Everything You Need to Know About Tax Numbers

March 25, 2015

by Robert Baird, President Baird Artists Management (BAM!)

Here is a recent e-mail from an AFM member:

Hi Robert,

I have a duo, and we have a tour of the US coming up in early 2016. We’ve been told that we’ll need an IRS Tax ID number because they’ll be withholding a percentage of our earnings. I’d appreciate your guidance on how you think we should proceed.

Revenue Canada and the IRS require tax numbers, both from individuals and businesses, for a variety of reasons:

1) If you are an individual applying for a tax waiver in Canada you need an Individual Tax Number (ITN).

2) If you are an individual filing a tax return in Canada you need an ITN.

3) If you are a business submitting a tax return in Canada, you need a Business Number (BN).

4) If you are a business applying for a tax waiver in Canada you need a BN.

5) If you are a business applying for a tax waiver in Canada you need to attach an application for an ITN for all employees or subcontractors.

6) If you are an individual submitting a tax return in the US, you need an Individual Taxpayer Identification Number (ITIN).

7) If you are an individual applying for a Central Withholding Agreement, you need an ITIN.

8) If you are a business submitting a W-8-BEN-E or filing a tax return in the US, you need an Employer Identification Number (EIN).

Both in Canada and the US an individual tax number is required if an individual is not eligible for a Social Insurance Number (SIN) in Canada or a Social Security Number (SSN) in the US. Obviously, this applies to nonresidents or occasional visitors such as artists on tour.

To get an ITN in Canada you simply submit a completed Revenue Canada Form T-1261 (www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261-fill-14e.pdf) and attach the required supporting documents (passport, driver’s license, or birth certificate). The documents must be originals or certified copies. Documents can be certified by local officials such as doctors, accountants, lawyers, teachers, or officials in a federal department, by having them signed, dated, and noted: “Certified a True Copy.” Revenue Canada will send you an ITN (and return any original documents) in four to six weeks.

To get an ITIN in the US you file a W-7 (www.irs.gov/pub/irs-pdf/fw7.pdf) along with an income tax return (unless you meet one of the exceptions), and a passport, or a certified copy of a passport. Passports can only be certified by the office of issue. It can take eight to 10 weeks to get an ITIN. In certain circumstances you may have to apply for and be denied an SSN first. This requires a visit to a Social Security Administration Office in the US. The denial letter is attached to the W-7 when it is submitted.

To get a BN for Canada, simply submit Revenue Canada Form RC-1 (www.cra-arc.gc.ca/E/pbg/tf/rc1/rc1-fill-14e.pdf) along with a copy of your Certificate of Incorporation.

You can get an EIN immediately by telephone, in four to six weeks by fax, or in four to five weeks by mail. Follow the instructions on this website: www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN.

It is important to remember that when you work in a foreign country, you should satisfy the tax requirements of that country. With the provisions of the Canada-US Tax Treaty, most tax liability is restricted to one’s own country, but it is a good idea to file an annual nonresident tax return where applicable, even if no taxes are owed.

—Please send your questions and concerns to me at: robert@bairdartists.com. While I cannot answer every question here, I will feature as many as I can, and I promise to answer every e-mail I receive.

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