This article is written to assist Canadian individuals who may find themselves in a situation where they need to file United States income tax returns. This could be the result of many reasons including; owning and renting property in the U.S., selling vacation property, or receiving investment income etc.
Canadian residents who are required to file or wish to file a U.S. individual income tax return, must first obtain a U.S. taxpayer identification number, commonly known as an ‘ITIN’ from the Internal Revenue Service (IRS). IRS Form W-7 is used to apply for the ITIN. U.S. taxpayer identification (ITIN) An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. The IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security number (SSN) from the Social Security Administration (SSA).
Form W-7 is used to apply for the ITIN. Original, valid passports are required to be submitted to the IRS as support for Form W-7.
ITIN’s are normally required to be submitted to the IRS along with Form 1040NR (individual tax return) during tax filing season. However, the IRS does permit a few exceptions wherein the ITIN can be applied for separately, in advance of filing the 1040NR. For example, one of the exceptions includes obtaining an exemption for 30% withholding tax on gross rents from a property management company or tenant. Specific templates and instructions are required to be followed by the IRS for this and other exceptions. Best to review with a tax professional.
ITIN’s are issued by the IRS by way of a letter mailed to the applicant’s address. You will receive a letter from the IRS assigning your tax identification number usually within seven weeks if you qualify for an ITIN and your application is complete. ITINs do expire after three years.
Certified Acceptance Agent
As mentioned previously, in order to apply for an ITIN, an original, valid passport must be submitted to the IRS along with Form W-7. The passports are returned by regular mail. For various reasons, primarily ongoing travel purposes, many people are not able to do without their passports for an extended period of time. The IRS recognizes this, and as an alternative, applicants can use the services of a ‘Certified Acceptance Agent’ to validate the passport and submit the ITIN application. The firm of Williams, Payne & Associates offers this service, which allows owners to retain possession of their passports. Passports are reviewed in our offices and returned immediately to the owner. Our firm then prepares Form W-7 along with any other required documents, and submits these to the IRS. Our firm also prepares U.S. and Canadian individual income tax returns – we can handle all of your income tax filing requirements in one stop.
The Certified Acceptance Agent accreditation was awarded to our firm as the result of meeting stringent educational standards and ongoing performance measures. We are pleased to be able to provide this valuable service to our clients. Our firm also prepares U.S. and Canadian individual income tax returns – we can handle all of your income tax filing requirements in one stop.
Williams, Payne & Associates is located in Newmarket Ontario servicing the York Region and Greater Toronto Area and beyond. The firm provides tax and accounting services as well as registered as tax preparers with the Canada Revenue Agency (CRA) & Internal Revenue Service (IRS). The firm is also registered as an IRS Certified Acceptance Agent.
NEWMARKET, KESWICK, AURORA, STOUFFVILLE, TORONTO AND RICHMOND HILL CANADIAN AND U.S. TAX SERVICES
Such as cross border issues, U.S. tax returns, snowbirds, expatriate, appeals, business expansion, FBAR, rental properties, incorporations, restructuring, estate planning, CRA appeals Estate Planning Newmarket Ontario
– Freezes-passing on future appreciation
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– Wasting freeze-share redemptions (using GRIP)
– Shareholder agreements/buy-sell
– Wills
Post Mortem Planning Newmarket Ontario
– Corporate restructuring -bump, pipeline
– Terminal, rights/things tax returns
– Corporate Restructuring & Succession Planning Etobicoke Ontario
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– Shareholder split-up, asset spin-offs
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– GRIP crystallization, secure loan-back, purification
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Partnership Restructuring Newmarket Ontario
– Incorporation of partnerships
-Wind-up partnership
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Miscellaneous Newmarket Ontario
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Certification of IRS Form W-7 – Newmarket Ontario
We are an IRS Certified Acceptance Agent (“CAA”). This status allows me to certify IRS Form W-7 (“Application for Individual Taxpayer’s Identification Number”). The ITIN is needed for:
– non-U.S persons filing U.S. tax return 1040NR, the W-7 is attached to the return
– persons claiming an exemption for a non-U.S. person as an eligible dependent on a U.S. tax return
– non-U.S. persons completing IRS Form W8-ECI/W8-Ben that is required for waivers for reduced withholding of the otherwise 30% U.S. non-resident tax, say on gross rental income and other passive income
– purchasers of U.S. real estate from a non-U.S. person completing IRS Form 8288A or 8288-B (application for reduced withholding) on the sale of U.S. real estate Canadian & U.S. Tax Services
There have been changes to the process as announced in June 2012 and in November 2012 by the IRS. To prove foreign status and identity, you must submit certain original documentation or certified copies issued by the issuing agency. Your passport as a stand-alone document will prove both foreign status and identity. For those renting U.S. properties, you need to obtain a letter from the management company on their letterhead indicating that the ITIN is needed for reporting and/or withholding purposes. This letter must be attached to the W-7. Other withholding agents must prepare a similar letter.
For my certification of the W-7, you need to get a copy of your passport certified by the passport office if you do not wish to send original documents. Without my certification, there is the likelihood that your W-7 has not been prepared accurately and completely, resulting in processing delays that will affect the processing of your U.S. tax return (say the U.S. 1040NR) and acceptance of waiver applications for reduced tax withholding. As a CAA, I have direct contact with the ITIN office should any difficulties arise. ITINs for dependents may require submission of original documentation.
Please contact our office to schedule an appointment. We look forward to supporting you.
