Travel Hacking From Scratch – Part 5 – US Credit Cards (ITIN)

Series Layout

Welcome to the Travel Hacking from Scratch Series – a series dedicated to getting those new into Travel Hacking up the curve as quickly as possible. Below is the layout of the series with links back to already published articles.

Today our topic is US Credit Cards – a look into what to do once you’ve mastered earning miles and points through Canadian credit cards.

A Bit of History

A while back, I had written quite an extensive series on the step-by-step method to obtain a US credit card. I’m not going to rehash what I had laid out in that previous series. I’ll leave it up to you to read up on all the aspects of why and how. What I plan on doing in this particular post is to provide you with a solution to what has proven to be one of the most difficult parts of the process, getting an ITIN.

I’ll also have a quick update on a new mail forwarding service that works better than the one I had suggested in the previous series.

Disclaimer

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CIRCULAR 230 DISCLOSURE: THE US TAX ADVICE CONTAINED HEREIN IS GENERAL IN NATURE. ANY US TAX ADVICE CONTAINED IN THIS WEBPAGE IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER US FEDERAL, STATE OR LOCAL TAX LAW.

The ITIN

The ITIN is the Individual Tax Identification Number, a number issued by the Internal Revenue Service (IRS) of the US Government. This number is issued to non-US nationals in order to have their US-based earnings tracked and taxed.

If you are a non-resident of the United States and receive income from the US, there’s a good chance you’ll need to file a US tax return. In order to file that tax return, you need either a Social Security Number (SSN) or an ITIN.

The ITIN number is important for tax purposes but it serves a dual purpose for our purposes. Credit rating agencies keep track of things like your payment history and rate everyone with something called a Credit Score. That credit score provides an indication to credit issuers on whether or not you are a good credit risk. In order to track that history, they need a unique identifier that nobody else has. Think about this example, what if there were two women named Tanya Mitchell that happened to share the same birthdate. The first Tanya always pays her bills on time while the second Tanya always defaults. How does a credit card issuer know whether or not to issue credit to the first Tanya?

Easy, they look up the credit score of the first Tanya using her SSN or an ITIN if she’s not a US citizen. Without an SSN or ITIN, issuers have no idea whether or not you are a good credit risk or not.

In essence, you need an ITIN in order to build your credit history. Without it, you have no chance of qualifying for multiple cards in the US.

Two common reasons for the IRS to issue an ITIN are:

1. You have the potential for US-based earnings and the company that will potentially pay you wants to be sure your earnings are properly documented to the IRS.
2. You have US-based income and the company paying you needs a way to report your earnings to the IRS.

In the previous series, I suggested using Amazon Kindle Direct Publishing or Smashwords as a way to prove to the IRS that you need an ITIN but it looks like that method is now not working. Reports indicate that both Amazon and Smashwords are no longer issuing letters of support that state that you require an ITIN.

Even if you did receive a letter from Amazon or Smashwords stating that you need an ITIN, there is no guarantee that the IRS will issue one. There have been plenty of readers that have reported getting rejected for their ITIN with no reason given and no chance to rectify the situation. Going through this process takes time and can be quite frustrating, especially if you don’t know why you were rejected.

That’s where US Tax Resources comes to the rescue.

An Almost Certain Method

Remember how I laid out two possible reasons why the IRS would issue you an ITIN? Well, we know that reason number 1 has proven to be a difficult way to obtain an ITIN but what if you had a reason to file a tax return with the IRS?

What if you actually earned income in the US? Well, then you would have a reason to file a tax return and the IRS would have a reason to issue you an ITIN.

Did you know that as a non-US resident, if you have more than $5 USD of income earned in the US, you have a requirement to file a tax return?

If this is a category that you fall into, I would recommend you file your taxes and apply for an ITIN at the same time.

There are many ways to earn income in the US that you may not have considered. For example, if you gambled anywhere in the US and won over $5 (including online sports betting agencies based in the US), that would be considered earned income. If you signed up for Amazon’s Mechanical Turk, did work and got paid more than $5, guess what? You have an obligation to file. The possibilities are endless.

With gambling income, when we are talking these small amounts of money, the casino is not going to issue you a 1042-S. Rather, they are relying on you to self-report your earnings and as a good citizen, you should do so. It’s really a win-win here. The IRS gets to collect taxes that it wouldn’t normally have and you, as the filer, have a reason to request an ITIN.

The IRS income filing requirements are quite nuanced and there’s a lot that you could screw up. This is where US Tax Resources can lend a helping hand.

What US Tax Resources Can Do

US Tax Resources will take all the worry out of your filing requirements, both for your tax return and your ITIN application. You will still have to do some of the legwork because you have to actually send in the forms, but outside getting a copy of your Certified True Copy of your passport, US Tax Resources does everything else.

What you walk away with is an almost guaranteed ITIN that you can use to establish your US credit history and qualify for US credit cards.

The Cost

The cost for US Tax Resources (USTR) to complete all the paperwork for you and to guide you in this journey is $249 CAD + tax. Remember, this a US tax accounting firm that specializes in US taxes so you should expect to pay for professional services. What you get out of it is professional advice, professionally prepared paperwork, and a guarantee that US Tax Resources will work with you to help you secure your ITIN. If for any reason, the IRS rejects your ITIN request, US Tax Resources will re-file at no additional cost. This should give you comfort that your paperwork will be done correctly.

The Steps

It’s a pretty simple process that you can do from your mobile device or your computer and it should take you no more than about 5 minutes.

1. Visit www.ustaxresources.ca/itin and click on the Onboarding Form button

2. Fill in the application form with the requested information. All fields denoted with a * indicate a required field.
   
   There are a couple of fields that require some personal information that I would normally warn you not to give out such as your Social Insurance Number (SIN) and Passport Number. Because this is an official US Federal Income Tax Return and ITIN request, this information is required. I can personally vouche for Ian Davis, the owner of US Tax Resources as I have known him personally for a few years and know him to be a stand-up guy. You can also take comfort in the fact that all your information is transmitted securely through an encrypted form.
   
   Also remember to attach a scanned copy of your passport as USTR need to verify your identity and that you are a Canadian citizen.
   
   
   3. Once you complete your form and prove you aren’t a robot, you will be taken to a legal disclaimer that you must agree to an sign. You can sign the form using your mouse or your finger, depending on your device.

   

   4. You will then be taken to a payment page where you will enter your credit card for payment. The total price will be $262.49 ($249 + GST).
   
   

   

   5. Once you complete payment, you will receive an automatic email confirming your payment and the next steps.

      And that’s it. That’s the whole process from a USTR perspective.

      Within 1-2 business days, you will receive a link to a Google Drive folder where you can download your completed tax return and ITIN application. You print off these document sand send them along to the IRS. Don’t worry, USTR will provide you with detailed instructions on where to send everything.

      When you send in your Tax Return and ITIN request, you will need to prove your identity to the IRS. You can do that in one of two ways:

      1. Send in your passport as part of your application – I don’t like doing this with anything because I’m always nervous about it being lost or delayed in having it returned.  With my job, there are occasions where I have last-minute travel so I need my passport.  If you don’t need your passport and aren’t as paranoid as I am, then go ahead and send it in … but there’s a better way.
      2. Send in a Certified True Copy of your passport – a Certified True Copy of your passport is simply a photocopy of your passport that is stamped and sealed by the Government of Canada, certifying that the photocopy is a true copy of your passport.  This is an official document and is accepted as if it is your passport.

      Getting a Certified True Copy of Your Passport

      USTR will walk you through this process as well but I thought I would rehash it for your benefit.

      In order to get a Certified True Copy of your Passport, you will need to complete the Government of Canada’s form, pptc516.  You can find a link to the form here (please note that I had to use Internet Explorer to get the form to download – Chrome did not work).  If you need a copy, I have one stored locally on my server here, (again Internet Explorer is required) but your first choice should always be to get it from the Government of Canada website.

      Fill out Sections A, B, and C.

      There is a $45 fee to get the Certified True Copy but you can use it for future Visa applications as well.  The $45 fee can get you up to 3 copies, so request 3.

      You will need to take the completed form, your passport and the $45 to a Passport Canada Service Location to get it processed and it will take 10 business days.

      The Waiting Game

      Once you have all your paperwork (Tax Return ITIN, Certified True Copy of your Passport) in order and send it into the IRS, it now becomes a waiting game. As you know, government agencies work on their own timelines but the quoted wait time is 6-8 weeks.

      My advice is to send it off and forget about it. There’s no sense in trying to expedite the request because there isn’t any way to do that. Just take a deep breath and resolve yourself to wait for a letter in the mail.

      When I got my ITIN a few years ago, it only took about 6 weeks for my ITIN to arrive. That day was a glorious day because it unlocked a whole new world of US credit cards for me.

      Special Offer

      For those diehard readers of PointsNerd, I would like to extend an invitation for a chance to win a free Tax Return and ITIN filing. There is a trade-off though. If you win, you have to write up a quick testimonial about your experience so that others that are on the fence can learn from your experience.

      In order to enter, simply comment in the section below and I’ll draw a random name on December 15th. Remember to provide your email address in your comment so that I can contact you if you win (don’t worry … it doesn’t post publically – only I can see it).

      Comments must be in by 11:59:00 PM MST on December 14, 2019, to be eligible.

      If you want to go through the steps and get your ITIN prior to the draw, that’s fine too. If you win, a refund of your fee will be provided to you.

      Conclusion

      As someone that loves seeing Canadians succeed in the Travel Hacking game, I’m very happy and proud to partner with US Tax Resources to come up with a novel way to help you obtain your ITIN so you can up your US Credit Card game.

      This is only part of the journey to get a US credit card but one could argue it’s the most difficult and time-intensive. I would encourage you to read the rest of the US Credit Card series to understand all the steps but I can tell you from experience, the journey is worth it.

      

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