ITIN Glossary: 30+ Tax Terms Explained

ITIN stands for Individual Taxpayer Identification Number. It is a 9-digit number issued by the IRS to individuals who need to file US tax returns but are not eligible for a Social Security Number. The ITIN starts with the digit 9 and has specific middle digit ranges (50-65, 70-88, 90-92, 94-99). ITINs are used exclusively for tax purposes and do not authorize employment in the United States.

TIN (Taxpayer Identification Number) is an umbrella term that includes all tax IDs. SSN (Social Security Number) is issued by the Social Security Administration to US citizens and authorized workers. ITIN (Individual Taxpayer Identification Number) is issued by the IRS to individuals who are not SSN-eligible. EIN (Employer Identification Number) is issued by the IRS to businesses and organizations. Each serves a specific purpose in the US tax system.

A Certifying Acceptance Agent (CAA) is an individual or organization authorized by the IRS to assist with ITIN applications. CAAs verify identity documents on behalf of the IRS, which means applicants do not need to mail original documents. CAAs must pass IRS suitability checks and complete a formal application process. Using a CAA through itin.so costs $297 (Standard) or $297 (Express) and includes W-7 preparation, tax return preparation, and document verification.

Form W-7 is the IRS Application for Individual Taxpayer Identification Number. It is a 2-page form that ITIN applicants complete and submit to the IRS along with a federal tax return and identification documents. Form W-7 collects your personal information, reason for applying, and identification details. The form is submitted by mail to the IRS Austin Processing Center or through a Certifying Acceptance Agent.

A CP565 notice is the official IRS letter that contains your assigned ITIN. It is mailed to the address you provided on Form W-7 after the IRS completes processing your application. The CP565 is a single-page document showing your name, address, and 9-digit ITIN. Keep this notice in a safe place as it serves as your proof of ITIN assignment. If lost, you can request a replacement by calling the IRS at 1-800-829-1040.

FIRPTA stands for Foreign Investment in Real Property Tax Act. It requires a 15% withholding on the sale price when a foreign person sells US real property. ITIN holders who sell US property are subject to FIRPTA withholding. They can file Form 8288-B before closing to request reduced withholding, or file a US tax return after the sale to claim a refund of excess withholding. An ITIN is required for both processes.

Form 1040 is the standard US individual income tax return for US citizens and resident aliens. Form 1040-NR is the US Nonresident Alien Income Tax Return for individuals who are not US residents. ITIN holders who are nonresident aliens typically file 1040-NR. Those who meet the substantial presence test or elect to be treated as residents file Form 1040. The correct form depends on your residency status under the IRC substantial presence test.

Backup withholding is a 24% tax that payers must withhold from certain payments when the payee does not provide a valid TIN or provides an incorrect TIN. Banks, brokerages, and other financial institutions may apply backup withholding to interest, dividends, and other payments if you do not have a valid ITIN or SSN on file. Obtaining an ITIN and providing it to your financial institution prevents backup withholding on your accounts.

FATCA stands for Foreign Account Tax Compliance Act. It requires foreign financial institutions to report accounts held by US persons (including ITIN holders) to the IRS. If you hold financial accounts outside the US and have an ITIN, FATCA may require your foreign bank to report your account information to the IRS. FATCA is separate from FBAR reporting but both aim to ensure US tax compliance for foreign accounts.

A tax treaty is a bilateral agreement between the US and another country that determines how income is taxed to avoid double taxation. The US has tax treaties with over 65 countries. ITIN holders from treaty countries may qualify for reduced US tax rates on certain income types (dividends, interest, royalties, pensions). To claim treaty benefits, ITIN holders file Form W-8BEN or include treaty claims on their US tax return. The treaty article and country must be specified.