Guide to Applying for a US Individual Taxpayer ID (ITIN) When Doing Business

If you’re a foreigner earning income in the US, or doing business there but not eligible for a Social Security Number (SSN), the ITIN (Individual Taxpayer Identification Number) is the key you need to comply with the regulations of the US Internal Revenue Service (IRS).

1. What is an ITIN?

An ITIN is a personal tax ID issued by the IRS to foreigners who aren’t eligible for an SSN. It’s a tool that helps them fulfill US tax obligations such as declaring and paying tax on income earned. In addition, an ITIN supports users in many other financial activities such as opening a bank account (personal or business) and participating in financial investment, securities, and real estate.

In particular, an ITIN helps users receive income from e-commerce and advertising platforms such as Amazon, eBay, Etsy, Google AdSense, YouTube, and Upwork without being subject to high withholding tax. Having an ITIN also helps legitimize income from business activities or services in the US.

Important note: An ITIN is not a green card or visa, and it doesn’t grant the right to work in the US. It is simply a number to ensure compliance with US tax law.

2. Who Should Apply for an ITIN?

The following cases should apply for an ITIN:

• Foreigners with income in the US but no SSN.
• Business owners, freelancers, and sellers on platforms like Amazon, Shopify, eBay, and Upwork who need to file US taxes.
• Financial, crypto, or securities investors in the US.
• People with income from YouTube, Google AdSense, or TikTok who want to reduce the 30% withholding tax rate.
• Individuals who want to open a US business bank account to receive payments.

For example, if you have YouTube income and no ITIN, that income can be subject to withholding tax of up to 30%. Once you register for an ITIN and file under a Double Taxation Avoidance treaty, the withholding rate can drop to 0-10%, depending on your registered country.

3. What Documents Are Needed for an ITIN Application?

The ITIN application documents you need to provide to AWE Legal must include the following:

• A scan of your most recent passport
• Permanent address on your national ID card
• The applicant’s LLC information (if any)

Note that an application can be rejected if the information provided is incorrect or documents are missing or invalid. Careful preparation from the start is therefore very important to avoid wasting time and money.

4. What is the ITIN Application Process?

The ITIN application process includes these main steps:

1. Prepare the required documents in full.
2. Fill in the ITIN application form accurately.
3. Submit the application by mail directly to the IRS, or through an authorized agent (Certifying Acceptance Agent – CAA) for support.
4. Wait for the IRS to process and issue the ITIN, usually within 8-12 weeks.

One important point to remember is that an ITIN is not issued automatically and must be renewed every 3 years if not used in a tax filing. If you file late or don’t have a valid ITIN, the IRS may apply penalties or deny a refund.

5. What Benefits Does an ITIN Bring to Business Owners?

For business owners and individuals with income in the US, an ITIN helps:

• Avoid high withholding tax when receiving income from the US, especially from multinational platforms.
• Make it easier to open a US business bank account.
• Legitimize income sources and financial transactions, facilitating business expansion.
• Create an advantage when working and transacting with partners or suppliers in the US.
• Help reduce tax or process refund claims under bilateral tax treaties between the US and the taxpayer’s country.