There are 5 exceptions that let you file Form W-7, the IRS application for an ITIN, without the U.S. federal income tax return it is normally filed with. Each one replaces the return with proof of why your ITIN is needed.
What are the ITIN exceptions?
The ITIN exceptions are 5 situations where you can apply without a tax return. In 4 of them, a bank, payer, school, lender, or buyer must report or withhold. In the 5th, your employer needs you to e-file under T.D. 9363.
Two terms come up in most exceptions. A withholding agent is the bank, fund, school, or buyer that pays you and must hold back tax. An information return is the form that payer files to report what it paid you, such as Form 1042-S.
Who can use an ITIN exception?
You can use an ITIN exception when your situation matches 1 of the 5 Exceptions Tables in the Form W-7 instructions. An exception removes the tax return, not the need for withholding or information reporting in the current tax year.
3 rules apply to every exception:
- The federal tax withholding and/or information reporting must take place within the current tax year.
- You still send original identity documents, or copies certified by the issuing agency. Students and exchange visitors under Exception 2 can have an SEVP-approved school certify their ID instead.
- If you are paid for personal services in the U.S., or hold a U.S. visa valid for employment, apply for a Social Security number (SSN) first. You qualify for an ITIN only if the Social Security Administration (SSA) denies it and you attach the denial letter.
A person with an SSN, or eligible for one, must not file Form W-7.
What is ITIN Exception 1 (passive income)?
Exception 1 covers passive income, such as partnership, interest, annuity, rental, or pension income, that is subject to third-party withholding or covered by tax treaty benefits. If you are required to file a federal tax return, Exception 1 is not available to you.
Exception 1 has 4 parts:
- 1(a) Partnership income: you are a partner in a U.S. or foreign partnership that invests in the U.S. and owns assets producing income subject to IRS reporting and withholding.
- 1(b) Business bank interest: you opened an interest-bearing account tied to your U.S. trade or business.
- 1(c) Resident alien bank interest: you are a resident alien for tax purposes and opened an interest-bearing account. That is a tax status, not an immigration status. The substantial presence test is one way to become one. Publication 519 explains the tests.
- 1(d) Distributions: you receive pensions, annuities, rental income, royalties, or dividends, and the withholding agent needs your ITIN.
The related information returns may include Form 1042-S, Form 1099-INT, Form 1099-MISC, Form 8805, and Schedule K-1 (Form 1065).
How would a foreign partner use Exception 1?
A foreign partner uses Exception 1(a) when the partnership must report or withhold on the partner's share of income.
Ana lives in Spain and joins a U.S. investment partnership as a limited partner. The partnership must report her share of income and withhold tax, so it asks for her ITIN.
Ana has no U.S. return to file, which is what keeps Exception 1 open to her. She writes "Exception 1a-Partnership Income" next to box h and sends Form W-7 without a return.
What proof does Exception 1 need?
Exception 1 proof depends on the part you claim:
- 1(a): a copy of the part of the partnership or LLC agreement that shows the partnership's employer identification number and shows you are a partner.
- 1(b) and 1(c): an original signed letter from the bank, on its letterhead, with your name. The letter states the account is subject to IRS reporting and/or withholding on the interest in the current tax year.
- 1(d): an original document or signed letter from the withholding agent, on letterhead, saying an ITIN is required to pay you.
A nonresident with a personal account and no U.S. business fits neither 1(b) nor 1(c). Check this before asking the bank for a letter.
For 1(d), a statement you made yourself counts only with a copy of the contract, or a letter in a postmarked envelope from the withholding agent.
What is ITIN Exception 2 (other income)?
Exception 2 covers wages, salary, compensation, honoraria, scholarships, fellowships, grants, or gambling income when you claim a tax treaty benefit. It also covers taxable scholarship, fellowship, or grant income when you claim no treaty benefit.
Exception 2 has 4 parts:
- 2(a) Treaty wages or honoraria: a treaty exempts or reduces tax on your pay, and you give Form 8233 to the payer.
- 2(b) Treaty scholarships, fellowships, and grants: a treaty exempts or reduces tax on the award, and you give Form W-8BEN to the withholding agent.
- 2(c) Scholarships, fellowships, and grants without a treaty: the award is subject to IRS reporting and/or withholding in the current year.
- 2(d) Gambling winnings: a visiting nonresident alien claims a treaty exemption or reduced withholding rate.
The related information return may include Form 1042-S.
What does an Exception 2 application look like for a student?
A student with a taxable fellowship and no treaty benefit applies under Exception 2(c), with no tax return.
Wei comes to a U.S. university on an F-1 visa with a taxable fellowship. There is no treaty benefit for the award, and Wei will not work in the U.S.
That puts Wei under "Exception 2c-Scholarship Income". Wei still needs no tax return to get the ITIN.
A student on an F-1, J-1, or M-1 visa who will not work does not have to apply for an SSN. A letter from the Designated School Official (DSO) or Responsible Officer (RO) saying so replaces the SSA letter.
Students and exchange visitors can also skip mailing their original ID. A school approved under the Student and Exchange Visitor Program (SEVP) can certify it instead.
What proof does Exception 2(c) need?
Exception 2(c) needs 4 things:
- An original letter or official notice from the school awarding the scholarship, fellowship, or grant, or a copy of a contract with the school.
- A passport with a valid U.S. visa.
- An original DSO or RO letter saying the award is subject to IRS reporting and/or withholding in the current year.
- An SSA letter saying you are not eligible for an SSN, or the DSO or RO letter saying you will not work.
Leave out the DSO or RO reporting letter and the application is denied. Ask the school early.
What proof do treaty pay, treaty scholarships, and gambling winnings need?
Exception 2(a) and 2(b) need a letter from the payer or school plus the treaty form you gave the payer. Exception 2(d) goes through a gaming official.
- 2(a): an original employment letter, a copy of the employment contract, or a letter requesting your presence for a speaking engagement. Add treaty details on Form W-7 and a copy of the withholding agent's completed part of Form 8233. A visiting professor paid for a treaty-exempt lecture is a typical 2(a) case.
- 2(b): an original letter or official notice from the school (or a copy of a contract with it), a passport with a valid U.S. visa, and treaty details on Form W-7. Add a copy of the Form W-8BEN you gave the withholding agent and an SSA letter saying you are not eligible for an SSN.
- 2(d): Form W-7 goes through a gaming official serving as an IRS ITIN Acceptance Agent. Without one, file Form 1040-NR after the tax year ends with Form W-7 and a copy of Form 1042-S. Think of a visitor from a treaty country who wins at a U.S. casino.
What is ITIN Exception 3 (mortgage interest)?
Exception 3 covers a home mortgage loan on U.S. real property you own, where the lender reports the interest. The lender reports it on Form 1098, Mortgage Interest Statement.
Kenji lives in Japan and buys a vacation home in Hawaii with a U.S. mortgage. The lender must report the interest on Form 1098, so it asks for his ITIN.
Kenji has no U.S. income and files no return, so he applies under "Exception 3-Mortgage Interest".
Proof: a copy of the contract of sale or similar documentation showing the home mortgage loan on U.S. real property. Kenji sends it with Form W-7 and his identity documents. That is the whole Exception 3 proof.
What is ITIN Exception 4 (sale of U.S. real property)?
Exception 4 covers a party to the sale of a U.S. real property interest by a foreign person. That sale is generally subject to withholding by the buyer. Exception 4 also covers a notice of non-recognition under Regulations section 1.1445-2(d)(2).
Lucia, a citizen of Mexico, sells a rental house she owns in Arizona. The buyer must withhold tax and file Form 8288 and Form 8288-A.
Lucia wants a withholding certificate, which she requests on Form 8288-B. Form 8288-B must show the taxpayer identification number of every party, so she needs an ITIN.
She attaches the completed Form 8288-B to Form W-7. Timing is the point here. She does not wait for next year's return. The ITIN request goes in with the sale.
What proof does Exception 4 need?
Exception 4 needs a completed Form 8288, 8288-A, or 8288-B, plus a copy of the real estate sales contract, Settlement Statement (HUD-1), or Closing Disclosure.
A seller like Lucia also attaches copies of the Forms 8288 and 8288-A the buyer submitted.
For a notice of non-recognition, the proof is documents showing the transaction: the date, the parties, and the type of transfer. A deed is one example.
What is ITIN Exception 5 (T.D. 9363)?
Exception 5 covers a non-U.S. representative of a foreign corporation who needs an ITIN to meet e-filing requirements under Treasury Decision (T.D.) 9363. If your employer has not told you it needs your ITIN for T.D. 9363 filings, Exception 5 does not apply to you.
Priya works in India as the compliance officer for a foreign corporation. Her employer names her as the person responsible for its IRS information reporting, and she needs an ITIN to e-file.
Proof: an original signed letter from the employer on corporate letterhead. The letter states an ITIN is needed for T.D. 9363 and that Priya is responsible for IRS information-reporting compliance.
On Form W-7, Priya writes "Exception 5, T.D. 9363" next to box h.
How do you claim an ITIN exception on Form W-7?
You claim an ITIN exception by checking box h ("Other") on Form W-7 and writing the exception on the dotted line by number, letter, and category, such as "Exception 1a-Partnership Income".
Then do 5 things:
- Pick the one exception and part that matches you in the Exceptions Tables of the Form W-7 instructions.
- If you claim a treaty benefit under Exception 1 or 2, enter the treaty country and treaty article number below box h. Publication 901 covers U.S. tax treaties.
- Gather the proof that part requires.
- Add your identity documents.
- Send Form W-7 with no tax return attached, at any time of year.
You can do this yourself. Apply by mail, at an IRS Taxpayer Assistance Center, or through a Certifying Acceptance Agent. The IRS charges no fee for an ITIN.
Publication 1915 shows completed Forms W-7 for the exceptions. Form W-7(SP) is the Spanish version, and filing it means future ITIN notices come in Spanish.
What if no ITIN exception applies to you?
If no exception fits, you apply by attaching Form W-7 to your U.S. federal income tax return. You file that package on or before the return's due date.
This route fits, for example, a nonresident alien who must file a U.S. return. It also fits a spouse, not eligible for an SSN, filing jointly with a U.S. citizen or resident, or a dependent claimed for an allowable tax benefit.
Having a return to file does not rule out Exceptions 2 to 5. A student or home seller with a filing duty can still apply early.
Frequently asked questions
Can I get an ITIN without filing a tax return?
Yes. You can get an ITIN without a tax return if you meet 1 of the 5 exceptions. You send the proof that exception requires instead of the return.
How many ITIN exceptions are there?
There are 5 exceptions. They cover passive income, other income such as scholarships and treaty wages, mortgage interest, sales of U.S. real property by a foreign person, and T.D. 9363 e-filing duties.
What proof do I send instead of a tax return?
You send the documentation that exception requires, such as an original signed bank letter for Exception 1(b) or 1(c), or a contract of sale for Exception 3. Your identity documents go in too.
Do I still need my passport if I claim an exception?
Yes, you still need identity documents such as a passport. An exception removes only the tax return. Students under Exception 2 can have an SEVP-approved school certify their ID instead.
Which exception do I use if a U.S. bank asks for my ITIN?
Exception 1(b) fits if the account is tied to your U.S. trade or business, and 1(c) fits if you are a resident alien for tax purposes. Either way, the proof is an original signed letter from the bank.
Can a foreign student get an ITIN without a tax return?
Yes. A foreign student with a scholarship, fellowship, or grant can apply under Exception 2(b) or 2(c). A student on an F-1, J-1, or M-1 visa who will not work does not have to apply for an SSN.
Which ITIN exception is for selling a house in the U.S.?
Exception 4 is for the sale of a U.S. real property interest by a foreign person. Proof is a completed Form 8288, 8288-A, or 8288-B plus the sales contract, HUD-1, or Closing Disclosure.
Can I use Exception 3 if I have a U.S. mortgage?
Yes. Exception 3 fits if you have a home mortgage loan on U.S. real property you own and the lender reports the interest on Form 1098.
When can I apply for an ITIN under an exception?
You can apply at any time if you meet 1 of the exceptions. The federal tax withholding and/or information reporting must take place within the current tax year.
Can I use Exception 1 if I have to file a tax return?
No. If you are required to file a federal tax return, you are not eligible for Exception 1. You attach Form W-7 to that return instead.
Sources
- Instructions for Form W-7 (Rev. December 2024)
- Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests
- How to apply for an ITIN
- Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number
- Publication 519, U.S. Tax Guide for Aliens
- Publication 901, U.S. Tax Treaties
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