How the New Individual Taxpayer Identification Number Law Could Impact You

From MilitaryOneSource Monthly Newsletter

A new tax law could make it tricky for military members to file their 2016 taxes using an individual taxpayer identification number, instead of a Social Security Number. The Protecting Americans from Tax Hikes Act of 2015, or PATH Act, requires taxpayers to renew their identification number if the one they have is set to expire on Dec. 31, 2016.

Failure to renew your individual taxpayer identification number prior to the expiration date could potentially cause a delay in processing your tax return. The delay could result in a reduced refund or additional penalties and interest if you owe tax.

If your spouse is not a U.S. citizen and the two of you have filed a joint tax return in previous years, it is likely that your spouse has used an individual taxpayer identification number. Additionally, if your spouse has children from a previous marriage and the children are not U.S. citizens and the two of you have claimed the kids as dependents on your taxes, then you have likely have used this number to identify them.

Take action to help you avoid delays

Here is a checklist to help determine whether the PATH Act applies to you:

Do you use a number other than a Social Security number to identify a dependent when you are filing taxes? This is likely an individual taxpayer identification number, and if you have not used it on a tax return at least once in the last three tax years, the number will expire on Dec. 31. 

Are you claiming a foreign national or a non-resident alien on your return? If so, then you have an individual taxpayer identification number. 

Did you decide against using that number when filing taxes between 2013 and 2015? If the answer is yes, then you need to renew your number. 

Does your identification number have the digits 78 or 79 in the middle of it? If so, then you must renew your number.

How to renew an individual taxpayer identification number

The federal government began accepting renewal requests in October. You must submit your request between Oct. 1 and Dec. 31, 2016, so that you can file your 2016 taxes next year. Failure to do so can result in delays in the processing of your return and expose you to penalties. Here are the things you need in order to update an expiring identification number:

Fill out and submit to the Internal Revenue Service, or IRS, a W-7 application form for a new number. 

Look for Letter 5821 from the IRS notifying you about your soon-to-expire number. You must send the IRS a copy of that letter along with the application.

Where to file your identification documents

You can mail your documents to the address listed on the W-7 application form. The IRS will return those documents to you within 60 days.

You can renew your number through an IRS authorized Certified Acceptance Agent in your state or at select Volunteer Income Tax Assistance locations.

You can make an appointment to renew your number at your local IRS Taxpayer Assistance Center

Military OneSource can help you deal with this tax law change. Contact a Military OneSource consultant at 1-800-342-9647 to discuss your tax concerns or to seek free document translation services. You may also want to speak with someone at your military installation's legal assistance office.