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Mosho2 · Sep 24, 2009, 04:11 PM

Hello,

I currently do not live in the US nor have any kind of US identification other than a Visitor's Visa that is about to expire.

I've bought some real estate properties and will be renting them and receiving rent. I have formed an LLC to have the houses registered under. I need to get an ITIN to get an EIN which I need for the management company to manage my properties.

I will be in the US today and tomorrow but after that I will go back to Israel and will have no ways to get back here for a while.

I called a friend who is a US citizen and he called his accountant who told him that I just need a notarized copy of my passport and the W-7 form, but at H&R block they told me that I need a reason for the IRS to issue an ITIN for me. (I would think that wanting to give them money is enough)

Thanks!

MukatA · Sep 25, 2009, 01:37 AM

You should contact AtlantaTaxExpert at [email protected] for ITIN.

Five Rings · Sep 25, 2009, 05:45 AM

The accountant was incorrect.

Because you are a nonresident alien your management company will be required to withhold 30% of the GROSS rental income and pay it over to the Treasury.

You may avoid this untenable situation by electing to treat this income as connected to a US trade or business and obtaining an ITIN.

On the W-7 you check box (h) write "exception 1(d), rental income".
You then obtain:
"1(d) A signed letter or document from the withholding agent, on official letterhead, showing your name and account number, and
evidencing that an ITIN is required to make distributions to you during the current tax year which are subject to IRS information
reporting or federal tax withholding." This is from the W-7 instructions.

Additionally, I would attach the document evidencing that you, indeed, do own these properties.

Of course you also must attach a notarized copy of your passport.

Getting the EIN is easy; see
Employer ID Numbers (EINs)

Mosho2 · Sep 25, 2009, 09:01 AM

That's great, thank you so much for the help!

Since I posted the question, I found this site, easycorpltd.com and they seem to be offering a service for individuals exactly in my position, getting an EIN without any need at all for an ITIN. I'm not entirely sure how, but they do have an A+ BBB rating which should mean I can trust them.

What do you think?

Five Rings · Sep 25, 2009, 10:01 AM

Get an ITIN.

Mosho2 · Sep 25, 2009, 11:29 AM

Could you please elaborate? I think it does sound a bit too good to be true, but if they can help me without getting an ITIN that will take 2 months, it might be a good option.

Thanks again!

Five Rings · Sep 25, 2009, 11:34 AM

You can get an EIN yourself over the phone. Click on the link I gave you.

Mosho2 · Sep 25, 2009, 11:39 AM

Oh, so you're not ruling out the site's service, just pointing out that it's unnecessary? I might not have 2 months to wait for the ITIN, that's the reason I'm considering it.

Thanks a lot for all your help!

IntlTax · Sep 26, 2009, 07:02 PM

You will need to obtain an ITIN, even if you get an EIN. You will need to file a U.S. tax return at the end of the year and you will include your ITIN on this tax return.

Five Rings · Sep 27, 2009, 07:08 AM

Look, the ITIN Unit loves to get a tax return as proof of requirement; it is their favorite thing.

That is why, failing a tax return, they have the "exception" rules and those rules are so stringent.

The point of filing under an exception is to avoid withholding. If you want to avoid withholding then apply for your ITIN now. If it makes no difference file your W-7 and attach your tax return to the application in early 2010.

Mosho2 · Nov 23, 2009, 10:22 AM

Hello again,

I have collected all the needed documents and have just 1 question before I send them. I have a copy of my passport signed by an Israeli notary public, in English. Is it possible that they would like an American Notary public to sign the copy?

Thanks!

Five Rings · Nov 23, 2009, 12:13 PM

Having a US notary certifying the copy would certainly be good insurance.

An EIN and an ITIN are two different things. Getting an EIN is relatvely simple and you can do that by following the directions here:
Apply for an Employer Identification Number (EIN) Online

As to your ITIN application that is somewhat more complex. To get a number you must prove who you are, that you are ineligible to get a social security number (which you can't because you are a nonresident alien which is proven by your Israeli passport), and why you need a number.

Note on the W-7 form that there a bunch of boxes right at the top of the Form. You are to indicate here your reasons for requesting the number.

In your case, you will check box (h). You will then write in "exception 1-rental income".
Along with your certified passport copy you will enclose a letter from your property manager, on his letterhead, stating that he will be managing your properties, collecting rents on your behalf, and paying expenses.
I would also include a copy of the deed which shows you own these properties.

Since the manager is required to withhold 30% of the gross rentals in tax before sending you any money, as soon as you get your ITIN you will complete Form W8-ECI and send it to him. This will stop the withholding of tax.
http://www.irs.gov/pub/irs-pdf/fw8eci.pdf

I cannot believe you have entered into this enterprise without profession tax guidance; correct that immediately.