Drawbacks of getting an ITIN

Hey everyone,
I’m considering getting an ITIN with this agent to be able to open a bank account when I step foot in the US. I have a US LLC and they told me that was a sufficient reason to obtain one.

I was wondering tho: Are there any drawbacks of getting an ITIN? For example:

  • Do I need to file taxes every year with possession of an ITIN, even if I don’t owe any?
  • If I go to the US on a tourist visa, will I be required to provide that ITIN when I enter the country, and will I be tracked for my time spent in the US? (could facilitate the substantial presence test)
  • Any other drawbacks?

Thanks!

My background: I’m a U.S. citizen located in the U.S., and have previously had LLCs with EINs. I am not an accountant, nor a legal or tax professional… Just based on my own personal understanding of things. So treat my words here accordingly.

Are you sure you’ll be requesting an ITIN for yourself personally, and not an EIN for your LLC?

I’m not aware of any drawbacks to obtaining an EIN for your LLC. Personally I’ve never needed to use an agent; there’s a simple form used to request the EIN, though I’m not sure if not being present in the U.S. offers any particular obstacles. As for your questions

  • As far as I understand, any requirements to file returns or pay taxes have nothing to do with whether or not you’ve been assigned an ITIN or EIN; tax filing and payment obligations are triggered by other criteria and apply regardless.

  • Neither I nor any non-U.S. visiting friends of mine have ever been asked for a tax ID number upon entry. Furthermore, any tracking or presence test has nothing to do with whether a tax ID number has been assigned to you.

Whether or not you have an assigned ITIN or EIN, you may have tax nexus based on where your LLC does business or possibly the state in which it’s registered. I’m afraid I don’t know much about this and you should consult an expert as to whether or not you’d also be subject to state taxes.

Good luck!

Hi @SVSparklemuffin ,

Are you sure you’ll be requesting an ITIN for yourself personally, and not an EIN for your LLC?

I already have an EIN, a bank account, and everything that is needed to run my LLC. Now what I’m missing is a personal bank account in the US to make ACH “Owner draws” from the LLC to my personal bank account.

Personally I’ve never needed to use an agent

In my case I need to since I’m not physically present in the US, nor do I have a US address.

As far as I understand, any requirements to file returns or pay taxes have nothing to do with whether or not you’ve been assigned an ITIN or EIN; tax filing and payment obligations are triggered by other criteria and apply regardless.

That’s gtk! It’s what I was able to find online indeed but I wasn’t sure.

Neither I nor any non-U.S. visiting friends of mine have ever been asked for a tax ID number upon entry

Gtk, thanks a lot!

whether or not you’d also be subject to state taxes.

As for this I read plenty of articles and booked many consultations with CPAs specialized in LLC taxes for NRA (Non-resident aliens).

Thanks a lot for your insights! :slight_smile:

Now what I’m missing is a personal bank account in the US to make ACH “Owner draws” from the LLC to my personal bank account.

Ah ok thanks, now I understand better. That makes sense, since as a pass-through entity for tax purposes, your LLC’s income and expenses will be reported on your personal tax return, for which you’d presumably need your own personal tax ID. In other words, perhaps there isn’t really much of a choice as to whether or not to obtain an ITIN? I’m afraid I don’t know anything about obtaining ITINs for non-residents, though. I received mine pretty much at birth. :wink:

Good luck & let us know how it goes!

I’m not 100% sure, but I don’t think there are any significant drawbacks to getting an ITIN. At least I’ve never had any issues with having a SSN (which I got while on a student visa back in the day). They don’t ask for it on the ESTA applications whenever I visit, at least. In terms of time spent in the US that’s usually tracked with your passport number IIRC.

There’s also no need to submit any tax returns if no tax is owed (unless you for some reason want to “re-activate” your ITIN in case it lapsed). You can still use a lapsed ITIN for banking purposes, etc.

Despite the above, I wouldn’t mess with the SPT threshold (ITIN or no ITIN)… If you’re anywhere close to hitting it, make sure you track every visit in a spreadsheet or something to make sure you don’t go over. Dealing with US taxes is not fun.

Awesome, thanks a lot @tkrunning , this is exactly what I was looking for

As for the SPT I definitely won’t mess up with this but I just wanted to understand how everything is linked together with the US tax sytem.

Thanks again!