You’ve immigrated to the United States, and you’ve probably heard that you need an ITIN number to pay your taxes. You’re probably wondering, “Can I work legally with an ITIN?”
We’re going to cover all the bases, so you’ll learn everything you need to know about an ITIN. That includes: what it is and if you can use it to work or start a business.
|Table of contents|
|1. What is an ITIN for?|
|2. Can I work legally with an ITIN?|
|3. Five things you can do with an ITIN|
|4. ITIN limitations|
|5. ITIN application|
|6. You definitely need an ITIN|
|7. Frequently asked questions|
What Is An ITIN?
If you earn money in the United States, you have to pay taxes using your SSN (Social Security Number). That’s an undeniable fact aapnd something everyone needs to do (especially business owners).
But resident and nonresident aliens can’t get one.
What can you do if you’re not eligible to get an SSN?
If that’s the case, you can get an Individual Tax Identification Number or ITIN. Once you get the nine-digit number, you can use it to comply with your tax obligations.
ITIN stands for Individual Taxpayer Identification Number.
But here’s the thing, while the IRS created it for a tax reason, you can use it for other things. Your ITIN number can do much more than make Uncle Sam happy.Learn also how to verify your EIN number
Can I Work Legally With An ITIN?
The answer is a bit complex.
To work in the United States, an applicant must have a valid SSN issued by the US government to eligible residents.
Before an employer hires someone, they check the 9-digit number so they can report wages and income tax withholding to the IRS and Social Security Administration offices.
Legally, resident and nonresident alien employees cannot be W-2 employees if they don’t have a Social Security Number (SSN).
If employers accept an ITIN in place of an SSN for employment verification purposes, they face IRS penalties.
However, they can employ a self-employed independent contractor with an ITIN.
This person (the ITIN-holder) receives a 1099 statement at the end of the year rather than a W-2 because they aren’t employees and don’t have taxes withheld from their paycheck.
What Else Can You Do With An Individual Taxpayer Identification Number?
Most people think that your ITIN is only for tax purposes, but that’s not even close to the truth. The nine-digit number has five additional uses.
Check them out:
Establish Proof Of Residency
There could come a time when you need to prove how long you’ve lived in this country. Having electric bills in your name won’t be enough. You need proof that you have lived here and paid taxes.
And that’s where an ITIN can come in. As you already know, this nine-digit number allows you to file your taxes. And a tax return is a quick and easy proof of how long you’ve lived here.
Don’t confuse proof of residency with a proof of identification. Neither an ITIN nor a tax return are proof of identification.
Get A Business Loan
Part of living the American dream is starting your own business. There’s just one problem, though. Any type of business needs financing to grow and thrive. In other words, you need the money to do it.
Here’s the thing, most lenders require that you have a social security number to obtain a business loan. If you’re an undocumented immigrant, that leaves you out.
Or does it?
Several lenders in the country let you obtain financing even if you only have an ITIN number.
But there’s a catch; if you don’t know of a good lender that accepts ITINs, you could spend days or weeks searching for the right option.
Fortunately, you can save yourself time and effort by choosing Camino Financial.
We offer ITIN loans, so you don’t have to spend your time searching. Just apply and get the money you need for your business.how to get ITIN loans to finance your business
Get A Driver’s License
A driver’s license means freedom in the United States, it’s a much-needed ID, and it can allow you to go anywhere (at least by car). You definitely want to get a license to legally drive to work, see friends, and so much more.
Many people think you need a social security number to get a license.
Fortunately, some states do accept ITINs for people who want driver’s licenses. If you’re going to get a driver’s license, see if your state is one of the many granting licenses for immigrants with ITINs.
Then, you can hit the open road legally.
Open An Interest-Bearing Bank Account
Here’s something that most people don’t think about. The interest you earn with a bank account is income. But, like other forms of income, you have to pay taxes on it.
And if you don’t have the proper tax identification number, you cannot open an interest-bearing bank account.
While some people think you have to get a social security number to open an interest-bearing bank account, that isn’t true.
You can open your account with an ITIN number with some banks. Then, you can start earning some interest on what you deposit.
If you’re running a business in the United States, this is a must. With an interest-bearing account, you can make your money work for you. Now, that’s how you live the American dream.Learn how to open a bank account without an SSN
Obtain A Mortgage
The American dream involves something else.
Buying a house!
You know that you’re really living the dream once you purchase some real estate.
You can make that dream come true when you have an ITIN number. Some lenders will provide you with the loan you need for your mortgage.
And it gets better. While you might think you need to have a massively high credit score to get a mortgage with an ITIN number, that’s not always true.
You can get approved with a credit score in the 620 range. Some lenders only require 3 percent down, too.
That’s not bad for putting your stake in the American dream.
While your ITIN number is useful for several things, it does have some limitations.
- First, it won’t change your immigration status. If you are currently an undocumented immigrant, the classification will still be such, even if you get your ITIN.
- Technically, an ITIN doesn’t give you employment eligibility. Of course, a person can work or run a business, but their ITIN is only a tool to pay taxes. It doesn’t change their legal status.
- You also won’t be eligible for social security benefits when you get an ITIN. You will need a Social Security Number (SSN) to qualify for these benefits.
But it’s not all bad. Check out this limitation:
- An ITIN number is not for immigration enforcement. At its core, it helps the government collect taxes. Applying for an ITIN won’t hurt you or affect you in any way. It will just help you.
Use these steps to apply for an ITIN:
- Complete a form W-7 (application for IRS Individual Taxpayer Identification Number) and attach it to your completed federal tax return. You can file anytime within a calendar year if you have a filing and reporting requirement.
- Submit required original ID documents to verify your identity and foreign status.
- Mail the form W-7 return, original identity, and foreign status documents to Internal Revenue Service, Austin Service Center, ITIN Operation, PO Box 149342, Austin, TX 78714-9372. Note: this is the only time you file a return to this specific address.
- Apply in person using an IRS-authorized certifying acceptance agent to verify your original documents and provide certified copies.
- A third way to apply is to visit an IRS Taxpayer Assistance Center. They will verify your identity and foreign status documents so you can keep your originals while they process the application.
- The IRS, on average, issues a letter within 7 weeks showing the new ITIN.
ITINs expire within 5 years or sooner if the individual has not submitted at least one tax return within that time frame.
To renew an ITIN, follow these steps:
- Complete a form W-7 application and include original or certified copies documenting your identity and foreign status.
- Then, attach everything to your federal income tax return.
- The IRS issues Notice CP565 when they renew an ITIN.
An Individual Tax Identification Number doesn’t change unless the IRS revokes it.
You Definitely Need An ITIN
Now you know the answer to “Can you work with an ITIN number?”
There are lots of reasons to get this tax number. Yes, you should get one to pay taxes, but that’s not all.
Your ITIN can also help you get a small business loan, establish proof of residency, and so much more.Learn how to pay taxes as an undocumented immigrant
Can you work in the US with an ITIN number?
Employers cannot legally hire individuals as employees unless they have a valid SSN.
That said, you can work as an independent contractor and perform services because there’s no income tax withholding.
Are there any jobs that accept ITIN numbers?
As previously mentioned, it is possible to employ independent contractors with an ITIN.
Popular contracting jobs that accept ITIN numbers include:
What happens if you use a fake SSN to get a job?
It’s illegal to falsify an SSN because it belongs to someone else. Employees’ wages and withheld taxes appear on the account of the legal holder of the SSN, making them liable for any Federal tax due.
When using another person’s SSN, a US citizen faces legal prosecution proceedings; illegal immigrants can face immediate deportation.