Filing Requirements for Non-Residents Receiving Rental Income from U.S. Property: What You Need to Know About ITIN and Tax Withholding
- Just Breve
- 2 days ago
- 5 min read
If you're a non-resident of the United States who owns rental property in the U.S., understanding your tax obligations is crucial to ensure compliance with U.S. tax laws.
One key aspect of managing your tax responsibilities is obtaining an Individual Taxpayer Identification Number (ITIN), which is essential for non-residents earning rental income in the U.S. This blog post will explain why your managing agent might be asking for an ITIN and how you can apply for one through a Certifying Acceptance Agent (CAA) like Just Breve. We will also look at the withholding tax rates and how it impacts your rental income.
Why is the Managing Agent Asking for an ITIN?
When you, as a non-resident property owner, earn rental income from U.S. property, the Internal Revenue Service (IRS) requires that you report this income for tax purposes. If you fail to provide an ITIN, your managing agent is required to withhold 30% of the rental income as a tax. This withholding is a part of U.S. tax law to ensure that foreign property owners meet their tax obligations.
In simple terms, the withholding tax ensures that the IRS gets their due taxes, even if the property owner is outside the U.S. and may not file a U.S. tax return annually. The IRS mandates this withholding because non-resident property owners are subject to U.S. tax on income earned from U.S. sources, including rental income.
What is an ITIN, and Why Do You Need It?
An ITIN (Individual Taxpayer Identification Number) is a unique identification number issued by the IRS for individuals who are required to file a U.S. tax return but are not eligible for a Social Security Number (SSN). Non-resident property owners need an ITIN for the following purposes:
Tax Reporting: To report rental income and any other U.S. sourced income.
Reducing Withholding Tax: To prevent the automatic withholding of 30% tax on rental income.
Tax Filing: An ITIN is required if you need to file a U.S. tax return to report rental income or claim deductions and credits.
The ITIN does not grant you any right to work in the U.S. or any immigration benefits; it is purely for tax purposes.
How Can You Apply for an ITIN?
To obtain an ITIN, you must file a W-7 application with the IRS. The process can be somewhat cumbersome, especially if you're unfamiliar with U.S. tax filing procedures. However, you don’t have to navigate this alone. A Certifying Acceptance Agent (CAA) like Just Breve can help simplify the process.
A CAA can assist you in completing the W-7 application and submitting it to the IRS on your behalf. The key benefit of working with a CAA is that they are authorized to certify your original documents, such as your passport, so that you don’t have to mail them to the IRS. This service is especially helpful if you're concerned about the security of sending original documents to the IRS.
Here’s how you can apply for an ITIN through Just Breve:
Contact Just Breve: Reach out to Just Breve either through their website or by phone. They will guide you through the necessary paperwork and documentation.
Provide Required Documents: You’ll need to submit identification documents, such as your passport or national ID, to verify your identity. The CAA will certify these documents. You will also need to provide documentation relating to the rental as specified by Just Breve.
Submit the Application: Once your application is complete and your documents are certified, Just Breve will submit the W-7 form to the IRS on your behalf.
Receive Your ITIN: Once the IRS processes your application, you’ll receive your ITIN.
Why Work With a Certifying Acceptance Agent?
Working with a CAA like Just Breve offers several advantages:
Expertise: They are familiar with the ITIN application process and can guide you through the necessary paperwork.
Efficiency: They handle the submission for you, which speeds up the process and reduces the risk of mistakes.
Security: They ensure that your original identification documents are certified and not lost or misplaced in the mail.
What Happens If You Don’t Apply for an ITIN?
If you do not apply for an ITIN and your managing agent withholds the 30% tax on your rental income, you can still file a U.S. tax return at the end of the year to claim a refund for the excess tax withheld. However, this process can be more complex without an ITIN. It’s always better to apply for an ITIN in advance to avoid unnecessary withholding and reduce the complexity of tax filing.
How Much Tax is Withheld on Rental Income?
For non-resident property owners, the general rule is that rental income is subject to a 30% withholding tax, unless you have an ITIN.
If you provide the appropriate documentation, such as an ITIN, you may be eligible for reduced withholding rates, especially if you file a tax return at the end of the year. It's important to consult a tax professional or a CAA like Just Breve to determine your specific withholding tax obligations and potential deductions.
Reviews of Just Breve Services
Many clients who have worked with Just Breve for ITIN services have left positive reviews highlighting the efficiency and professionalism of their team. Below is a table of some recent reviews from their website:
Review | Rating |
"Just Breve made the process of getting my ITIN simple and stress-free. Their team was very knowledgeable and helped me every step of the way." | ★★★★★ |
"I was nervous about sending my passport and documents to the IRS, but Just Breve ensured everything was handled securely and quickly." | ★★★★★ |
"The service was fast, professional, and saved me time. I would definitely recommend Just Breve for anyone applying for an ITIN." | ★★★★★ |
"The team at Just Breve provided excellent customer support and helped me with the W-7 form. They made everything so much easier." | ★★★★★ |
"I had no idea where to start with getting an ITIN, but Just Breve guided me through the whole process. Highly recommended!" | ★★★★★ |
Conclusion
If you're a non-resident property owner earning rental income in the U.S., it's important to understand the tax obligations that come with owning property in another country. By applying for an ITIN, you can reduce or eliminate the 30% withholding tax on your rental income. Working with a Certifying Acceptance Agent like Just Breve can simplify the process and ensure that everything is handled correctly and efficiently.
If you’re ready to apply for your ITIN, contact Just Breve today, and let their expert team help you navigate the process.
For more information or to get started, visit www.justbreve.com.
Can Just Breve help?
Yes, we can. Just Breve is a US tax accounting firm, assisting non-US persons with their US tax filing requirements, including filing a 1040NR and obtaining an ITIN. We assist in applying for a new ITIN or renewing an existing ITIN. We are a certifying acceptance agent (CAA) and have a contract with the IRS to help with Form W-7 ITIN applications (and EIN applications). We have assisted several thousand applicants over the last decade with their Form W-7 ITIN applications.
T: 077255 87696
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