US TAX ID For Foreign Partner

Foreign Person with US Partnership Investment

Is It Time to Update Foreign Partners’ U.S. TINs’?

In order for a foreign partner to claim a refund a valid Taxpayer Identification Number (TIN) is required. A foreign partner must file an income tax return (Form 1040NRForm 1120F, etc.) with a valid TIN.

Please note that Individual Taxpayer Identification numbers (ITINs) that haven’t been included on a U.S. federal tax return at least once in the last three consecutive tax years will expire. In addition, certain ITINs will expire according to an annual schedule based on the middle digits of the ITIN. You need to take action to renew it if it’ll be included on a U.S. federal tax return.

If You are Foreign Partner with USA Based LLC/LLP/S CORP OR C CORP. You need to know this?

A foreign or domestic partnership (other than a publicly traded partnership) that has effectively connected taxable income allocable to a foreign partner must pay a withholding tax under IRC section 1446 equal to the applicable percentage of the effectively connected taxable income that is allocable to its foreign partners. A partnership must pay the withholding tax for a foreign partner even if the partnership does not have a U.S. TIN for that partner.

Foreign partners must attach Copy C of Form 8805 to their U.S. income tax returns to claim a credit for their share of the IRC section 1446 tax withheld by the partnership. To ensure proper crediting of the withholding tax when reporting to the IRS, a partnership must provide a U.S. TIN for each foreign partner. The partnership should notify any of its foreign partners without a valid TIN of the necessity of obtaining a U.S. TIN. An individual’s TIN is the individual’s social security number (SSN) or ITIN. An ITIN is a nine-digit number that will always begin with a 9, is formatted like an SSN, and has the fourth and fifth digits in the range of “50” to “65”, “70” to “88”, “90” to “92” or “94” to “99”. It is also possible that a partner’s TIN could be its U.S. employer identification number (EIN).

NOTE: Certain aliens who cannot obtain SSNs can now apply for ITINs on Form W-7, Application for IRS Individual Taxpayer Identification Number.

Partnerships should review their files and/or contact their foreign partners to verify that each foreign partner has a valid TIN.

Please note even though the Form W7 ITIN application looks simple and straightforward to complete any small mistake would lead to rejection. As the ITIN application process time is estimated to be between 6 to 12 weeks at peak tax season time you could potentially waste a lot of time and risk the process of losing the original passport which is mandatory if you are sending the Form W7 application directly without using an Acceptance Agent service. For more details on the step-by-step ITIN application work process by acceptance agents please check this blog.

Our team specializes in international expatriate U.S. personal tax return services. If you need assistance with ITIN Renewal/US 1040 filing for refund claim/FATCA Compliance work/FBAR FINCEN114 Filing, ITIN/ Form W7 Application/E.I.N./Form W8BENE or Certified Acceptance Agents [C.A.A.] services/1040NR U.S. tax filing for refund claim of excess 1042S / 8288A/ 8805/ W2/ 1099. We are happy to assist our clients in a timely, efficient, and cost-effective way.

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