Many Canadians who seek to purchase or already own US real estate are unaware that at one point or another they will require a US Individual Tax Identification Number (ITIN). If you earn income by renting out a US property or by selling it, you are required to file a US tax return to report this income and may also be potentially subject to a withholding on this income. In either case, you need an ITIN to file your US tax return and comply with any applicable withholding rules.
What is an ITIN? It is a processing number issued by the IRS to individuals who are not eligible for a US Social Security Number, but are required to fulfill a filing requirement in the United States. It is akin to a Canadian Social Insurance Number.
In order to submit an application for an ITIN, you must submit a completed Form W-7, Application for IRS Individual Taxpayer Identification Number, and a supporting original of an Identification Document (ID) that is approved by the Internal Revenue Service (IRS). The following documents are approved ID:
- US driver’s license;
- Foreign driver’s license;
- Civil birth certificate;
- United States Citizenship and Immigration Services ID;
- Visa issued by the US State Department;
- US military identification card;
- Foreign military identification card;
- National identification card;
- Foreign voter’s registration card; and
- Medical or school records (for dependents under the age of 14 or for students under the age of 18).
Original pieces of photo ID will be returned within no less than six (6) weeks after being received. Coupled with the risk of lost documents, this is a major inconvenience for most applicants.
Fortunately, an alternative to this new rule exists. Certified copies of photo ID, obtained from Service Canada will be accepted in the absence of original copies.
For a complete list of Service Canada locations, please see: http://www.servicecanada.gc.ca/cgi-bin/sc-srch.cgi
We commonly recommend that our clients go to their Passports Canada to obtain a certified copy of their Canadian passports.
Please note that a certified copy of one of the IDs identified above prepared by a notary is not accepted by the IRS. If you wish to provide a certified copy of an ID, the copy must be prepared by the authority that issued the original.
If you are about to purchase US real estate, already own it or seek to sell, please consult one of our cross border specialists in order to determine your cross border filing, tax and estate planning needs.
The comments offered in this article are meant to be general in nature and are not intended to provide legal advice regarding any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate for your circumstances.
About the author
Shlomi Steve Levy is a Partner of Levy Salis LLP and is a member of the Quebec Bar, the Law Society of Ontario (L3), the Society of Trust and Estate Practitioners, and the Canadian Bar Association.