Ready to start filing taxes? This year’s tax season gets started this coming Friday, Feb. 12. That’s when the Internal Revenue Service will begin to accept and process 2020 tax returns. While previous years have allowed taxpayers to start filing in January, this year, the IRS pushed the date out by a few weeks to allow for system adjustments following the second round of Economic Impact Payments and other benefits that were implemented at the end of last year.
As usual, legal residents and citizens use their Social Security number and the respective form, depending on income (W-2 for full-time employees, 1099 if self-employed, etc.). But for immigrants who generally file their taxes using an Individual Taxpayer Identification Number (ITIN), the process this year may be a little different.
Here’s a helpful guide for those who file their taxes with an ITIN:
1. What is an ITIN?
Foreigners use this number to pay taxes on accrued interest from a bank or investment account in the United States, or on income from working with American individuals or businesses.
It’s also used by students, apprentices and teachers who have earned salaries and scholarships, along with spouses of visa holders authorized to work to pay self-employment income tax. You do not have to have legal status to apply for an ITIN.
While a tax return using ITIN does not guarantee legal or employment status, it allows you to open a bank account with interest, obtain a driver’s license in some states, and helps immigrants provide a record of the time they’ve spent in the country when legalizing their status.
2. How to obtain or renew an ITIN?
The process for renewing an ITIN is the same as the process for applying for a new ITIN.
You don’t need to apply in person (you can fill out the form and mail it to the IRS and they will send your ITIN to your provided address), and it’s free.
The only requirement is to fill out the application form (W-7) with basic information such as name, date of birth and address; a federal tax return; and proof of identity (you can use your passport, driver’s license, visa, etc.).
The ITIN must be revalidated every 5 years and expires after three if not used.
3. Will the legal status of an immigrant be disclosed to other government agencies?
Despite the concerns, the ITIN is NOT a tool for immigration enforcement.
Under Section 6103 of the Internal Revenue Code, the IRS is not authorized to release taxpayer information to other government agencies, except to the Department of the Treasury for investigations related to tax crimes or to respond to court orders for that reason.
In fact, for the IRS to share information with other agencies, U.S. laws would have to change, which isn’t currently being pursued by Congress.
4. Are there any benefits?
In addition to a possible refund, there are some tax credits that you can take advantage of regardless of your immigration status.
For example, the Child Tax Credit (CTC) is worth up to $2,000, and the Additional Child Tax Credit (ACTC) could give you up to $1,400 as a refundable qualifying child credit.
Although these two tax credits require the child to have a Social Security number, you as a taxpayer can claim them as long as you have obtained your ITIN.
Previously, a tax return allowed a child credit to be obtained for the person who filed it, but under the Trump administration, this is no longer possible if the child is undocumented, according to the organization of the United States Immigration Council.
5. Other things to keep in mind
As of Dec. 31, 2020, two categories of ITIN expired:
- ITINs that have not been used on a federal tax return at least once during tax years 2017, 2018, or 2019.
- ITINs with the middle digits: 90, 91, 92, 94, 95, 96, 97, 98 or 99, which were assigned before 2013 and have not yet been renewed, also expired at the end of 2020. Reminder that ITINs with middle digits (example: 9NN-83-NNNN) from 83 to 87 expired last year. The middle digits 73 to 77, 81 and 82 expired in 2018. The middle digits 70, 71, 72 and 80 expired in 2017, and 78 and 79 expired in 2016. In 2020, the ITINs with the middle number 88 expired as well.
- Filing tax returns with an expired ITIN will likely result in processing delays until the ITIN is renewed. This includes refunds for some tax credits, such as the Child Tax Credit and the American Opportunity Credit.
- If you did not receive the first and/or second economic stimulus check, but believe you qualified for it, you can claim the “Refund Recovery Credit” on your Form 1040 (tax form). It is important that you review the get my payment page on the IRS website to be sure that you qualify. Remember that the second economic stimulus package allowed for mixed status families to be eligible for government aid through members of the family and children with Social Security numbers. At this time, your ITIN does not make you eligible for the second round of stimulus checks with these new changes.