Ep 36: What Is English For "Tax IDs"?
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We discuss Tax Identification Numbers (TINs). We have fun discovering what they are called in various countries.
TINs are nine-digit numbers assigned by the Internal Revenue Service (IRS) or the Social Security Administration (SSA) for tax reporting purposes.
We discuss the history of TINs and the introduction of the Individual Tax Identification Number (ITIN) in 1996.
We also explain the eligibility criteria for obtaining a Social Security Number (SSN) and the process of applying for an ITIN. We highlight the importance of TINs for filing taxes, claiming treaty benefits, and opening bank accounts.
We also mention the Employer Identification Number (EIN) used for business entities.
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The speakers' views and opinions discussed in this episode should not be considered financial, tax, or legal advice. Consult your advisor for any legal, cross-border tax, and financial advice.
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The International Money Café (00:02.93)
And we're back with another shorty episode where in 10 minutes or less, Manasa and I will take a terminology in the cross-border space and kind of just tell you what it is in common English as we say. In today's episode, we're going to talk about a tax identification number and there's a couple of them and we'll go into details. So one of the cool things about tax identification numbers is different countries
actually have their own numbers. So we looked this up and here's some cool examples. In UK, it's NINO, which is National Insurance Number. In Canada, it's SIN, SIN, Social Insurance Number. In Australia, they call it the tax file number. New Zealand, it's the IRD number, Inland Revenue Department number. And in India, Manasa, you pronounce this one.
Yes, in India it's the Aadhaar number. quickly, what is a tax identification number? It's a nine digit number, which is either an employer identification number assigned by the Internal Revenue Service or a Social Security number assigned by the Social Security Administration or an ITIN
which is an individual tax identification number, again, assigned by the Internal Revenue Service. Brief history, a Social Security number started in 1935, finally was implemented in 1961. I believe the Civil Service Commission adopted their Social Security number as an official federal employee identifier. And then the Internal Revenue Code
made amendments requiring each taxpayer to furnish an identifying number for their tax reporting purposes. So that's how I guess the IRS and the SSA started to talk to each other. The ITIN program was introduced much later. It was created in 1996.
The International Money Café (02:21.399)
for the purpose of allowing tax return filings by individuals who do not have a social security number. receiving an ITIN number in itself does not confer the right to work or receive income of the United States. So, yeah. And I love what you just said. So when can you get the social security number? I think is the one I'm going to go with. So.
you're entitled and you should go ahead and apply for a social security number one, if you're a citizen, meaning you're born in the U S that's one, or if you're born abroad to you as parents, obviously you need to go apply at the U S consulate or the embassy. Now, if you're non-immigrant visa holder, we talk a lot about all these work visas.
you were allowed to go get the social security number because you need a way to be filing your taxes. Now the F1 visa, the student visa, that's always an interesting one. I remember when we first came here and we went to apply for the social security number as an F1 visa holder, we could get the social security number, but it would be stamped not authorized to work. So even though we had the number, we really couldn't use it to work.
Or let's say if you're coming to the US as a green card holder, you are entitled and you should go ahead and apply for the social security number. Okay, the I-Team. To apply for the I-Team, you use form, I believe it's W7 with IRS, and you can do this via a certified acceptance agent, and you can actually find a lot of these agents overseas. So you don't necessarily have to be in the US to apply for it.
That's of course is assuming you're eligible to get it. You may not be eligible for the social security number. So think of a situation where you have some sort of income that you need to report, but you can't get the social security number, but you still need to file your taxes. You still need to report it. That's when you go ahead and do the IT. Other situations where you should be able to apply for the IT is let's say if you're the dependent or spouse of a non-immigrant visa holder. So this could be
The International Money Café (04:41.032)
also including kids. And again, you can apply the first year with IRS or certified acceptance agents. You're going to need again, the W7 paper file. And a lot of times what happens is you go file your taxes. You don't have a social security number. As part of that application, you'll be able to apply for the IT.
Yeah. Right, Jane. So. Let's talk about where's the item used, right? You already said tax returns, but these could also be used for claiming treaty benefits. And remember, you know, if you are a non resident alien, that is somebody who's not as US citizen or a US visa may not even be present in the US, but you have US source income and you need to file a tax return.
then you may need to get an ITIN because you may want to claim treaty benefits or claim refunds of the amounts that have been withheld. Speaking of withholdings, an ITIN must also be on a withholding certificate. If you are a beneficial owner of some kind of an effectively connected income, which is from the US, and you're claiming
an exemption for this effectively connected income or you're claiming exemptions on certain annuities, et cetera. So that's where it's used for dependents who are on ITINs. You can use your ITIN for your school, for your college. You can also use it to open a bank account and also get your credit history together. that's lot of places. Yeah.
Yeah, which is fantastic because it really does allow you to operate in the US. So a couple more things I did want to add about the ITN is one, we know they can expire if not used for five years on a tax return. We also know dependents with ITN are not eligible for full child tax credit if living in the US and you cannot claim an income credit
The International Money Café (07:00.811)
on the ITIN. Anything else you can think about the ITIN or you want to jump to the next one? Yeah, no, the real quickly on the ITIN though, and you may want to reference another episode that we have on getting married to a non-resident spouse. So that's definitely another time when you or your spouse has to apply for an ITIN. But remember, being on a US tax return with
a US citizen entails other tax disclosure requirements. Just putting this out there about items. there's another important tax ID, which is the employer identification number. An employer identification number is usually a number that you apply with the Internal Revenue Service.
when you are opening a business entity in the US. So it could either be a disregarded entity, which is a limited liability company or a corporation or some other trust or any one of those reasons for which you would need an EIN number. Also, you will need an EIN number to open a bank account for this entity that you have just opened.
And for tax filing purposes obviously. apply for the EIN, you need to have a responsible party. That means somebody who the US government can identify who is applying for the EIN. So in order to be a responsible party, you need a social security number or an ITIN.
All of these are interconnected. But these are some of the important tax identification numbers that are used in the US. Anything, you know.
The International Money Café (09:11.69)
I think we've covered all the three main numbers. The only other thing I want to say is you do want to make sure your ID is not compromised, whatever the ID is. And we have an episode that will link to this where we actually talk about identity theft and how to protect yourself. And that's all I have to add to this. Yes. All right. So I guess we came in under 10 minutes. So references.
to the episode is available in our show notes or on our newsletter. And please go to our website. It's a brand new one. And sign up to get our newsletter and make sure that you know of all the episodes that drop. Thanks for listening. Bye. Bye.
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