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Yes — but only in specific situations that the IRS defines precisely in the Form W-7 instructions. Most ITIN applicants must attach a completed U.S. federal tax return to their application. Without it, the IRS has no basis for issuing a tax identification number. However, the IRS recognizes five exceptions where a tax return is not required, and each one comes with its own documentation requirements that must be met exactly.
This guide covers each exception, who qualifies, what documents replace the tax return, and how to indicate the exception correctly on Form W-7.
The General Rule: A Tax Return Is Required
When you apply for an ITIN using IRS Form W-7, you must ordinarily include a complete, signed U.S. federal tax return with your application. The return establishes your tax purpose — it tells the IRS why you need a taxpayer identification number and connects your ITIN to a real filing obligation.
For most non-U.S. residents, this means submitting Form 1040-NR (U.S. Nonresident Alien Income Tax Return) alongside Form W-7. The IRS processes both together, writes your assigned ITIN onto the return, and forwards it for processing. This is the standard process for applicants with U.S. rental income, investment income, freelance income from U.S. clients, or other reportable U.S.-source income.
If your situation is clearly covered by a tax return filing obligation, the exception route is not available to you — and attempting to use an exception when one doesn’t apply will result in rejection.
The Five IRS Exceptions
The IRS exceptions are numbered 1 through 5 in the Form W-7 instructions. Each applies to a specific situation in which a tax ID number is needed but a tax return cannot yet be filed or is not legally required. When claiming an exception, you check Box h on Form W-7 and write the exception number and category on the dotted line beside it.
Exception 1 — Passive Income: Third-Party Withholding or Tax Treaty Benefits
Who qualifies: Non-U.S. residents who receive U.S.-source passive income that is subject to withholding at source — and who need an ITIN either because a withholding agent requires it for information reporting, or because they are claiming a reduced rate under a U.S. income tax treaty.
This is one of the most commonly used exceptions. Passive income categories covered under Exception 1 include:
- Bank deposit interest and dividends
- Partnership income (Schedule K-1)
- Pension and annuity income
- Rents (when subject to third-party withholding — distinct from rental income reported on a 1040-NR)
- Royalties
- Gambling winnings
What you submit instead of a tax return:
For withholding situations, you must provide a letter or statement from the withholding agent — typically a bank, brokerage, fund administrator, or payer — confirming that you receive income subject to withholding and that the agent needs your ITIN to complete information reporting. The letter must be on official letterhead and identify the type of income, the withholding rate, and the agent’s contact information.
For treaty benefit claims, you must also provide documentation establishing that you are a resident of the treaty country and that the specific income type is covered by the applicable treaty article.
On Form W-7: Check Box h and write “Exception 1” followed by the applicable subcategory — for example, “Exception 1a–Partnership Income” or “Exception 1d–Pension Income.” Also enter the treaty country name and article number if claiming a treaty benefit.
Exception 2 — Other Income: Wages, Salary, Compensation, or Gambling Winnings Subject to Withholding Under a Tax Treaty
Who qualifies: Non-U.S. residents receiving U.S.-source compensation — wages, salary, honoraria, or gambling winnings — who are claiming exemption from withholding under a U.S. income tax treaty, and who are not required to file a return solely on account of that income.
This exception is most relevant for foreign researchers, professors, and students receiving U.S. compensation under treaty exemptions, and for non-residents receiving gambling winnings who want to claim a treaty-reduced withholding rate. Canadians who win at U.S. casinos and are eligible for a casino tax refund under the Canada-U.S. treaty may qualify here.
What you submit instead of a tax return:
A completed Form 8233 (for compensation) or Form W-8BEN (for gambling or other income), plus a letter from the withholding agent confirming the payment and the treaty benefit being claimed.
On Form W-7: Check Box h and write “Exception 2” with the applicable subcategory — for example, “Exception 2a–Wages” or “Exception 2d–Gambling Winnings.”
Exception 3 — Mortgage Interest: Third-Party Reporting
Who qualifies: Non-U.S. residents who have a home mortgage loan on U.S. real property that is subject to third-party reporting of mortgage interest paid. U.S. lenders are required to report mortgage interest paid to them on Form 1098 — and to do so, they need the borrower’s tax identification number.
This exception applies when a U.S. mortgage lender requests your ITIN for information reporting purposes, not because you have a current tax filing obligation. It is less common but relevant for non-residents who hold U.S. property with a U.S. mortgage and have not yet triggered a rental income reporting requirement.
What you submit instead of a tax return:
Documentation from the U.S. mortgage lender confirming that you have a home mortgage loan on U.S. real property and that the lender is subject to third-party reporting requirements for mortgage interest. A letter on official lender letterhead identifying the property, the loan, and the reporting requirement is typically required.
On Form W-7: Check Box h and write “Exception 3–Mortgage Interest.”
Exception 4 — Dispositions of U.S. Real Property by a Foreign Person (FIRPTA)
Who qualifies: Non-U.S. residents who are a party to a sale or disposition of U.S. real property — either as the seller or the buyer — where FIRPTA withholding applies and either party does not yet have a U.S. tax identification number.
This is the most practically important exception for Nolly.com’s clients who are selling U.S. real estate. Under FIRPTA, the buyer must withhold 15% of the gross sale price and remit it to the IRS using Forms 8288 and 8288-A. Both the buyer’s and seller’s tax ID numbers must appear on those forms. If either party doesn’t have an ITIN yet, they can apply under Exception 4 without first filing a tax return.
Exception 4 is also how foreign sellers apply for an ITIN to support a Form 8288-B withholding certificate application — which requests IRS approval to reduce the withholding amount before closing. Applying early matters here: what you need before selling U.S. property as a non-resident explains the timing and why a late ITIN application can delay the entire transaction.
Note that after the sale, a Form 1040-NR must still be filed to calculate the actual tax and claim any refund of excess withholding. Exception 4 allows the ITIN to be obtained in advance — the FIRPTA refund process then follows once the sale is complete.
What you submit instead of a tax return:
Completed copies of Forms 8288 and 8288-A (if the sale has already closed) or Form 8288-B (if applying for a withholding certificate before closing). These FIRPTA documents serve as the supporting documentation in place of a tax return.
On Form W-7: Check Box h and write “Exception 4–FIRPTA.”
Exception 5 — Treasury Decision 9363 (Certain Intermediaries, Partnerships, and Withholding Agents)
Who qualifies: This exception covers a specific set of situations under Treasury Decision 9363, primarily involving intermediaries, partnerships, and withholding agents that need to identify foreign payees for information reporting purposes under the U.S. tax code’s chapter 3 and chapter 4 withholding rules. It is primarily used by financial institutions and fund administrators rather than by individual property owners or investors.
This exception is less frequently encountered by individual non-resident applicants and is the most technical of the five. If a bank or financial institution has told you that you need an ITIN under this exception, the institution will typically provide the necessary documentation.
On Form W-7: Check Box h and write “Exception 5, T.D. 9363.”
Summary: Which Exception Applies to Your Situation?
Important: Exceptions Do Not Eliminate the Tax Obligation
Qualifying for an exception means you can obtain your ITIN without filing a tax return now — but it does not mean you have no U.S. tax obligation. If you have U.S.-source income that is taxable, a return will eventually be required.
For FIRPTA sellers, the Form 1040-NR still needs to be filed after the sale to calculate the actual tax and claim a refund of excess withholding. For passive income recipients, if withholding exceeds actual tax owed, the only way to recover that money is to file a return. Non-U.S. residents who need to file a 1040-NR should do so regardless of whether the exception route was used to obtain the ITIN.
Apply for Your ITIN With or Without a Tax Return
Nolly Services Inc (Nolly.com) is an IRS-authorized Certifying Acceptance Agent based in Toronto, Canada. Whether you need to file a return alongside your ITIN application or qualify for one of the five exceptions, Nolly.com handles the complete process: determining which exception applies, preparing the correct documentation, completing Form W-7, and submitting your application to the IRS. Your identity is verified on a video call with a Certifying Acceptance Agent, so you don’t send your passport to the IRS.
Sources
All factual claims in this article are sourced from official IRS publications:
- IRS —Instructions for Form W-7 (December 2024)
- IRS —Form W-7 (December 2024)
- IRS —How to Apply for an ITIN
- IRS —Revised Application Standards for ITINs
- IRS — FIRPTA Withholding
Published June 15, 2026. General information, not tax advice. Nolly Services Inc is a private company and is not part of the IRS.
