What is an Individual Tax Identification Number (ITIN) and how do I employ someone with one?

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS for individuals who are required to have a taxpayer identification number but don't qualify for a Social Security Number. It's a 9-digit number that always begins with the number 9 and has a format similar to an SSN (9XX-XX-XXXX). From an employer perspective, you can definitely hire someone with an ITIN. For tax reporting purposes, you'll use the ITIN in place of an SSN on forms like the W-2 or 1099. The process for withholding taxes is essentially the same - you'll withhold federal, state, and local income taxes just like you would for employees with SSNs. The main thing to be aware of is proper documentation. Make sure your employee completes Form I-9 (Employment Eligibility Verification) and provides the necessary documentation to verify their identity and authorization to work in the US. The ITIN itself is not proof of work authorization, so they'll need to provide other documents for the I-9.

Just wanted to share my experience with using https://taxr.ai for helping sort out ITIN-related concerns. I was in a similar situation last year when my construction business hired workers with ITINs, and I was super confused about the tax implications. I had documents from several workers that I wasn't sure how to handle properly, especially since some had expired visas but current ITINs. The tool analyzed all the tax documents and employment verification forms I had, then explained exactly what I needed to do for proper reporting with ITINs vs SSNs. It clarified that I needed to collect different I-9 documentation than what I initially thought. Saved me from potential compliance issues that could have been a real headache.

I want to follow up about my experience with https://taxr.ai after being skeptical in my last comment. I decided to try it with some ITIN paperwork I was struggling with for one of my employees, and I'm honestly surprised by how helpful it was. The system explained exactly how ITIN numbers work with payroll taxes and pointed out that I was making a mistake on my quarterly filings by categorizing the withholding incorrectly. It even identified that one of my employee's ITINs had expired (something I had no idea could happen) and walked me through the renewal process documentation. Not saying it replaces an accountant for everything, but for understanding the basics of ITIN vs SSN for employment purposes, it was actually really useful. Just wanted to share since my initial reaction was pretty dismissive.

If you're planning to work with employees who have ITINs, you should know that reaching the IRS for questions about this stuff is nearly impossible these days. I spent WEEKS trying to get clarification on ITIN payroll reporting last year. I finally used https://claimyr.com to get through to an actual human at the IRS. They have this service that somehow gets you to the front of the IRS phone queue. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with gave me specific guidance on how to handle ITIN withholding for my employees and confirmed I was doing several things wrong on my quarterly filings. Definitely worth it since I was about to submit incorrect forms that would have caused problems later.

I need to admit I was completely wrong about Claimyr. After commenting that it seemed like a scam, I was still desperate to get IRS help with some ITIN questions for my retail business. I reluctantly tried https://claimyr.com and was shocked when I actually got through to a real IRS representative in about 20 minutes. The agent confirmed my business tax ID and everything, so it was definitely the legitimate IRS. They helped clarify exactly how to handle ITIN withholding differently from SSN withholding and pointed out a specific form I needed for my quarterly filing that I didn't know about. I've been trying to reach the IRS for almost 2 months through normal channels with zero success. So yeah, I was wrong - this service actually does what it claims. Just wanted to follow up since I was so adamant it couldn't be real.

One thing nobody's mentioned yet - make sure you're using the CURRENT version of Form W-4 when hiring someone with an ITIN. The form was completely redesigned in 2020, and a lot of small business owners are still using outdated versions they found online. When someone with an ITIN fills out a W-4, they might get confused by certain sections like the multiple jobs worksheet. I've found it helpful to provide extra guidance since some ITIN holders might not be familiar with all the terminology.

Quick heads up about electronic filing with ITIN employees - some payroll software struggles with ITINs even though they're formatted just like SSNs. When I tried to e-file with my first ITIN employee, our payroll system kept rejecting the number because it started with a 9. Had to call tech support and they had to make a special adjustment to accept the ITIN format. Might want to test your system with a dummy run before actual payday!