ITIN for non-US founders: when you need one, and when you don't

Most founders abroad are told they need an ITIN. For the EIN, Form 5472 and most bank accounts, they don't. Here is what an ITIN is for, the cases where a founder outside the US really needs one, how to apply with Form W-7 from abroad, and how long it takes.

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Founders outside the US hear about the ITIN early, usually from a forum thread or a formation service's add-on list, and often in the same breath as the EIN. The two get mixed up constantly. An EIN identifies your company. An ITIN identifies you, as a person, to the IRS.

Most founders running a US company from abroad don't need an ITIN at all. Some do, and for them it takes two to three months to get, so it's worth knowing early which group you're in.

What an ITIN is

An ITIN is a nine-digit number the IRS issues to people who need a US taxpayer identification number for federal tax purposes but aren't eligible for a Social Security number. It's for federal tax only. It doesn't authorize work in the US, qualify you for Social Security benefits, or serve as identification outside the tax system.⁠[1]

The IRS's own rule of thumb is simple. You need an ITIN if you have a federal tax purpose and you're not eligible for an SSN.⁠[1] The rest of this guide is about which purposes those are for a founder.

When you don't need one

For the EIN. The IRS's online EIN application asks for the responsible party's SSN or ITIN, but the paper and phone routes don't. Founders abroad get the company's EIN by fax, mail or phone without either number. Our guide to getting an EIN covers each route.

For Form 5472. A US LLC owned by one foreign person files Form 5472 each year. The form asks for each 25% foreign shareholder's US identifying number, if any. When there isn't one, the company enters a reference ID number instead. The company makes that number up itself, with no application to the IRS, and uses the same one every year.⁠[6]

For a treaty rate on Form W-8BEN. When a US client or platform asks you for a W-8BEN, you can claim treaty benefits by giving either a US number on line 5 or the tax number your home country issued you on line 6.⁠[7] A founder in India, for example, would normally give a PAN. An ITIN is generally required for treaty claims only when you don't provide a foreign tax number.⁠[7]

For most business bank accounts. Fintech banks that serve founders abroad usually ask for a passport. Relay, for instance, asks each owner for an SSN or a passport number, and accepts only a passport as ID from owners who aren't US citizens.⁠[10] Our guide to US bank accounts for non-residents covers which providers accept founders abroad.

When you do need one

When you must file a US tax return. A nonresident alien who is engaged in a trade or business in the United States must file Form 1040-NR. That holds even with no US income from that business, no US-source income at all, or income that a treaty makes exempt.⁠[8] Filing that return needs a taxpayer number, and for a founder without an SSN that means an ITIN, applied for with the return itself.⁠[2]

Whether your business is engaged in a US trade or business depends on the facts of how and where it operates. A foreign-owned single-member LLC that sells software from abroad and one with US staff and a US warehouse can land on different sides of that line. This is the question to put to a CPA who works with foreign-owned companies, before your first tax season.

When you're a partner in a US partnership. A US LLC with two or more members is classified as a partnership unless it elects to be taxed as a corporation.⁠[9] The IRS says a partner in a partnership conducting a trade or business in the US is treated as engaged in that business, must file a US return and must have an ITIN, which it also needs on the partner's W-8BEN.⁠[7] Co-founders abroad who share a US LLC are the group that most often needs ITINs.

When you claim a treaty benefit without a home tax number. Some treaty claims, and some applicants from countries that don't issue tax numbers, need an ITIN. Form W-7 has a specific reason for nonresidents who need an ITIN only to claim a treaty benefit.⁠[3]

When you want a refund of US tax withheld. If too much tax was withheld from US income paid to you, getting it back means filing a return, and the return needs an ITIN.⁠[3]

How to apply from abroad

You apply with Form W-7. In most cases you attach it to the tax return that creates the need, rather than filing it on its own, and send both together by your return's due date.⁠[1] For a nonresident who wasn't paid wages subject to US withholding, Form 1040-NR is due on the 15th day of the sixth month after the tax year ends, which is June 15 for a calendar year.⁠[8]

There are exceptions that let you apply without a return, such as for certain passive income with third-party withholding or a treaty claim.⁠[3] Each has its own documents, and Form W-7's instructions list them.

Documents. You must prove your identity and foreign status with original documents or copies certified by the agency that issued them. A valid passport is the only document that does both on its own. Without one, you need at least two other documents from the IRS's list.⁠[3] Sending an original passport by post is the part founders dislike most. The IRS returns originals to the address on your W-7, and says to contact it if they haven't arrived within 60 days.⁠[2]

Three ways to submit.

RouteCostChecks your W-7Authenticates your documentsWhere
Mail to the IRSFreeNoNot applicable, you send originalsFrom anywhere
Certifying Acceptance AgentFee variesYesYes, returned immediatelyUS and abroad
Acceptance AgentFee variesYesNo, originals still go to the IRSUS and abroad
IRS Taxpayer Assistance CenterFreeYesYesUS only, by appointment

Certifying Acceptance Agents are authorized by the IRS, can verify your passport and return it on the spot, mail the package to the IRS, and work with the IRS on any problems with the application.⁠[2],[5] The IRS publishes a list of them, including firms outside the US.⁠[5] For a founder abroad, a CAA is usually the right route, because it keeps your passport at home.

What gets an application sent back

Most delays come from a few avoidable mistakes, and each one costs another round of several weeks.

The details on your W-7 have to match your documents exactly. The IRS checks that the name, date of birth and country of citizenship on the form are the same as on the passport or other documents you send.⁠[3] A middle name on one and not the other is enough to cause a query.

Documents count only if they haven't expired by the date you submit the application, and the postmark date usually decides that.⁠[3] A passport due to expire in the next few months is worth renewing first.

Sending Form W-7 on its own when your situation needs a tax return attached is the other common mistake. Unless one of the exceptions in the W-7 instructions applies, the return goes in the same envelope.⁠[2],[3]

How long it takes

The IRS says to allow seven weeks to hear about your application. From overseas, or during tax season from January 15 to April 30, it can take nine to eleven weeks.⁠[1]

You'll hear back by letter. A CP565 notice means the ITIN has been assigned. A CP566 means the IRS needs more information, and a CP567 means the application was rejected and you have to resubmit.⁠[2]

Because of that timing, an application sent close to the June 15 deadline can still be in progress when your return is due. Plan the application with your accountant in the first months of the year, alongside the return it goes with.

Keeping it valid

An ITIN expires if it isn't used on a federal tax return for three consecutive tax years. It expires on December 31 after the third year without use.⁠[4]

You only need to renew it when you next need it on a tax return, using the same Form W-7 with the renewal box checked. An ITIN that only appears on information returns, such as a Form 1099 reporting a payment to you, can keep being used there after it expires.⁠[4]

Who needs one, in practice

Here's how it usually falls out for founders abroad. Treat it as a guide to the conversation with your accountant, not a ruling.

SituationITIN usually needed?
Getting the company's EINNo
Filing Form 5472 for a single-member LLCNo, a reference ID number works
Opening a fintech business accountNo, a passport is the usual ID
W-8BEN for a client, with a home-country tax numberNo
Partner in a multi-member US LLC that does business in the USYes
Owner who must file Form 1040-NRYes
Claiming a refund of tax withheld in the USYes

If the company is a C corporation, it files and pays its own US tax. A shareholder abroad who isn't otherwise engaged in a US business generally has to file a US return only if the tax due on US income, such as dividends, wasn't fully withheld.⁠[8] Founders who expect to raise money usually choose that structure anyway, and our guide to starting a US company from abroad compares the two.

The yearly filing a foreign-owned LLC can't skip is Form 5472. Our guide to Form 5472 and the other US filings covers it, along with the penalty for missing it.

Frequently asked questions

Do I need an ITIN to get an EIN for my US company?

No. A founder without an SSN or ITIN can't use the IRS's online EIN application, but can get an EIN by sending Form SS-4 by fax or mail, or by phone if the business has no US office. The ITIN and the EIN are separate numbers for separate purposes.

Does a foreign owner of a single-member LLC need an ITIN for Form 5472?

No. Form 5472 asks for each 25% foreign shareholder's US identifying number if they have one. If they don't, the company enters a reference ID number that it creates itself, with no application to the IRS needed, and uses the same one every year.

How long does it take to get an ITIN from outside the US?

The IRS says to allow 7 weeks to hear about an ITIN application, and 9 to 11 weeks if you apply from overseas or during tax season, January 15 to April 30. A Certifying Acceptance Agent can check your passport and return it immediately, so you don't have to mail the original to the IRS.

Does an ITIN expire?

Yes. An ITIN that isn't used on a US federal tax return for three consecutive tax years expires on December 31 of the third year. You only need to renew it when you next need it on a tax return. An expired ITIN can still be used on information returns such as a Form 1099.

Sources

  1. IRS: Individual taxpayer identification number (ITIN), checked
  2. IRS: How do I apply for an ITIN?, checked
  3. IRS: Instructions for Form W-7, checked
  4. IRS: ITIN expiration FAQs, checked
  5. IRS: Acceptance agent program, checked
  6. IRS: Instructions for Form 5472, checked
  7. IRS: Instructions for Form W-8BEN, checked
  8. IRS: Instructions for Form 1040-NR, checked
  9. IRS: Limited liability company (LLC), checked
  10. Relay: Required documents to open a Relay account, checked

This article explains how things generally work. It is not legal, tax or financial advice for your situation. Rules differ by state and by country, and they change often, so check with a CPA, an enrolled agent or an attorney before you sign, file or pay.

Researched and written under our editorial policy. Spotted a mistake or an old price? Tell us.

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