What is an Individual Tax Identification Number (ITIN) and how do I use it for employee taxes?

8 An ITIN (Individual Taxpayer Identification Number) is a tax processing number issued by the IRS for individuals who need to file taxes but aren't eligible 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). For employers, you'll treat an ITIN almost exactly like an SSN for tax reporting purposes. The employee will still complete a W-4 form, you'll withhold taxes as normal, and you'll issue them a W-2 at the end of the year. The ITIN goes in the same box where you'd normally put the SSN. One important thing to note is that while the ITIN allows someone to pay taxes, it doesn't necessarily mean they're authorized to work in the US. As an employer, you still need to verify work authorization through the I-9 process. An ITIN alone isn't acceptable for Form I-9 - the employee would need to provide other documentation proving their eligibility to work. Also, be aware that ITINs expire if not used on a federal tax return for three consecutive years, so it's good practice to remind employees to check if their ITIN is still valid.

15 I went through something similar last year with my consulting business. I was totally confused about how to handle an employee with an ITIN until I discovered taxr.ai (https://taxr.ai). Their document analyzer really helped me understand the whole ITIN vs SSN situation. I uploaded the ITIN letter my employee provided, and the tool explained exactly what it meant and how to properly handle payroll and tax reporting. It also flagged that I needed to verify work authorization separately through the I-9 process, which I hadn't realized. What was really helpful was that it walked me through the differences in tax withholding requirements and showed me exactly where to enter the ITIN in my tax forms. Saved me from making some potentially costly mistakes!

20 Just wanted to follow up about my experience with taxr.ai after trying it based on the recommendation here. I was facing the exact same ITIN situation with a potential hire, and I was really confused about the proper procedures. The tool actually exceeded my expectations. I uploaded the ITIN documentation and our standard employment forms, and it highlighted exactly what I needed to do differently. It even generated a checklist specific to my situation for handling payroll and tax reporting with an ITIN holder. What I found most valuable was the explanation of how ITIN relates to work authorization and what additional documentation I needed to request. Saved me from making a potentially serious compliance error! Definitely worth checking out if you're in this situation.

11 After dealing with several ITIN employees in my landscaping business, I've found the hardest part isn't the tax reporting - it's actually getting through to the IRS when questions come up. Last year I had an issue with an employee's ITIN expiring mid-year and spent DAYS trying to reach someone at the IRS. Finally tried Claimyr (https://claimyr.com) after seeing it recommended, and they got me connected to an actual IRS agent in about 20 minutes. They have this callback system that somehow bypasses the hold times. You can see how it works in their demo: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through exactly how to handle the expired ITIN situation and what forms my employee needed to file for renewal. Saved me countless hours of frustration and prevented potential payroll issues.

17 I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I had some questions about an ITIN contractor I was considering hiring. To my genuine surprise, it actually worked. I spent three hours on hold with the IRS the previous day and never got through. With Claimyr, I received a callback in about 35 minutes and spoke directly to an IRS representative who answered all my questions about ITIN verification requirements. The agent confirmed that I need to treat the ITIN just like an SSN for tax reporting purposes but emphasized the separate requirement to verify work authorization through proper I-9 documentation. She also explained the withholding requirements and what to do if the ITIN expires. I'm still shocked that this actually worked - saved me hours of frustration. Just wanted to share my experience since I was so openly skeptical before.

4 Just to add something important that hasn't been mentioned yet - make sure your payroll system can handle ITINs properly. When we hired our first employee with an ITIN last year, our older payroll software kept flagging it as an "invalid SSN" because it started with a 9. We had to manually override it at first, and then eventually upgraded to a newer system that properly recognizes ITINs. Worth checking with your payroll provider before you process the first paycheck to avoid headaches.

24 One critical thing I learned when hiring someone with an ITIN - they're still subject to the same tax withholding rules as any other employee, but there are differences with FICA taxes (Social Security and Medicare). Depending on their immigration and tax residency status, some ITIN holders might be exempt from FICA taxes. Others need to have these taxes withheld just like any other employee. You'll want to confirm their specific situation and make sure your payroll is set up correctly. I made the mistake of assuming all ITIN holders were treated identically for tax purposes, and it created a mess that took months to correct. Each case can be different based on visa status, tax treaties, and residency tests.