Individual
Taxpayer Identification Number
What is ITIN?
An ITIN, or individual Taxpayer Identification Number, is a tax processing
number that became available on July 1, 1996, for certain nonresident and
resident aliens, their spouse, and dependents. The ITIN is only available
to individuals who cannot get a Social Security Number (SSN). It is a 9-digit
number, beginning with the number "9", formatted like an SSN (NNN-NN- NNN).
The temporary IRS Number previously assigned is no longer valid.
What is the purpose of an ITIN?
ITINs are only used for federal income tax purposes. The issuance of
an ITIN does not entitle the recipient to Social Security benefits
or the Earned Income Tax Credit (EITC); create an inference regarding the
individual's immigration status; give the individual the right to work
in the U.S.
When completing the tax return (1040, 1040A, 1040EZ, 1040NR, 1040NR
EZ), the individual will enter their ITIN in the space for the SSN.
How do I know if I need an ITIN?
If you must file a U.S. tax return or you are listed on a tax return
as a spouse or a dependent and you do not have, and cannot obtain, a valid
Social Security Number, you must apply for an ITIN. The IRS no longer accepts
"SSA205c", "applied for", "NRA", blanks, or previously issued IRS temporary
numbers. Include your ITIN on the return to ensure prompt processing and
receipt of any refund. New Internal Revenue Regulations require including
a valid Tax Identification Number (TIN) on all U.S. federal income tax
returns. Each person listed on the return must have a valid TIN (either
an SSN or an ITIN). If a return requesting a refund is filed without an
SSN or ITIN for the primary filer and spouse, the refund will be delayed
until they obtain the
Identification number. If a dependent SSN/ITIN is missing, the exemptions
will be denied and refunds will be adjusted accordingly. If you are previously
issued a temporary IRS Number, you must now apply for an ITIN.
How do I apply for an ITIN?
To obtain an ITIN, you must complete IRS Form W-7, Application for
IRS Individual Taxpayer Identification Number. You may complete and sign
a Form W-7 for a minor dependent. However, other dependents and spouses
must complete and sign their own Forms W-7. The Form W-7 requires documentation
substantiating foreign/alien status and true identity for each individual.
If you, your spouse and/or dependents need ITINs, you may submit separate
Forms W-7 and documentation at the same time. You may either mail the documentation,
along with the Form W-7, to the Philadelphia Service Center, present it
at IRS walk-in offices, or process your application through Acceptance
Agent authorized by the IRS.
Are ITINs valid for work purposes?
No. ITINS are only used for federal income tax purposes. Alien individuals
who are legally admitted to the U.S. for permanent residence or other categories
which authorize U.S. employment are eligible for Social Security Numbers
(SSNs). Individuals who are eligible for SSNs are ineligible for ITINS.
What are Acceptance Agents?
Acceptance Agents are entities (colleges, financial institutions, accounting
firms, etc.) Who are authorized by the IRS to assist applicants in obtaining
ITINs. They review the applicant's documentation and forward the completed
Form W-7 to IRS for processing. For more information on ITIN check
out Publication 1915, Understanding Your IRS Individual Taxpayer Identification
Number.
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Paper
Wealth is the Name of the Game
Paper wealth is also called being wealthy "on paper". In fact, the
majority of wealthy people possess paper wealth. What this means is unlike
currency in the way of cash-on-hand, and savings and checking accounts,
their money is tied up in various investments, like stocks, bonds, money
market accounts, CDs, real estate, etc. However, a cash-flow is necessary
to make the initial investments. With regard to individual assets, keep
in mind that on a balance sheet and income statement cash "is" an asset.
Also, an additional determinant of wealth is liability, as with assets
come liabilities.
A point to consider, is that most people think their homestead is an
asset. It isn't. It's a liability, and since it's also an investment, people
should purchase homes, live in them long enough to build up some equity,
then put that baby on the market to sell for a profit. The profit can be
used to reinvest in real estate or some place altogether different. In
any case, you want equitable assets that give you a borrowing advantage
and liquid assets that give you cash-out advantage.
Having paper wealth means you own a lot of tangibles by way of investment;
deeds, CDs, titles, and other kinds of paper to signify your interest percentage,
all that add up to a total net worth. If you're said to be worth $40 mil,
that doesn't mean you have $40 mil sitting in some bank. It means that
combined, money in the bank, real and personal property, investments, etc.
are valued at that amount. If you found yourself facing a difficult debt,
you have the resources to liquidate to cash and make your payment.
Pertaining to real estate, what the most appropriate investment to
be made with those proceeds will be determined by any number of factors;
whether the real estate market is a "buyer's" or "seller's"; interest rates,
etc. And getting back to what I said about homestead property being a "liability",
often times homeowners get trapped into the "refi" situation, like it's
second nature. Refinancing is fine, but is primarily for people who are
struggling with debt and need a quick-fix before their credit situation
gets out of hand. It's a wonderful tool for the everyday person who needs
to stay afloat. However, if you're talking about building assets, you've
got to rid yourself of what weighs you down the most; free up your money
to make a profound investment. Depending on the market, you can always
buy more house for less; or buy less house for less and use some of the
cash to "fix it up" to sell.
If your homestead property was bought to live and die in, then, of
course you'll have emotional ties that won't allow you to break free of
such a burden. However, if on the front end you enter the deal with investment
strategy in mind, your game plan is already set up to be short-term, so
refinancing won't even be on your mind. Most lenders expect second mortgages
to be on the primary residence, unless you have perfect credit and adequate
income. Creativity as well as creative financing is the name of the game.
In this situation, if you're really strung out on refinancing, I'd refinance
with a line-of-credit rather than a one-shot deal. But it's all very much
up to the individual.
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