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An Individual Taxpayer Identification Number (ITIN) is a United States tax processing number issued by the Internal Revenue Service (IRS). It is a nine-digit number beginning with the number “9”, has a range of numbers from '50' to '65', '70' to '88', “90” to “92” and “94” to “99” for the fourth and fifth digits and is formatted like a SSN (i.e. 9XX-7X-XXXX).^[1] Temporary identification numbers are issued to the main taxpayer only and these numbers are usually triggered after a 45-day suspension period. Filing the W-7 application incorrectly, checking the wrong box for the reason the individual is submitting a W-7 form or if the taxpayer's identifying documents are not accepted by the IRS, can be a reason for which the taxpayer may receive a temporary taxpayer identification number.^[2] ITIN numbers are issued by the IRS to individuals who do not have, and are not eligible to obtain, a valid U.S. Social Security Number, but who are required by law to file a U.S. Individual Income Tax Return. An individual required to file a tax return must check boxes b, c, d, e, f, or g on the W-7 application. Individuals who check boxes a, f or h meet certain conditions for not filing a U.S. tax return, and for obtaining an ITIN number from the IRS.

Regardless of immigration status, both resident and nonresident immigrants may have Federal tax return and payment responsibilities under the Internal Revenue Code.^[3] Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception. An ITIN application cannot be filed electronically (efile). The application must be attached to a valid federal income tax return.

The ITIN program was created in 1996 for the purpose of allowing tax return filing by individuals without a Social Security account number. Receiving an ITIN number does not in itself confer the right to work and receive income in the United States.^[4]

Gambling Etiquette Tips To Go With Your ITIN Getting the most you can returned from tax withholdings on your gambling winnings is a part of knowing the procedures like when to file an ITIN Application. I want to register to a paying Social networking company. (A website like Myspace that pays you money to use their website). I am required to be atleast 14 years of age, have a valid Social Security Number, have a TIN (Taxpayers Identification number) or ITIN, and fill out an IRS form W9. You Can Use an ITIN For Your Online Business And then now, with the whole e-commerce and job shift boom, let’s take it to the online part. You can use your ITIN to open up a Stripe or a PayPal merchant account and other merchants as well too.

In 2006, 1.4 million people used ITINs when filing tax returns. Federal tax law generally prohibits the IRS from sharing data with other government agencies, including the Department of Homeland Security, assuring unauthorized aliens^[5] that the tax information will be confidential and generally will not be used to initiate removal procedures.^[6][7]

ITINs are also used by real estate brokers to facilitate mortgages for unauthorized aliens.^[8] In addition to use by unauthorized aliens, ITINs are used by foreign investors in United States real estate. Such investors need ITINs to file federal and state tax returns to report rental income.

An individual who meets eligibility requirements can file an ITIN application himself or herself. This involves submitting IRS form W-7, which records biographical information, along with specified types of valid supporting ID and a tax return. The applicant can apply directly or file with a certifying acceptance agent, who can assist with the application process for a fee. ITINs can also be issued for a spouse or dependents, if documentation and signature requirements are met and they are claimed on a valid tax return.^[9] Effective June 22, 2012 the IRS began requiring most applicants, even those using acceptance agents, to submit original supporting documents or copies certified by their issuing agency. The IRS will not accept notarized copies of the passport for ITIN application.

In 2012, the IRS indicated that ITINs would expire after 5 years. In 2014, the IRS amended that policy to expire ITINs only if the numbers had not been used in the last 5 years. Under this revised policy, all ITIN's must be used to file a return or they will expire and be reassigned. This now includes those issued before 2013. These changes go into effect in 2016.^[10] The policy has since been revised again so that ITINs expire after three years of non-use. In addition, ITINs issued prior to 2013 will begin expiring in 2016, starting with those with middle digits of 78 and 79 (Example: (9XX-78-XXXX).^[11]

References[edit]

1. ^'Understanding Your IRS Individual Taxpayer Identification Number ITIN'(PDF). www.irs.gov. Retrieved 2020-02-26.
2. ^'General ITIN Information'. May 25, 2011. Archived from the original on September 23, 2011. Retrieved September 28, 2011.
3. ^NY Times, April 16, 2007
4. ^NY Times,April 15, 2003
5. ^Alien vs Immigrant Comparison Chart
6. ^U.S. Tax Program for Illegal Immigrants Under FireNPR, March 5, 2007.
7. ^Boston Globe, February 17, 2008
8. ^Politics Undercut Mortgages For Illegal Workers by Nancy Mullane; Morning Edition, National Public Radio, November 4, 2008.
9. ^'Individual Taxpayer Identification Number (ITIN)'. Irs.gov. Retrieved September 25, 2012.
10. ^Unused ITINS to Expire After Five Years; New Uniform Policy Eases Burden on Taxpayers, Protects ITIN IntegrityIRS, June 30, 2014.
11. ^'Individual Taxpayer Identification Number'. August 16, 2016. Retrieved September 2, 2016.

External links[edit]

Las Vegas is one of the favorite destinations of foreign nationals visiting the USA. If the luck strikes, these foreign nationals can win thousands of dollars at casinos. Nonresident aliens or foreign nationals visit the USA for a short time so most of the time foreign nationals are confident about leaving the USA with the entire amount of gambling winnings. However, the IRS has its own set of rules. Nonresident alien might be subject to 30% tax on gambling winnings so it is essential to understand the IRS regulations in regards to gambling winnings tax.

This is an email from one of our clients, a foreign national visiting the USA. “I visited the USA in 2012 for 1 month. Specifically, I was in Las Vegas and won $200,000 at the casino. I cannot even describe how happy I was. However, the casino refused to pay me the entire amount of gambling winning. Moreover, I was assessed 30% gambling winnings tax. I will appreciate if you can clarify whether I can claim this money back. I do not think that gambling winnings tax was legitimate in my case.”

The above situation is quite common. Casinos follow the IRS guidelines, however, there are several ways to avoid or to minimize gambling winnings tax on foreign nationals.

IRS Rules and Gambling Winnings Tax on Foreign Nationals

There are several scenarios that might happen.

Foreign Professional Gambler and Gambling Winnings Tax

Las Vegas is famous for hosting professional poker tournaments and other gambling events. Consequently, foreign professional gamblers can win millions of dollars by participating in these events. If foreign nationals or nonresident aliens are engaged in a US trade or business at any time during the year, then they are taxed at regular US rates. Moreover, the US net taxable income is calculated as a difference between US gross income and all applicable deductions. Pending particular circumstances, these foreign professional gamblers will fall into the category “engaged in a US business”. As a result of it, they will not be subject to 30% withholding gambling winnings tax. However, each situation is unique so it is important to analyze specific circumstances.

A taxpayer can be treated as engaged in a US trade or business if their activities in the US are continuous, regular and substantial rather than sporadic or isolated. If it is considered from the context of gambling, this would mean that the non-resident alien (NRA) is inside of the US often enough to be treated as engaged in gambling activity on a regular basis. The NRA would also have to be in the US long enough to be treated as a resident, and subject to the US tax on worldwide income. This fact is determined by using the substantial presence test, where your physical presence inside of the US is evaluated over a 3 year period.

It may also be possible to obtain the professional gambler status if you were in the US only a few times in the year, if the gambling activity involved a significant amount of money. In this circumstance the quality of the type of gambling could outweigh the quantity, allowing you to be considered a professional gambler for US tax purposes.

Your ability to be able to file a tax return as a professional gambler will make a significant difference in the outcome of your tax due. Winnings can be be offset by your losses, and the net gains are taxed at a graduated tax rate. At the graduated rate you may find that the tax rate imposed is substantially less than the 30% rate imposed by the withholding system. Whether or not you are able to receive this financial benefit on your tax return will depend on how the facts submitted to the IRS are interpreted. So a proper guidance from an expat tax CPA is suggested.

Foreign Nationals and 30% Withholding Gambling Winnings Tax

Foreign nationals with US gambling winnings by accident face a different story. These foreign nationals will be subject to 30% income tax rate or lower tax treaty rate because this income is not effectively connected with US trade or business. Some types of gambling winnings are exempt from this tax. Per the IRS regulations the list includes the following games: blackjack, craps, baccarat, roulette or big six wheel.

Foreign Nationals, Tax on Gambling Winnings and US Tax Treaties

The USA signed an income tax treaty with various countries. Several of these income tax treaties have a provision for the gambling income.

There are select countries which have a tax treaty with the United States (US) that will reduce the 30% withholding tax on gambling proceeds. If you are a resident of one these treaty countries, you only need to present a form to the casino that will prevent any withholding tax from being applied.

The nationals of the following countries are exempt from US income tax on gambling winnings.

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• Austria
• Belgium, Bulgaria
• Czech Republic
• Denmark
• Finland, France
• Germany
• Hungary
• Iceland, Ireland, Italy
• Japan
• Latvia, Lithuania, Luxembourg
• Netherlands
• Russia
• Slovak Republic, Slovenia, South Africa, Spain, Sweden
• Tunisia, Turkey
• Ukraine, and the United Kingdom

The form that you need to present is W8-BEN. This form will assist you in claiming the treaty benefits along with your Individual Taxpayer Identification Number (ITIN).

If a a tax was withheld on your gambling earnings, you do have the option of filing a US tax return and request the IRS for a refund. In order to do so, you will need to file Form 1040-NR, once the tax year has been completed.

How to claim a tax treaty rate on gambling winnings of foreign nationals?

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Foreign nationals must file the IRS Form 1040NR to claim a tax treaty rate and to minimize the amount of gambling winnings tax. Some other countries have a lower tax treaty on gambling winnings too.

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Conclusion

Foreign nationals with gambling winnings are suggested to contact an expat tax CPA that specializes in working with nonresidents with US interests. There are several ways to minimize US gambling winnings tax so it is important to review each individual situation with an expert. International tax experts at Artio Partners are pleased to assist foreign nationals with US interests.

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