Four ITIN questions clients commonly ask:
When does my ITIN expire?
ITINs that haven’t been included on a U.S. federal tax return at least once in the last three consecutive tax years will expire. In addition, ITINs that were assigned before 2013 will expire according to an annual schedule based on the middle digits of the ITIN. The middle digits refer to the fourth and fifth positions of the ITIN. For example, the middle digits for 9xx-78-xxxx are “78.”
2. Does my ITIN need to be renewed when it’s expired (per IRS letter notice)?
Depends whether or not you’re filing a US tax return.
Expired ITINs or ITINs that are about to expire must be renewed in order to avoid delays in processing one’s tax return and preventing dis-allowance of credits and deductions that otherwise rely on return reporting of a valid TIN.
If your ITIN is only used on information returns filed with the IRS by third parties, you don't have to renew your ITIN, even if the ITIN has expired for purposes of filing a U.S. federal tax return. However, in the future, if you file an income tax return, you will need to renew your ITIN at that time.
3. What do I do when I am assigned a social security number (SSN) subsequent to my ITIN?
Once you receive a SSN, you must use that number for tax purposes and discontinue using your ITIN.It is improper to use both the ITIN and the SSN assigned to the same person to file tax returns.It is your responsibility to notify the IRS for it to combine all of your tax records under one identification number.If you do not notify the IRS when you are assigned a SSN, you may not receive credit for all wages paid and taxes withheld which could reduce the amount of any refund due.
You can visit a local IRS office or write a letter explaining that you have now been assigned a SSN and want your tax records combined.Include your complete name, mailing address, and ITIN along with a copy of your social security card and a copy of the CP 565, Notice of ITIN Assignment, if available.The IRS will void the ITIN and associate all prior tax information filed under the ITIN with the SSN. Send your letter to: Internal Revenue Service Austin, TX 73301-0057
4. Why and by When do Foreign Property Buyers/Sellers need ITINs?
Foreign buyers and sellers of U.S. real property interests need Taxpayer Identification Numbers (TINs) to request reduced tax withholding when disposing of the property interest, and to pay any required withholding. Individuals who do not qualify for Social Security Numbers may obtain Individual Taxpayer Identification Numbers (ITINs) to meet the requirement to supply a TIN.
Joint owners each need their own ITIN and tax return – make sure buyer’s lawyer issues 8288 to both names and in percentages owned.
Common mistakes I see made at buyer’s end (lawyer or title co) are:
•They issue the 8288 & 8288-A only to one Canadian spousal owner and not to both (or all owners)
•The 8288 & 8288-A forms are incorrectly completed. Buyer or its representatives need to hire someone competent to prepare or review these forms.
•If buyer’s side gets either of above points wrong, it will create headache and extra expense for you, the seller.
Note that seller can attach an ITIN application (W-7) to 8288 and need not already have a TIN at sale date. So, the hysteria surrounding a 20 day rush is overrated. Note that the seller can file 8288 forms without buyer’s ITINs if not procured within 20 days of sale date.
No one on this planet can get an ITIN sooner than six weeks.