If you’re a Canadian who is earning income in the United States, you may need to obtain an Individual Taxpayer Identification Number (ITIN) from the Internal Revenue Service (IRS). An ITIN is a nine-digit tax processing number that is issued to individuals who are required to file US taxes but do not have or are not eligible to obtain a Social Security Number (SSN).

Here’s everything you need to know about obtaining an ITIN for Canadians.

Why Do Canadians Need an ITIN?

If you’re a Canadian who is earning income in the US, you will need to file a US tax return with the IRS. To do so, you will need an ITIN if you do not have or are not eligible to obtain a Social Security Number (SSN).

Common reasons why Canadians may need an ITIN include:

  • Owning rental property in the US
  • Selling real estate in the US
  • Earning income from a US business
  • Receiving certain types of income from the US, such as dividends, interest, or royalties

How to Apply for an ITIN

To apply for an ITIN, Canadians must submit Form W-7, Application for IRS Individual Taxpayer Identification Number, to the IRS. The form must be completed accurately and accompanied by original documents, such as a valid passport, that establish your identity and foreign status.

Alternatively, you can apply for an ITIN through an IRS-authorized Acceptance Agent or Certified Acceptance Agent. These agents are authorized by the IRS to assist individuals in obtaining ITINs and can certify your identity and foreign status.

When to Apply for an ITIN

It’s important to apply for an ITIN as soon as possible if you need one. The application process can take up to 12 weeks to process, and longer during peak tax season.

If you need to file a US tax return and do not have an ITIN, you can attach Form W-7 to your tax return and submit both documents together. However, if you submit your tax return without an ITIN or Form W-7, your return will be considered incomplete and may be subject to penalties and interest.

Renewing Your ITIN

If you have been issued an ITIN, it’s important to keep track of when it will expire. ITINs expire if they are not used on a US tax return for three consecutive years.

To renew your ITIN, you will need to submit a new Form W-7 and original documents that establish your identity and foreign status. You should submit your renewal application as soon as possible to ensure that your ITIN does not expire.

In conclusion, obtaining an ITIN is an important step for Canadians who are earning income in the US and need to file US taxes. By understanding the application process and when to apply, you can ensure that you are compliant with US tax laws and avoid penalties and interest.