ITIN – Individual Tax Identification Number

An ITIN, or Individual Tax Identification Number, is assigned by the IRS to individuals who are not American citizens and are not eligible for a social security number.

Most Israelis who are assigned an ITIN receive one for the following reasons:

1. They file a tax return in the U.S. for income earned in the U.S.
2. They are married to an American citizen and file a joint tax return with their spouse

 What are the advantages of receiving an ITIN?

1. The IRS federal tax withheld amounts to 30% of earned income in the U.S. for non-US citizens. In most cases, this number is significantly higher than the tax that is actually calculated after filing a proper tax return.

Additionally, a non US citizen who chooses not to file a tax return forfeits his right to deduct any expenses that would drastically reduce his/her taxable income. Furthermore, the individual would be subject to a 10% tax when selling property, even if it is sold at a loss.

For example: In the framework of filing a tax return you are entitled to deduct all property-associated expenses including property depreciation. Additionally, you would be entitled to a 3800$ deduction from your taxable income using your personal exemption.

Therefore, it is clearly advantageous for an Israeli citizen who has invested in the U.S. to file a tax return and receive refunds on any excess of federal tax withheld.

2. There are significant tax credits, such as the Additional Child Tax Credit and the Making Work Pay Credit which require an individual to report a specific minimum earned income.

Oftentimes, the US citizen’s income does not reach the minimum threshold to be eligible for the tax credit. However, by filing a joint return, the family unit may reach the minimum requirements and therefore be eligible for the tax credit.

 Required documents to apply for an ITIN:

Please attach the following documents for your ITIN application: Complete  W-7 form (Application for IRS Individual Taxpayer Identification Number).

Two IRS acceptable identification documents from the list below:

1. Current Israeli passport (If you choose this option, there is no need for a second identification document. This is the only identification document that does not require a second document to be sent with it.).
2. Current Israeli or American drivers license.
3. Israeli National Identification Card (Teudat Zehut) or U.S. state identification card.
4. Birth certificate.
5. Israeli Voter identification card.
6. Visa.
7. U.S. military identification card or Israeli military identification card (choger).
8. U.S. Citizenship and Immigration Services (USCIS) photo identification.

Please note: The above documents must either be original or stamped as certified by the Israeli authorities.

 ITIN Application process

There are two different ways to file an ITIN application:

1. Filing a tax return and application for an ITIN simultaneously. Should you choose this option, the IRS will issue you an ITIN and immediately process your tax return.
2. Applying for an ITIN before filing a tax return. This option is limited to Israelis who fulfill certain criteria. After receiving an ITIN, the individual can go ahead and file a tax return.

 When does the IRS return the documents?

According to the IRS, once the application is processed, all documents will be returned within two months.

We recommend consulting one of the representatives at Virtue Tax for a detailed and comprehensive explanation of the entire ITIN application process.