The W-7 application process to get an ITIN, for tax purposes

I am a Certifying Acceptance Agent for ITINs (Individual Tax Identification Numbers). This means, I am authorized to review the source documents (primarily passports), certify their accuracy, and apply ITIN for my clients.

Why does one need an ITIN?

ITINs are required for many reasons in the US, the primary reason being it acts as the identifying number when you file a US Federal and State tax return. Normally, people are familiar with the SSN (Social Security Numbers), but not everyone is eligible to obtain an SSN. People who are dependents (such as children), or spouses who are on dependent visas, are not eligible to obtain SSNs, so the only way they can file a tax return with the Internal Revenue Service (IRS) - the primary agency responsible for collecting income taxes - is by obtaining an ITINs.

Unlike SSNs, which are obtained generally throughout the year, ITINs are generally issued when you apply for a tax return.

The normal process of applying an ITIN is by filing the form W-7 with the IRS. One is also supposed to send the original documents to the IRS - one document to verify the person's identity, and another document to verify their foreign status. A passport is generally the best document and acts as proof of identity and foreign status.

Since many people shy away from sending their original passports to the IRS and be locked out of a passport close to two months, the alternative is to see a Certifying Acceptance Agent, such as myself. As an agent, I can verify the original passport, confirm the identity of the ITIN applicant by personally seeing them, and return their passports in a single visit. The applicant never parts with their original documents.

As a CAA, I fill out the W-7 form, as well as the W-7 (COA) - Certificate of Accuracy form. I mail these documents, along with a copy of the source documents, and the tax return to the IRS at their Austin address.

Documents to be uploaded for new ITINs:

1. Copy of passport pages - first page, visa page, and US Entry stamping page
2. Copy of Primary Tax payer's SSN Card
3. Address where you want to receive IRS correspondence

Documents to be uploaded for renewing ITINs:

1. Copy of passport pages - first page, visa page, and US Entry stamping page
2. Copy of Primary Tax payer's SSN Card
3. Address where you want to receive IRS correspondence
4. Copy of the original ITIN issuing letter from IRS
5. All pages of letters from IRS (if you received one indicating that ITIN is going to expire).

I have helped numerous clients from various countries (US, Canada, Russia, Mexico being the most common) clients obtain their ITINs.

Please give me a call at 480-639-2030 for a free phone consultation.

A lesser known mortgage secret

Many Americans enjoy home ownership, and along with it, a mortgage from a lender at a certain Annual Percentage Rate (APR).

Many of the mortgage holders pay just their monthly dues, a portion of which goes to the mortgage insurance, a portion (generally large) goes towards interest, a portion goes to the principal, and the remaining goes towards escrow - which takes care of your home property taxes and home insurance.

Some homeowners like to pay off their mortgage sooner than the standard 30 years or 15 years, so they either round off their monthly payments to the nearest hundred or whatever higher amount they are comfortable with. For example, someone with a monthly mortgage payment of $2,100 may pay off $2,500 or $3,000, or a flat $100 extra.

If you regularly pay off an extra amount on top of your monthly mortgage, read on. There is a lesser known secret that you can use to pay off your principal first with the extra amount.

As you all know, many banks use your previous month's ending balance (or the current month's starting balance) to calculate the monthly interest. For example, say, the total principal balance of your mortgage as of August 31, 2017 was $450,000. Let's say your APR is 4% annually. and your monthly mortgage amount is $2,700. When you make your regular monthly payment of $2,700 on September 01, 2017, the banks always calculate the interest first.
The monthly interest on $450,000 at 4% is $450,000 * (4/100) * (1/12) = $1.500. (As you can see, 4% or 4/100 is the interest annually, and 1/12 helps me get the interest per month). Assuming, $150 for mortgage insurance, and $300 for escrow, the remaining amount ($2,700 - $1500 - $150 - $300 = $750) goes towards your principal. (Just compare this: $1,500 goes towards interest, versus just half $750 going towards principal!) Your new outstanding principal balance is now $450,000 - $750 = $449,250. (Out of the $2,700 you paid, you just made a dent of $750 in your principal).

If you are the type of person who wishes to pay off your mortgage sooner, you may round the $2,700 to say $3,000 and add another $2,000 to it to make it an even $5,000. With this, the additional $2,300 goes towards your principal, and your new outstanding principal balance is $449,250 - $2,300 = $446,950. Any additional regular payment you make uses this amount to calculate interest for the subsequent month.

Let's say you are fortunate enough to have a mortgage with a bank that uses your current principal balance to calculate your interest. When I say current, it means the principal balance as of "now", not the ending balance from the previous month. Let's see, how the same $5,000 monthly payment in September pans out. With such a bank, using the same example, the technique is to make the $2,300 principal payment first on September 01, 2017. This has to be done separately and should be the only mortgage transaction for the day. I will explain why in a minute.

Let's start with the same set of numbers, $450,000 outstanding principal balance as of August 31, 2017 and your $2,300 principal only payment on September 01, 2017. Your new outstanding principal balance as of September 01, 2017 is now $450,000-$2,300 = $447,700.

Now, on September 02, 2017, make your $2,700 regular payment. Your interest is now calculated on $447,700 and not $450,000.
Your new interest is $447,700 * (4/100) * (1/12) = $1,492.33. Assuming, $150 for mortgage insurance, and $300 for escrow, the remaining amount ($2,700 - $1,492.33 - $150 - $300 = $757.67) goes towards your principal.
Your new principal balance is $447,700-$757.67 = $446,942.33 as of September 02, 2017, and if you do not make any more payments, this becomes your monthly ending balance, and the whole cycle continues.

Let's look at this again:
If you had made the full $5,000 payment on September 01, 2017, your new principal balance is $446,950.
If you split the $5,000 with the principal only on the first day, and your regular $2,700 payment the subsequent business day, your new principal balance is $446,942.33, now $7.67 lower.

Now, this $7.67 does not seem a lot due to the high mortgage amounts, but if you keep prepaying the principal first and lowering it, and then making your regular payment towards the end of the month, you will be paying down the mortgage sooner.

So, the next time you hand in the principal and regular payment check as a single amount, just think about this strategy.

Let me know how this works out for you.

Getting your Canadian passports certified

The new IRS regulations call for dependents requiring an ITIN, through the W-7 form, when submitting your US tax return.

However, under earlier rules, a notarized copy of the passport and other supporting documents was sufficient for applying the ITIN using the W-7 form. However, under the new rules updated in January 2013, the IRS is now asking that the supporting documents be certified by the original issuing authority. For example, if you are a Canadian national wishing to submit a Canadian passport as a supporting document, you need to get the Canadian passport certified by the Canadian Consulate.

This is how I did it:

Being a Canadian national, I looked for the Canadian consulate closest to my location, which was the Miami consulate at 200 South Biscayne Blvd, Ste 1600, Miami, FL. The procedure for obtaining a certified copy was not given in their website, so I called them. They did not pick up the call on the first try, but I did leave a detailed voicemail which was returned within half an hour. The lady explained that I need to submit a written letter requesting the passports be certified, along with the original passports, and a return envelope preferably one with tracking.

I prepared a free form letter, included by credit card number (American Express), expiration date, and the original passports and a return USPS Priority Mail envelope. The charge per certification was $20 USD. I sent the passports and the letter via USPS priority mail which was delivered the next day. A few days later, I got a call from the consulate that they do not prefer USPS Priority Mail for return because it does not have the stronger tracking methods as FedEx or UPS. I authorized them to charge my American Express card for the FedEx mailing. My original passports, the certified copies, and the return USPS envelope was delivered to me the next day by FedEx.

I have submitted the certified copies along with my W-7 form to IRS. I am anxiously waiting for a response.

Update as of August 2017:

There is an alternative to sending passports. Look for a Certifying Acceptance Agent near your area 
When you visit a Certifying Acceptance Agent (CAA), he/she will look at the passport and attest that it has been viewed, and pertinent details copied to the W-7 form. The CAA will also fill out the W-7 COA (Certificate of Accuracy) form essentially telling IRS that he (CAA) is allowed to verify the passport with IRS' permission.

Note: I am a Certified Acceptance Agent in the Phoenix area, and have successfully obtained ITINs for my clients. If you need help with ITINs, please come and see me or call me at 480-639-2030. I have served numerous clients over the years.

1800Flowers - Relationships matter!

Relationships are the foundations to success. Wherever we go, whatever we do, if we succeed in building healthy relationships, they can add joy and smile to everyday life. That is precisely why we should spend some time in nurturing the relationships we have and appreciate them for being there. Wives who have appreciative husbands, kids who have appreciative parents, employees who have appreciative employers, all will see life improve. Why is social networking so alive in the web these days? Anything that aids in building relationships, building strong networks, is here to stay.

1800Flowers is the largest online vendor of flowers, gifts, chocolate etc for any occasion, big or small.They have been ever-growing through the years only because of their commitment to build relationships.1800Flowers knows that relationships are the cornerstone to success, so they take the time to nurture them. Their website is user-friendly and committed to making online shopping a pleasant experience. 1800Flowers have a 24 hr support service that is committed to servicing customers by providing answers to every question the customer may have. 1800Flowers utilizes every technology that is available to make customer experience pleasant, thereby ensuring that ‘once a customer, always a customer’. 1800Flowers have a growing number of followers who spread the word of their amazing experience with them. When something puts a smile on your face, you are bound to remember that moment and remember the appreciation. 1800Flowers builds a relationship with its customer by providing a rewarding, easy to use online experience , enabling you to nurture your relationships.

Can I fly?

Of late, I have been thinking of learning to fly an airplane, perhaps a Cessna or a Piper. I have a degree in Aerospace Engineering, where in I was taught the principles of flight, propulsion, structural engineering and designing of airplanes.

Having studied the theory behind flight, it is only prudent that I put these theories into practice and observe how theory can explain reality.

I do know that to get a Private Pilot License in Canada, one needs to have 40 hours of flying experience, and 40 hours of ground school experience.

This is a very expensive process though - the whole process would cost about 10K or so, and that is only the tip of the iceberg. You can then upgrade to a whole gamut of things - night flying, multi-engine, jets and so on.

So, will I be flying? Only time can tell. I will blog on my experiences...

So long!