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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Speaker 1 (00:06):
Welcome to the International Money Cafe Podcast, the show where we filter out the noise on cross-border taxes, finances, and life in the us. I'm your host, Jen Hams, certified financial planner, founder and owner of Elgon Financial Advisors,
Speaker 2 (00:21):
And I'm your host, man Nadi, enrolled agent, owner and founder of Amman Tax and Business Services. Join us on this journey as we explore the unique challenges faced by inbound outbound families and businesses on taxes, compliance, and financial planning. Let's get to the show
Speaker 1 (00:43):
And we are back with another shorty episode where in 10 minutes or less, Monica and I will take a terminology in the cross-border space and can I just tell you what it is in common English as we say.
Tax Identification Number (TIN)
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 look this up and here's some cool examples. In UK it's nine oh, which is National Insurance number. In Canada, it's SIN seen 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, Manas, you pronounce this one.
What is a Tax Identification Number?
Speaker 2 (01:39):
Yes, in India it's the AHA number. So 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 I 10, 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 this 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 S bss A started to talk to each other. The program was introduced much later. It was created in 1996 for the purpose of allowing tax return filings by individuals who do not have a social security number. So receiving an IT number in itself does not confer the right to work or receive income in the United States.
When can you get a Social Security Number?
Speaker 1 (03:14):
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 are entitled, and you should go ahead and apply for a social security. Number one, if you're a citizen, meaning you are born in the us that's one. Or if you're born abroad to US parents, obviously you need to go apply at the US consulate or the embassy. Now, if you're non-immigrant visa holder, we talk a lot about all these work visas, you are 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 scammed, not authorized to work.
Speaker 1 (04:14):
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 IT team to apply for the IT team you use from, I believe it's W seven 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 of course is assuming you are eligible to get it. It means 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 also including kids. And again, you can apply the first year with IRS or certified acceptance agents. You're going to need again the W seven 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.
Where is the IT used?
Speaker 2 (05:40):
Yes. And let's talk about where's the IT used, right? You already said tax returns, but these could also be used for claiming treaty benefits. And remember, if you are a non-resident alien that is somebody who's not a 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 item because you may want to claim treaty benefits. So claim refunds of the amounts that have been withheld. And 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 are claiming exemptions on certain annuities, et cetera. That's where it's used for dependents who are on its. You can use your IT for your school, for your college. You can also use it to open a bank account and also get your credit history together. So that's a lot of places.
Speaker 1 (07:00):
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 IT is one, we know they can expire if not used for five years on a tax return. We also know dependents with IT are not eligible for full child tax credit if leaving in the US and you cannot claim and income credit on the it. Anything else you can think about the IT or do you want to jump to the next one?
Speaker 2 (07:33):
Yeah, no real quickly on the IT 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 item. But remember being on a US tax return with a US citizen entails other tax disclosure requirements. So just putting this out there about it. And also there's another important tax ID which is the employer identification number. An employer identification number is usually a number that you apply with 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 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. But to 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 respons, you need a social security number or an item. So all of these are interconnected, but these are some of the important tax identification numbers that are used in the us. Anything else you can think about? Jane?
Speaker 1 (09:30):
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.
Speaker 2 (09:48):
Yes. Alright, so I guess we came in under 10 minutes, so references to the episode is available in our show notes or our non 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.
Speaker 3 (10:15):
Thank you for listening to the International Money Cafe podcast. The content is for informational and educational purposes only and should not be used as a substitute for professional advice. Seek the advice of your qualified service provider with any questions you may have regarding your cross order finances and tax needs.