Taxpayers with Individual Taxpayer Identification Numbers (ITINs) will have a different set of rules for the 2017 income tax filing season. The changes are the result of the Protecting Americans from Tax Hikes Act, better known as the PATH Act, which was passed in 2015.
The revisions center around those ITINS that may have gone unused or are expired – and what cannot be done until they are renewed. For example, ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return unless renewed by the taxpayer. In addition, ITINs issued prior to 2013 that have been used on a federal tax return in the last three years will need to be renewed starting this fall. That process will begin in October, according to the Internal Revenue Service.
Taxpayers with an expired ITIN who don’t renew before filing in 2017 could have their refund delayed, or they may find they are ineligible for certain tax credits until the ITIN is renewed. The Child Tax Credit and the American Opportunity Tax Credit for education are just two that could be affected.
Who Has to Renew?
If an ITIN holder doesn’t intend to file a tax return next year, no action is necessary. However, there are two main groups who may need to renew an ITIN ahead of the 2017 filing season:
- Taxpayers with Unused ITINS - ITINs not used on a federal income tax return in the last three years (covering 2013, 2014, or 2015) will no longer be valid to use on a tax return as of Jan. 1, 2017. ITIN holders in this group who need to file a tax return next year will need to renew their ITINs beginning Oct. 1.
- Expiring ITINs. ITINs issued before 2013 will begin expiring this year, and taxpayers will need to renew them on a rolling basis. The first ITINs that will expire under this schedule are those with middle digits of 78 and 79 (Example: 9XX-78-XXXX). The renewal period for these ITINs begins Oct. 1. The IRS will mail letters to these taxpayers starting in August to inform them of the need to renew their ITINs if they need to file a tax return and explain steps they need to take. The schedule for expiration and renewal of ITINs that do not have middle digits of 78 and 79 will be announced later.
To renew an ITIN, use Form W-7, Application for IRS Individual Taxpayer Identification Number. Remember to include all the information and documentation required. Use the newest version for the form available. The new version, named “Rev.9-2016,” will be available in September of this year.
Applicants can mail their form and documentation – which must include the original identification or certified copies by the issuing agency – to the IRS address on the form. They can also use one of the IRS-authorized Certified Acceptance Agents around the country, or contact an IRS Taxpayer Assistance Center in advance and bring the original identification documents in person.
Make It a Family Affair
To make renewal easier and to reduce paperwork, the IRS is offering a group renewal process for families. If either the taxpayer, a spouse or a dependent has received a notice to renew an ITIN, they can choose to renew the ITINs of all their family members at one time, rather than doing it piecemeal over several years. For now, this applies to those taxpayers with an ITIN with middle digits of 78 or 79.