10 Weird ITIN Myths That Keep Our Finances in the Dark Ages

From the moment we’re old enough to understand that cash buys gold, we’re fed a pack of lies about everything from taxes to credits and debits, you name it.

And it’s not really anyone’s fault;  it’s more a failing of our financial constructs combined with scary money stories our peers, parents and grandparents told us.

We’ve all fallen for these dated money-related advice/myths/stories at some point. They keep us stuck in annoying financial situations and tax nightmares. And we are too scared to make a move because… what if we mess it up if we don’t listen?

Take me, for example. I used to think that if I didn’t file my taxes on time, the IRS would show up at my door with handcuffs 🤭

Yes, I genuinely believed that missing the deadline by a day meant I’d be off to jail. Turns out, it’s not that dramatic — there are penalties and interest, sure, but no instant prison sentence!

What a relief, right?

We’ve all had those moments. And these myths do more than just scare us — they destroy our confidence and keep us from making smart financial decisions.

Eager to bust a few of them?

Grab a comfy spot on your couch, and let’s dive into 10 of the weirdest and most ridiculous ITIN (Individual Taxpayer Identification Number) myths out there.

Prepare to have your mind blown (or at least mildly surprised).

Myth #1: ITINs Are the Same as Social Security Numbers

A common misconception is that SSNs and ITINs are equivalent and have the same functions. It’s simple to presume that both these numbers are the same because they are utilized in tax filings.

Some even believe that both can be used to obtain government benefits and employment permits. 

Fact

Sure, both ITIN and SSN have nine-digit numbers, but they serve totally different purposes. 

An SSN is issued by the Social Security Administration (SSA) for people eligible to work in the U.S. and to access social security benefits. 

Think of it as your legal pass to employment and social services. On the other hand, an ITIN is issued by the IRS solely for tax purposes. It’s for those who need to file taxes but aren’t eligible for an SSN.

So, while an SSN can open doors to employment, social security benefits, and more, an ITIN’s role is to keep you on the IRS’s good side by ensuring you can file your taxes diligently.

Why People Get Confused 

Many individuals mistakenly think that SSNs and ITINs have the same purpose because of their similar format. The distinction is further muddied by the fact that both numbers are utilized for tax-related procedures.

Myth #2: Having an ITIN Means You Can Work in the U.S.

Some folks think that just because you have an ITIN, you’re automatically allowed to work in the U.S. It sounds logical, right? A tax number should mean you can work. But that’s not how it works. I’ve heard people say, “Oh, just get an ITIN and you’re set to work anywhere!”

Sorry, but having an ITIN doesn’t give you work authorization. If you want to work legally in the U.S., you need the appropriate work visa or an SSN.

Fact

Having an ITIN does not give you permission to work in the US. Additionally, it disqualifies you from the Earned Income Tax Credit (EITC) and Social Security payments. The ITIN’s sole purpose is to enable you to file your taxes and maintain IRS compliance.

Why People Get Confused

Many people think that because ITINs are issued by the IRS and are involved in tax filings, they grant work authorization. However, ITINs are strictly for tax purposes and don’t affect work status.

Myth #3: ITINs Are Only for Non-U.S. Citizens

The idea that ITINs are only for non-U.S. citizens is pretty widespread. Some people think ITINs are a VIP pass for non-citizens. Like it gets you into a secret illuminati club. 

Spoiler alert: It doesn’t.

Fact

While ITINs are often associated with non-U.S. citizens, they’re also for U.S. residents who aren’t eligible for an SSN. This includes foreign nationals, nonresident aliens required to file a tax return, and dependents or spouses of U.S. citizens/residents who don’t qualify for an SSN.

Why People Get Confused

The primary users of ITINs are non-U.S. citizens, leading to the assumption that ITINs are exclusive to them. However, ITINs are meant for anyone who needs to file U.S. taxes and cannot get an SSN.

Myth #4: ITINs Can Be Used as Proof of Identification

Here’s another one for the books. People sometimes think, “Hey, it’s a government-issued number. Must be good for ID, right?” Wrong again.

Fact

ITINs are strictly for tax purposes. They’re not valid for identification outside of that. So, you can’t use your ITIN to open a bank account, apply for a loan, or do anything else that requires a government-issued ID.

Why People Get Confused

Because ITINs are issued by a federal agency (the IRS), some people assume they can be used as a general form of identification. However, their purpose is limited to tax matters only.

Myth #5: Applying for an ITIN is a Nightmare

Ah, the dreaded paperwork. Some folks are so scared of forms that they avoid applying for an ITIN altogether. But let’s take a breath and look at the reality.

Fact

Applying for an ITIN isn’t as bad as it’s made out to be. Yes, it requires some paperwork, but it’s manageable.

Fill out Form W-7, attach the necessary documents (like your passport or national ID), and send it to the IRS. If everything’s in order, you should get your ITIN within seven weeks. 

Not too bad right?

Why People Get Confused

 Government paperwork tends to have a reputation for being complicated. This myth is fueled by the general perception that anything involving the IRS must be difficult and time-consuming.

How doola Can Help

Now, if the thought of handling all that paperwork still makes you break out in a cold sweat, don’t worry — we are here to help. Here’s how we can make the process smoother:

Expert Guidance: Our team of experts can walk you through each step of the ITIN application process. No more second-guessing or stressing over forms.

Documentation Assistance: We’ll help you gather and prepare all the necessary documents, ensuring everything is in order before you submit.

Compliance Support: We make sure you’re following all IRS guidelines and requirements, reducing the risk of delays or rejections.

Book a free consultation today to learn more about ITINs.

Myth #6: ITIN Holders Don’t Pay Taxes

I’ve heard all kinds of strange notions about this particular myth. Some folks think having an ITIN is like having a magical shield that takes you off the tax hook.  

Others believe it’s a loophole the IRS created for people to dodge taxes. There’s even a notion that ITIN holders are doing the IRS a favor just by existing and, therefore, don’t need to pay taxes 😛 Not kidding at all!

Fact

The whole point of an ITIN is to ensure you pay taxes.

ITIN holders are required to report income, file tax returns, and, yes, pay taxes like everyone else. The IRS uses ITINs to process tax returns and payments for those not eligible for SSNs, ensuring that everyone who earns income in the U.S. pays their fair share of taxes.

So, if someone tells you ITIN holders are off the hook, they’re definitely misinformed.

Why People Get Confused

Some people believe that an individual is exempt from paying taxes without an SSN. This myth persists because the primary function of an ITIN is misunderstood by those unfamiliar with the tax system.

Myth #7: ITINs Never Expire

Some people believe that once they get an ITIN, it lasts forever. However, this is not true.

For example, an acquaintance of mine got his ITIN in 2016 but didn’t use it on a tax return for several years. When he tried to use it again, he discovered it had expired and he needed to renew it. He had no idea ITINs could expire, and it delayed his tax filing.

Fact

ITINs do expire. If you haven’t used your ITIN on a tax return in the past three years, it will expire. Plus, ITINs issued before 2013 must be renewed periodically, even if you’re actively using them.

Why People Get Confused

People often think once they have an identification number, it lasts forever. The concept of expiration for a tax identification number is not commonly known.

Myth #8: Renewing an ITIN is Impossible

The word “renewal” itself can induce anxiety. It’s like when you get that dreaded “time to renew your driver’s license” notice and you immediately imagine long lines and endless forms. But renewing an ITIN isn’t the Herculean task some think it is. Trust me, it’s just some paperwork and patience.

Fact

Renewing an ITIN is pretty straightforward. Fill out the same Form W-7 you used to apply, attach the required documents, and then send it to the IRS. Just make sure to do it well before tax season to avoid delays.

Why People Get Confused

Renewal processes for various documents can be complex, leading to the assumption that renewing an ITIN is equally difficult.

We’ve all had those renewal nightmares — whether it’s a passport, a driver’s license, or even a library subscription.

The automatic assumption is that it will be a bureaucratic mess. However, the ITIN renewal process is quite similar to the initial application, minus the drama. 

And if you find yourself pressed for time, you can get in touch with doola. Our team of experts can walk you through each step of the ITIN renewal process.

Myth #9: You Can’t Claim Dependents with an ITIN

A topic that confuses many. Some folks think if you have an ITIN, you’re out of luck claiming dependents. Not true. 

Fact

ITIN holders can absolutely claim dependents on their tax returns. Your dependents need their own ITINs, but you can claim children or other qualifying relatives who live in the U.S., Canada, or Mexico.

Why People Get Confused

Some people believe that not having an SSN disqualifies them from claiming dependents, not realizing that ITINs serve the same function for tax purposes.

Myth #10: ITIN Holders Don’t Get Any Tax Benefits

According to some people, if you have an ITIN, the IRS does not see you besides when it is time for you to cough up cash. To them, the IRS is like “pay me now and go”.

Let’s bust this one wide open.

Fact

While there are certain benefits that are not applicable to ITIN holders such as EITC, they still can qualify for other credits and deductions.

This includes Child Tax Credit (CTC) and American Opportunity Tax Credit (AOTC) depending on their eligibility requirements.

In fact, IRS wants everyone who is earning income in America regardless of their immigration status to be entitled to benefit from tax benefits.

Why People Get Confused

This misconception arises because many think that only SSN holders can enjoy tax breaks.

Nevertheless, ITIN cardholders may still take advantage of some credits and deductions provided that they meet the criteria required for this purpose.

How to Apply for an ITIN?

Now that we’ve busted some myths let’s talk about how you can actually apply for an ITIN. Here’s a step-by-step guide to make it as painless as possible:

Determine Your Need for an ITIN

Make sure you really need one. If you’re required to file a U.S. tax return but don’t have and can’t get an SSN, you need an ITIN.

Complete Form W-7

This is the IRS form used to apply for an ITIN. It’s available on the IRS website. Fill it out completely and accurately.

Gather Required Documentation

Provide proof of your foreign status and identity. A passport is your best bet. If you don’t have one, you’ll need at least two other documents like a national ID, U.S. driver’s license, or birth certificate.

Submit Your Application

 Mail your Form W-7 and documents to the IRS, or take them to an IRS walk-in office or an acceptance agent authorized by the IRS.

Wait for Your ITIN

 If everything’s in order, you should get your ITIN within seven weeks. During peak tax season, it might take a bit longer.

The Last One: Why One-Size-Fits-All Advice Is The Biggest Myth

While writing this piece, I couldn’t shake the thought of how these ITIN myths highlight our tendency to see taxes in black-and-white terms. It’s like we’re told, “You must do this or that, or you’re doomed!”

There’s no room for debate, nuance, or individual needs and preferences.

But here’s the catch: anything related to taxes or ITINs are very specific. What works for you might not work for your neighbour, spouse or even your best friend.

So next time someone tries to tell you that you must do this, that, or the other with your taxes, remember these few facts. And if they still don’t get it, just hand them this blog.

And end your talk with a smile and say, “You do you, mate.”

Taxes and ITINs Got You Worried? Let doola Lift You Up!

doola is here to assist you with a variety of tax-related tasks, including applying for an ITIN, renewing it, and getting sound tax guidance.

We provide professional assistance to help you acquire and prepare all required documentation as we walk you through each step of the ITIN filing procedure.

By ensuring that you’re adhering to all IRS regulations, our compliance package lowers the possibility of delays or rejections. 

Here’s a round-up of what we offer:

Personalized Advice: We’ll help you understand which tax benefits you qualify for and how to claim them.

Document Preparation: We assist in gathering and preparing all the necessary documents to ensure you don’t miss out on any eligible credits.

Filing Support: Our experts can help you file your taxes correctly, ensuring you maximize your benefits and stay compliant with IRS regulations.

Ongoing Support: Tax laws change, and so do your circumstances. We provide ongoing support to help you stay on top of your tax situation year after year.

So why sweat the small stuff? 

Book a free consultation now and make your tax worries a thing of the past!