All you need to know about PTIN.

by Mounica Kota | Nov 1, 2020 | ITIN

All you need to know about PTIN.

If an individual is preparing or is assisting others in the preparation of their federal tax returns, then he should have a valid PTIN. PTIN stands for Preparer Tax Identification Number and is issued by the IRS to the professional tax preparers. These professional tax preparers are Certified Public Accountants (CPAs) and the Enrolled Agents (EAs). These tax preparers are paid and must include their PTIN in all those federal tax returns which they are filing for their clients.

The PTIN is an eight-digit number that is preceded by the alphabet ‘P’. The PTIN is placed in the place of the tax preparer’s SSN in case of all tax returns filed by them.

Does an individual taxpayer need PTIN?

Individual taxpayers don’t need to have a PTIN. If you are not being paid for the services you are providing for preparing tax returns and filing tax returns, then you would not need a PTIN. PTIN would not be required for an individual in case

If an individual is preparing and filing his tax returns
If an individual is preparing and filing a joint tax return for his spouse
If an individual is preparing and filing tax returns for his friends and relatives
If any tax returns are being filed by an individual while volunteering in an organization.

Does an employee need a PTIN?

There might be instances in which employees in an organization might be asked to collect and collate tax-related information. This information must be further used by the employee to file the tax returns for the organization. This can be considered as a part of the general duties of an employee within an organization. The organization or rather the employer would compensate the employees for the efforts put in towards the tax preparation and filing. However, the employees do not need to have a PTIN.

The employees do not need to have a PTIN as they would not be paid specifically for the services they are providing for tax preparation and filing tax returns.
The employees who would be preparing the tax returns would not sign the tax returns. Rather, the tax returns would be signed by the treasurer or any other authorized officer of the organization.

How to obtain a PTIN?

PTIN can be obtained by following the below-mentioned steps:-

PTIN can be obtained by visiting the online PTIN System. There a click on ‘Create an Online PTIN Account’ will help in getting started. There are no fees charged for creating the PTIN at this step.
The online application for PTIN must be completed. For this, the necessary information required are Social Security Number, Business information, personal information, tax returns for the previous year, information on personal certification, etc.
At this step, you will have to pay the fees for registration. It is $50 and can be paid either by debit card or credit card.
After the payment procedure is successful and the information has been provided, the PTIN would be provided online.
Moreover, if you do not want to apply for the PTIN online it can be done through the mail. The Form W-12 must be filled for this purpose and sent to the IRS. By the online method, the PTIN can be obtained in 15 minutes whereas by the paper mode it would take around 4-6 weeks.
The PTIN would expire on 31^st December of every year and should be renewed. The online PTIN Account must be visited and login can be done by using the username and password.

How to find out tax preparers who have a PTIN?

The IRS would have a directory which would include those PTIN holders who are available for public search. This directory can be used for finding out the PTIN holding tax preparers.

The directory can be visited on the IRS website i.e. Directory of Federal Tax Return Preparers with Credentials and Select Qualification.
Now the country, ZIP code, and area must be found out where the PTIN tax preparers are being searched.
The CPAs or EAs must be searched.

Conclusion

So, obtaining and renewal of the PTIN is quite easy and is a must if tax preparation and filing are done for others and money is made out of it.

Top 10 things to keep in mind for your tax filing

by Mounica Kota | Jul 17, 2020 | Charitable Contributions, ITIN, Tax Extension, tax filing

Top 10 things to keep in mind for your tax filing

Filing tax returns can be tricky, confusing and you ought to be cautious while filing your tax returns.

So, let us give you some basic tips to follow while filing your tax returns. These tips will help in avoiding common mistakes to ensure that your taxes are filed properly and you obtain the maximum refunds.

1.Filing for an extension

You can easily file for an extension in the timeline of your tax return filing but, an extension in the due date for tax payment cannot be done. You might have the thought that you may end up having taxes to pay once your return filing is completed. So, you should pay whatever amount you owe to the IRS by the July deadline so that you could do reconciliation after the returns have been filed successfully. If you do not pay your taxes by the deadline, you might have to pay a penalty which you should try to avoid.

2.Document your charitable contributions meticulously

Nowadays, charitable contributions are getting a lot of scrutiny from the IRS. So, if you are planning to claim charitable contributions as itemized deductions in your tax returns then you must have written acknowledgment from charitable organizations for contributions made of $250 or more. The contribution made can only be claimed if they are made to a qualified organization. In case of your contribution being less than $250, you must keep a list or record of what you contributed and to whom.

3.Know about new due dates for some tax returns

There might be some information forms that would be needed by you for filing your tax returns might be having different due dates than that of your tax returns. So, you need to be alert and visit the IRS’s website for the information on these new due dates.

4.Need for amendment

Many taxpayers have to file amended tax returns due to reasons like receipt of updated Forms 1099, Schedules K-1, and other information forms later than filing your actual tax returns. You need to be aware of the factor that if you are receiving any rectified information returns ad you have already filed your tax returns then you would not have to amend your returns if the difference is not more than $100 in your income or not more than $25 in your withholding. In these cases, your information and filing both would be considered as correct and no penalty would be charged.

5.Expiry of your ITIN

If you are using your ITIN for tax returns filing, then you must be careful about your ITIN being expired. If your ITIN has not being used for filing federal tax returns once within three years then your ITIN must have been expired and it needs to be renewed. You can renew your ITIN by submission of Form W-7 and the necessary documents as well. If you are filing your tax returns without a valid ITIN or without submitting a renewal application for your ITIN then there might be adjustments made into your tax returns. Your income tax return would be processed but you would not receive the refunds and any exemptions claimed on the income tax return would be denied to you.

6.Disaster losses

In case of any loss incurred in an area that has been federally declared disaster area, the losses can be claimed as an itemized deduction on your federal income tax returns. This loss must be related to your home, your vehicles, or any household items and the amount which you can deduct are reduced by any insurance payment which you have received or reduced by any salvage value of your property. These losses can be deducted on Schedule A of Form 1040 for the year in which the losses have occurred.

7.ID Theft

The tax season is the best season for identity thieves. You must be very vigilant and should try to keep your financial information secure. You should not send your financial information to a tax preparer by electronic medium if the medium is not encrypted. Moreover, you should be careful about phishing scams which can be in the form of fake email, text, or anonymous phone call.

8.Private debt collectors on the job

There has been a relative change in the IRS procedure i.e. the use of private debt collectors for certain federal bills that are overdue. If your tax debt is to be collected by debt collection agencies then you would be notified by a letter that confirms this. The collection agencies would send collectors who can be said as IRS contractors and any check you pay would be addressed to the IRS.

9.Query resolution with the IRS

Your queries on tax returns can be addressed by the Interactive Tax Assistant present on the IRS. This can be helpful for you in resolving your queries and thus, assisting you in filing your tax returns correctly.

10.Selection of your tax preparer

If you are planning to hire a tax preparer for preparation of your tax returns then you must obtain referrals, check the credentials of the tax preparers, interview them, and understand the method they use to bill, etc. These are the vital information that you must collect and you must check if they have a PTIN (IRS Preparer Tax Identification Number) or not which is mandated by the law.

Conclusion

Hence, you can follow these tips and file your tax returns successfully on time without facing any inconvenience or difficulties.

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

by Mounica Kota | Jan 31, 2020 | federal income tax, IRS, ITIN, SSN, tax filing, Tax Payers, tax return, taxes, W-7 Form

What is the process to obtain the US Individual Taxpayer Identification Numbers (ITINs)?

US Individual Taxpayer Identification Number is an Identification Number which is used by the IRS (Internal Revenue Service) for the administration required in the field of tax laws. ITIN is a nine-digit number that is issued either by the SSA (Social Security Administration) or by the IRS. ITIN is issued by IRS to those individuals who must have a US taxpayer identification number but do not qualify to obtain SSN (Social Security Number)from the SSA.

Why do you need ITIN?

When you are working in the US and earning in the US, but you do not qualify to obtain an SSN, then the ITIN will be helpful during your filing for tax returns.

Let us find out what does an ITIN does.

If you qualify to obtain a tax refund from the IRS, then ITIN will help you in obtaining a refund.
ITIN will help you to file your taxes and help the qualifying dependents to claim the tax benefits.
Moreover, ITIN can help you to apply for a mortgage loan or open a bank account.

Eligibility for obtaining ITIN

You should be falling into these below-mentioned categories to obtain the ITIN.

You should be a non-resident alien who needs to file a US tax return.
You must be a US resident alien who has to file a US tax return.
You should be a dependent or the spouse of a US citizen or resident alien.
You must be a dependent or spouse of a non-resident alien VISA holder such as H4 VISA.
You should be a non-resident alien who is claiming a tax benefit.
You should be a non-resident alien student, researcher or professor filing a US tax return or for claiming an exception.

Procedure to obtain ITIN

For the process of applying for ITIN, you will need the below-mentioned documents.

Form W-7
IRS Application for Individual Tax Identification Number.
Your federal tax return. But, if you are eligible for an exception then you must provide the supporting documents as well for the exception.
Original documentation from the issuing agency for proof of your identity and foreign status.

Since, you will be filing your tax returns in the form of an attachment to your ITIN application you should avoid mailing your filled form to the address which is mentioned in Form 1040, Form 1040A or even Form 1040EZ.
You can send your Form W-7, tax return, and other documents either to the mailing address mentioned in Form W-7 or submit it at the walk-in offices of the IRS. You can also get your form and documents processed by an agent who has been appointed by the IRS.
These Acceptance Agents are those entities such as colleges, financial institutions, accounting organizations, etc. who help the ITIN applicants in obtaining ITIN. These Acceptance Agents would review the application forms and would forward them to IRS for further processing.

Timeline within which ITIN must be applied

When you are ready to file your Federal Income Tax Return, you should also complete your Form W-7. This needs to be done as the return would be needed to be attached to FormW-7.

If you are qualifying for any of the exceptions, then you do not need to file a tax return. You would only submit Form W-7 along with those supporting documents which provide proof for the exception. An applicant is allowed to apply for ITIN during any time of the year but if you need to attach the tax return to Form W-7 and that tax return is filed after the due date then you might have to pay penalties.

When will you receive your ITIN?

The IRS usually takes a time of around two months to complete the processing of the ITIN form. If your documents and details are correct, then your form would be processed and ITIN would be sent to your mailing address approximately within two months.

However, if even after 2 months you do not receive your ITIN or any other document/correspondence from IRS then you can call IRS at the Toll-free number and enquire about your ITIN application.

Hence, ITIN is very much necessary for tax return and if you are filing your tax return with an expired ITIN then your request would be processed but you will not receive any tax exemptions or credit claims.

Reference

Can You File Your Taxes In The US Without A Social Security Number?

by Mounica Kota | Dec 30, 2019 | EITC, global income tax, IRS, ITIN, SSN, Tax Payers, Tax Planning, Tax Refund, taxes, W-7 Form

Can You File Your Taxes In The US Without A Social Security Number?

Citizens of the US use their Social Security Number as identification when it comes to doing their taxes. However, there are a lot of citizens from other places who do not qualify for SSN, yet earn in the country and are liable to pay taxes. If you are one such citizen, you can use the Individual Taxpayer Identification Number or ITIN to file your taxes instead of SSN.

ITIN’s Capabilities

The ITIN is designed only to help citizens without an SSN the capability to file taxes and nothing else. The IRS clarifies that the ITIN cannot be used as:

An authorization to work in the US
Qualification for SSN or other tax credits such as Earned Income Tax Credit (EITC)
A stimulus to impact your immigration status

Who Needs an ITIN?

Anyone who needs to file their taxes and does not have an SSN can apply for ITIN. If you have a dependent and want to claim them in your tax returns and they do not have an SSN, you would need to get an ITIN for them as well.

As per the IRS, resident and non-resident aliens can get ITIN irrespective of what their immigration status is. An easy way to understand is that you would need an ITIN if you need to file your taxes. This is applicable even if you stay in another country.

How To Apply For ITIN?

Getting your ITIN isn’t all that complicated. To apply for ITIN, you need to submit Form W-7 to the IRS. You can either submit the form by mailing it to the IRS or schedule an appointment if you need any helpwith the forms.

To fill the application form, you would need certain basic details such as name, birthdate and mailing address. You would have to mention your US visa number should you have. Also, the form requires you to mention the reason why you want to apply for ITIN.

Expiry of ITIN

An issued ITIN can expire if it has not been used. If you obtain an ITIN and do not use the same for a period of three years, the ITIN will expire on the 31^st of December 2019. ITIN that were issued before the year 2013 would also expire on the 31^st of December 2019. The middle digits for the ITIN in such cases would be 83 and 84. For example, you ITIN could look like (9XX-83-XXXX).

Renewal of ITIN

In the event your ITIN expires, you do not have to worry about filing your taxes. You can always renew the ITIN using the following measures. You must fill up Form W-7 along with an application form for ITIN. While you are required to submit the required documents, you do not have to submit a tax return in the case of renewal. Unless there is a filing requirement, you do not have to submit your tax returns. If your family members were issued ITINs, you must submit their W-7 forms at the same time.

The renewal process of ITIN is a bit similar to getting a new one. You can use any of the following methods.

Mail the forms to the IRS at:

Internal Revenue Service

Austin Service Center

ITIN Operation

P.O. Box 149342

Austin, TX 78714-9342

Schedule an appointment with the IRS Taxpayer Assistance Center.
Apply for an ITIN in person at any Certifying Acceptance Agent that is authorized by the IRS.

You can file your taxes in the US even if you do not have a Social Security Number. You can apply for ITIN using the methods mentioned above and file your taxes.

Reference:

https://www.taxslayer.com/blog/how-to-file-taxes-without-a-social-security-number/

https://www.irs.gov/credits-deductions/individuals/how-do-i-renew-my-itin