Net income provides a more accurate account of the financial status. Here’s why.
What is the Individual Taxpayer Identification Number (ITIN)?
The Individual Taxpayer Identification Number, or ITIN, is to a nine-digit number issued by the Internal Revenue Service (IRS) to someone living in the United States who doesn’t have a Social Security number. The ITIN allows that person to identify herself to the IRS when she files her tax returns.
An ITIN is required for individuals who are required to file taxes, but don’t have a Social Security number and are ineligible to receive one, such as undocumented immigrants. Without a taxpayer identification number, someone without a Social Security number won’t be able to identify herself to the IRS for the purpose of paying her taxes or receiving a tax refund. Undocumented immigrants contribute over $11 billion in taxes every year.
The IRS issues ITINs to residents of the U.S. who don’t have Social Security numbers as well as nonresident aliens when they need to file a tax return. Dependents and spouses of either type of person also need an ITIN.
ITINs expire periodically due to lack of use, or when the IRS that deems that it needs to sunset certain series of numbers, and they must be renewed if the person it belonged to needs to file taxes again. People who had an ITIN but later received or became eligible for a Social Security number will also have their ITINs expire.
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Individual Taxpayer Identification Number (ITIN) example
James is an immigrant in the United States. Because he needs to pay his taxes but can’t obtain a Social Security number, he has to apply for an ITIN. He fills out the IRS’s Form W-7, the Application for IRS Individual Taxpayer Identification Number, and mails it to the IRS service center in Austin, Texas, along with his tax return and proof of identity. The service center mails him an ITIN after processing his information.
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