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When should I apply for ITIN?

As for identification of persons, there are two different set of identification numbers in the U.S. The first one is the Social Security Number which can be obtained only if the person is a U.S citizen or a Green Card holder or holder of a visa that provides the person with a temporary residency in the U.S. The other number is the Individual Tax Identification Number; which is abbreviated as ITIN. Instead of explaining who can obtain an ITIN, it is easier to define who cannot. Basically, anyone who cannot get a Social Security number (SSN), requires to obtain an ITIN for tax purposes. Yet still, we would like to present who can indeed obtain ITIN: Foreign individuals who are not eligible for a Social Security Number but have a tax liability in the U.S.Individuals who do not live in the US, who are not likely to obtain SSN; but, need a tax ID number for tax returnsIndividuals who came to the US for residency purpose and need to have a tax ID number for tax returnSpouses and dependents of the US citizens and foreign individuals who went to the US for residency purposes and are not eligible to obtain an SSN and required to pay taxesSpouses and dependents of individuals who are not residents of the US but need to file taxes As for the “right time to apply” for ITIN, it is essential to know why it is so important. ITIN is basically a TAX IDENTIFICATION number issued by the IRS. It is crucial for filing tax returns, therefore it is essential to apply for it as soon as possible, especially if you have tax filing obligations. Failing to comply with tax filings would result in severe penalties.

How do I get taxed as a non-US resident?

For non-U.S. resident business owners who run a business in the U.S., taxation might pose a major question. Since taxation is one of many indicators whether the investment in the U.S. is worthwhile, it is essential to understand how the U.S. taxation system approaches non-resident aliens. In the U.S., citizens are not the only ones that have been paying taxes. In addition to the citizens, “residents” and “non-residents” might be obliged to pay taxes as well, provided they fulfill the required criteria. Therefore, if you are a non-U.S. citizen and have a business operating in the U.S., you might be still liable to pay taxes and to file tax returns. Basically, whether you have tax responsibilities depends on your residence status and/or how much time you have spend in the U.S. As a result, if you are a; green card holder, ora holder of nonimmigrant visas who satisfy the substantial presence test, then you are considered as a resident alien for tax purposes. This classification as resident alien, meeans that you must report all your income from all sources on their U.S. tax return and pay income tax on it at the same rates as U.S. citizens. Who? Green Card Holders A green card holder is a person who is a lawful permanent resident of the United States. If you have a green card, you must pay U.S. taxes even if you spend most of your time outside of the country. Non-immigrant Visa Holders Non-immigrant visa holders are those entered into the U.S. with the purpose of temporarily visit or stay. Different than green card holders, if a non-immimgrant visa holder satisfies the substantial presence test, that person might be liable for their taxes as well. Please note that there are many exceptions to this test and it would be better to consult with an expert if you have any doubts. In principle, the reason behind this substantial presence test is to determine whether the non-immigrant visa holder has been physically present in the U.S. substantially. In this connectin, the non-immigrant visa holder must be in the U.S. at least for: 31 days during the current year, and183 days during the 3-year period that includes the current year and the two years immediately before that. Please note that only 1/3 of the days you were present in the first year before the current year, and 1/6 of the days you were present in the second year before the current year will be counted. There are many exemptions to this list. One of the most peculiar one is problably the closer connection exemption. This means that if you: are present in the United States for less than 183 days during the current yearhave not applied for a green cardhave a closer connection with a foreign country than with the U.S., andmaintain a tax home in this foreign country during the year, you will be exempted from the aforementioned obligations even if you satisfy the general criteria. Tax Obligations In addition to paying taxes, if a non-U.S. resident meets the above-mentioned criteria, the person might be liable for certain taxation obligations, including filing tax returns such Form 1040NR.

Q&A: Is there a scenario where I do not need EIN?

Generally, all types of businesses without looking at their size and the number of employees must get an EIN. Therefore, you are required to have an EIN if you have a company in the US, but in some cases, you may not need to have one at all. EIN is used by the IRS – Internal Revenue Service to keep track of businesses and their tax responsibilities. In this context, some types of businesses that are not legally separated from their owners do not need an EIN. For instance, if you have a sole proprietorship or single-member LLCs without any employees, you may, of course, use your social security number instead of an EIN or tax ID. These two types of businesses do not need to have an EIN. However, it is safe to say that having one confers some has advantages even if it is not required. EIN is beneficial and may required when you hire employees, establish a payroll, get special licenses and local permits, open a bank account and etc.

How to apply for a withholding tax scheme?

If you are liable for paying withholding tax in the State of Delaware, you are required to open to withholding account. To this, you have two ways to do it. You can either (i) register to the One-Stop Business Licensing and Registration system or (ii) fax or mail the Form Combined Registration Application for State of Delaware Business License or Withholding Agent (CRA) to a designated Delaware Division of Revenue Withholding Tax Unit contact details. Both options are free of charge. Following registering the Division of Revenue for withholding, you are to receive your personalized withholding tax forms within a few weeks. Please note that any late filing and payment of withholding tax will result in penalties. Any late filing is subject to a penalty of 5% per month, plus interest of 0.5% per month from the original due date until paid. Failure to pay is also subject to an additional penalty of 1% per month, though not to exceed 25%. Tips As to when is this tax due, it may differ case-by-case. Please check the calendar on the website of the Delaware Division of Revenue or consult with us. 
Please note that the State of Delaware does not accept consolidated withholding tax payments for more than one employer. Each employer must file its withholding tax return by using its own Federal Employer Identification Number (EIN). 
As for the employees to file for withholding exemptions, the State accepts Form W-4 for an employee to claim personal exemptions. 
If you are not sure whether you are required and liable for withholding tax, please do not hesitate to contact us.