping.”

Alternatively, Woroch suggested checking to see if your particular card allows you to redeem points for gift cards to retailers where you plan to shop.

Use discounted gift cards

Besides redeeming credit card points for retailer gift cards, you can also scour the web for cheap gift cards online. Planning a trip to Target? Scan websites like Raise,Cardpool and CardCash first. These sites buy and sell unused gift cards at a discount, meaning you can save on purchases you were planning to make anyway.

Consider having your kids contribute

Depending on your child’s age, back-to-school shopping might be the perfect time to start having them contribute to their own goods, especially if they earn an allowance or have a job. Talking to your kids about money at a young age — whether about budgeting, saving or spending — will help them develop solid money habits that will pay off in the future.

Parents already seem to be catching on to this idea. “It was surprising to see how much of their own money kids are contributing towards the back-to-school bills,” Mathews said. “Teens and pre-teens will be spending $63 of their own money, which works out to $1.5 billion overall. This is significantly higher than the levels we saw a decade ago.”

Although the news about increased spending on back-to-school supplies may be alarming, these days there are more ways than ever to save. A little ingenuity, resourcefulness and research can go a long way.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Cheryl Lock
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Cheryl Lock is a writer at MagnifyMoney. You can email Cheryl at [email protected]

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Survey: Most Americans Have Raided Their Retirement Savings

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Successfully saving for retirement requires dedication and self-restraint, but more than half the country admits to robbing their future selves in order to satisfy today’s spending needs, according to a new survey by MagnifyMoney. While the economic pressures bearing down on workers today make their actions understandable, the hard truth is that many Americans are turning an already-difficult task that much harder by tapping into their retirement savings early.

Key Findings

  • Approximately 52% of respondents admit to tapping their retirement savings account early for a purpose other than retiring: 23% have done so to pay off debt, 17% for a down payment on a home, 11% for college tuition, 9% for medical expenses, and 3% for some other reason.
  • About 29% say there are some scenarios where it is a good idea to withdraw money early from a retirement savings account.
  • Around 60% of respondents do not know exactly how much they have saved for retirement. Just 40% know the exact amount, while 45% have a rough idea, and 15% have no clue.
  • Almost 25% are unhappy with their retirement savings. 47% are happy with the amount saved, and about 28% are neither happy nor unhappy.
  • Finally, 27% have never thought about how much money they’ll need in retirement.

Why are Americans tapping their retirement savings early?

The two main reasons respondents cited for withdrawing money from their retirement savings are as American as apple pie: home ownership and personal debt. According to the survey, 23% of those making an early withdrawal did so to help pay down non-medical debt, while 17% needed the money for a down payment on a home.

Although the housing market appears to be cooling off compared to just a few years ago, a down payment on a home still requires a significant chunk of change — experts recommend a down payment equaling 20% of the total mortgage to optimize your mortgage payments.

Personal debt, from credit cards to student loans, remains a fixture of everyday economic reality for millions of Americans. In other words, the stressors that cause workers to raid their retirement funds don’t look like they will decrease appreciably in the foreseeable future.

Which Americans are withdrawing money the most?

Breaking down the demographics, older savers are less likely to withdraw money from their retirement fund than younger savers. 54% of millennial savers say they’ve taken an early withdrawal from a retirement savings account, compared with 50% of Gen Xers and 43% of baby boomers. This stands to reason considering that many millennials have now entered the stage of life where they are getting mortgages, starting families and taking on bigger financial obligations while also being decades away from the traditional retirement age. Millennials are also more likely to say that raiding your retirement fund is justified under certain circumstances, as seen in the chart below:

Just one of many bad retirement savings habits

Tapping into retirement funds — whether an employer-sponsored 401(k) or a traditional IRA — before the appropriate age almost always comes with a financial penalty in the form of additional taxes and fees. What is more, you’re diminishing the principle that fuels the compound interest you need to meet your retirement savings goals.

Unfortunately the survey reveals early withdrawals are just one of the many bad habits Americans engage in when it comes to retirement savings. This list of less-than-ideal practices includes:

  • 35% of Americans are not currently saving for retirement. Of those who are, 37% started saving at age 30 or above, and 12% started saving when they were older than 40.
  • 60% of Americans do not know exactly how much they have saved for retirement. Just 40% know the exact amount, while 45% have a rough idea and 15% have no clue.
  • Nearly 1 in 5 Americans don’t contribute enough to their employer-sponsored retirement account to get the maximum company match. Maximizing a company match is one of  your best ways to maximize your retirement savings. Among those with an employer-sponsored retirement savings plan, just 17% of respondents contribute 10% or more of their take-home pay. Almost 5% contribute nothing at all, and nearly 6% are unclear about how much they contribute.

  • Approximately 42% of respondents have made the mistake of withdrawing their entire balance from an employer-sponsored retirement plan when changing jobs without rolling it over – and nearly 15% have done so more than once. A little more than 47% of millennials admit to this faux pas.

The most damning finding of all is that 27% of those surveyed have never thought about how much they’ll need in retirement. And while “ignorance is bliss” may hold true when it comes to some things in life, this expression should not apply to your retirement plans.

Methodology

MagnifyMoney by LendingTree commissioned Qualtrics to conduct an online survey of 1,029 Americans, with the sample base proportioned to represent the general population. The survey was fielded June 24-27, 2019.

Generations are defined as:

  • Millennials are ages 22-37
  • Generation Xers are ages 38-53
  • Baby boomers are ages 54-72

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here