bizmend

[bizmend]

Who Needs an ITIN if You’re a Freelancer or Amazon Seller Based in Bangladesh

Introduction

The digital economy is booming in Bangladesh. From Amazon FBA sellers shipping goods to U.S. warehouses to freelance graphic designers landing clients on Upwork, many local entrepreneurs find themselves working with American platforms and customers. In that landscape, one question pops up again and again: who really needs an ITIN and why does it matter so much for anyone earning U.S. source income? In this post you will discover exactly which Bangladeshi freelancers and Amazon sellers must obtain an ITIN to stay compliant with U.S. tax rules, open U.S. bank accounts, and ensure smooth payment verification on services like PayPal. By the end you’ll understand why obtaining an ITIN is more than a box to tick—it can save you money, reduce withholding rates, and unlock financial opportunities.

What Is an ITIN and Why It Exists

An ITIN stands for Individual Taxpayer Identification Number. It’s a nine-digit number issued by the Internal Revenue Service in the United States. The sole purpose of an ITIN is to help individuals file U.S. tax returns or claim tax treaty benefits when they are not eligible for a Social Security Number (SSN). Even if you never set foot on U.S. soil, the IRS still expects you to report U.S. source income—and that is where an ITIN comes into play.

How an ITIN Differs from a Social Security Number

A Social Security Number is reserved for U.S. citizens and authorized workers. It also grants certain benefits like Social Security and Medicare coverage.

An ITIN is strictly for tax processing. It does not grant legal work authorization in the United States or entitle the holder to Social Security benefits.

If you try to apply for an SSN without authorization, the Social Security Administration will reject your application. The IRS then issues an ITIN to anyone who has a valid reason to file a U.S. tax return but cannot obtain an SSN.

Who Issues ITINs and How They Are Used

ITINs are issued by the IRS after you submit a completed Form W-7 along with supporting identity documents (usually a valid passport).

To reduce rejections and speed up the process, many non-residents work with IRS Certified Acceptance Agents (CAAs). Agents like Business Globalizer can verify your original documents in person, fill out Form W-7 correctly, and submit everything directly to the IRS.

Once the IRS assigns you an ITIN, you use that number on any U.S. tax forms you file. U.S. banks and payment processors also use your ITIN to confirm your identity when they onboard you.

Which Bangladesh-Based Digital Entrepreneurs Typically Need an ITIN

Amazon FBA Sellers with U.S. Source Income

If you run an Amazon business using FBA (Fulfillment by Amazon) and ship products to American customers or store inventory in U.S. warehouses, the IRS considers that U.S. source income. Even if all your operations remain in Dhaka or Chittagong, Amazon will withhold up to 30 percent of your gross sales unless you can prove you are a foreign person entitled to a reduced withholding rate under the Bangladesh-U.S. tax treaty. To claim that treaty benefit, you must provide Amazon Seller Central with a valid ITIN.

Freelancers Earning from U.S. Clients on Upwork or Fiverr

Suppose you work as a graphic designer, software developer, or content writer for clients based in the United States. In that case, any payments over $600 in a calendar year trigger Form 1099 reporting. Without an SSN or ITIN, U.S. companies withhold 30 percent by default on payments to non-resident contractors. Once you secure an ITIN, you can file Form W-8BEN to claim treaty benefits and reduce—or even eliminate—that withholding. After filing your annual Form 1040-NR, you may get a refund of overpaid taxes.

Other Digital Entrepreneurs Earning Through U.S. Platforms

YouTubers and Content Creators: AdSense pays U.S. source revenue. Without an ITIN, Google withholds at 24 percent (or 30 percent) of your ad income.

Affiliate Marketers: Earning commissions via Amazon Associates or ShareASale means U.S. source payments. To avoid heavy withholding or account holds, you need an ITIN.

Dropshippers: If you sell products directly to U.S. customers through Shopify or WooCommerce integrated with U.S. payment gateways, you are still earning U.S. source income. An ITIN ensures you don’t face unnecessary withholding.

Why Physical Location Doesn’t Change the Requirement

Even though you live in Bangladesh, the IRS tax code focuses on the source of income. If a U.S. company pays you—or you sell to a U.S. customer—those earnings fall under U.S. tax jurisdiction. The IRS does not care if you never set foot in America. It cares that you report the income properly. That is why most Bangladesh-based digital entrepreneurs earning from U.S. sources require an ITIN.

Why Non-Resident Entrepreneurs Require an ITIN

U.S. Tax Reporting Requirements

Filing Form 1040-NR

Anyone who has U.S. source income and is not a U.S. citizen or green card holder must file Form 1040-NR (or 1040-NR-EZ). This document reports your U.S. income, allowable deductions, and computes your tax liability. Without an ITIN, you cannot submit Form 1040-NR.

Withholding and Tax Treaty Benefits

By default, U.S. payers withhold 30 percent on payments to foreign contractors. Once you provide a valid ITIN and complete Form W-8BEN claiming benefits under the Bangladesh-U.S. tax treaty, you may reduce withholding to as low as 0 percent or 10 percent, depending on income type.

Without that treaty claim, you lose out on significant savings. Imagine Amazon or Upwork withholding 30 percent on every transaction versus only 0 percent when you have an ITIN and claim treaty benefits.

Penalties for Not Filing or Reporting

Failing to file Form 1040-NR or submit Form W-8BEN could trigger penalties, interest charges on unpaid tax, or even account blocks on platforms like Upwork and Amazon. The IRS can assess a penalty of up to 5 percent per month of the unpaid tax for late filing—up to a maximum penalty of 25 percent of the tax owed.

Opening a U.S. Bank Account

Why U.S. Banks Demand a Tax ID

Most major U.S. banks—Chase, Bank of America, Wells Fargo—insist on either a Social Security Number or an ITIN before opening a personal or business checking account.

Even fintech services like Wise or Payoneer often ask for an ITIN to confirm your identity, especially if you plan to receive higher volumes of payments.

Benefits of Holding a U.S. Bank Account

Lower Transfer Fees: When Amazon disburses earnings to a U.S. account, you avoid multiple currency conversions and large international wire fees. Converting from U.S. dollars to Bangladeshi taka at local banks often has higher margins than converting directly through Amazon to your Bangladeshi bank.

Faster Settlements: Freelancer platforms like Upwork allow direct ACH deposits into U.S. checking accounts, letting you access funds within 2–3 business days instead of 5–7 days via wire transfer.

Credit and Debit Cards: Having a U.S. account can make it easier to get a U.S.-based debit or credit card, which can be useful if you run U.S. ad campaigns, pay U.S.-only subscription services, or want to establish a credit history in the United States.

Payment-Platform Verification (PayPal, Stripe, Amazon Payouts)

PayPal KYC and Tax Requirements

PayPal’s Know Your Customer process often asks for a U.S. tax ID when you deal in U.S. dollars or plan to link a U.S. bank account. Without a tax ID, PayPal may place limits on your account or hold funds while verifying your identity. With an ITIN, you can unlock features like higher withdrawal limits, merchant services, and smoother dispute resolution.

Stripe and Other Processors

Many digital entrepreneurs in Bangladesh use Stripe to accept payments from U.S. customers. Stripe’s onboarding process checks your tax residency. An ITIN seals the deal—it shows you are a legitimate foreign taxpayer and removes any extra verification steps.

Amazon Seller Central and 1099-K

If you run an Amazon store that qualifies for Form 1099-K reporting, Amazon requires a taxpayer ID to issue the form correctly. Providing your ITIN ensures Amazon does not apply a 30 percent backup withholding. Instead, you can file the proper forms and claim the tax treaty benefit to reduce or eliminate that withholding.

Real-Life Examples and Scenarios

Example 1. Bangladeshi Amazon FBA Seller

Situation

You sell kitchen gadgets through Amazon FBA. You ship products to U.S. fulfillment centers and earn $10,000 in gross sales each month.

Problem

Amazon withholds 30 percent (that is $3,000) every month as backup withholding because you do not have a valid U.S. taxpayer ID.

Solution

Apply for an ITIN by submitting Form W-7 along with a copy of your Bangladesh passport and bank statement.

Provide Amazon Seller Central with a valid IRS Form W-8BEN claiming benefits under the Bangladesh-U.S. tax treaty.

Amazon reduces withholding to 0 percent, letting you keep the full $10,000. Over a year, you save $36,000 in withheld funds (12 months × $3,000), minus any nominal fees for ITIN application services.

Example 2. Upwork Freelancer in Dhaka

Situation

You create illustrations for U.S. clients on Upwork, earning $2,000 per month. Upwork issues Form 1099-MISC because your payments exceed $600 per year.

Problem

Without an ITIN, Upwork withholds 30 percent of each payment (that is $600 per month). On top of that, the IRS may flag your account for inconsistent tax reporting.

Solution

Work with a Certified Acceptance Agent to verify your identity documents and submit Form W-7.

Upwork receives your ITIN and the completed W-8BEN claiming treaty benefits.

Withholding drops to only 10 percent under the treaty for service income, meaning you lose $200 instead of $600 per month. Over a year, you recover $4,800 more than if you remained without an ITIN.

Example 3. YouTuber or Content Creator Monetizing in USD

Situation

You run a Bangla tech review channel on YouTube, earning $500 per month in AdSense revenue.

Problem

Google withholds at the default rate of 24 percent without a valid U.S. tax ID. That means $120 per month goes straight to the IRS with no possibility of claiming treaty benefits.

Solution

Obtain an ITIN.

Submit Form W-8BEN to Google AdSense, claiming the Bangladesh-U.S. treaty rate of 0 percent on royalties or service income.

Google stops withholding. Over a year you keep $1,440 instead of losing $1,440 to IRS withholding.

These examples highlight a simple truth: if you earn from U.S. platforms, an ITIN can save you thousands of dollars and open doors to banking and payment solutions that make your life easier.

How to Apply for an ITIN from Bangladesh

Required Documents

Valid Bangladesh Passport

You need a clear, unexpired copy of your passport. If your passport is about to expire, renew it first.

Proof of Foreign Residency

A recent bank statement, utility bill, or national ID card clearly showing your name and Bangladesh address. You cannot use a spouse’s or parent’s document—only your own name will do.

U.S. EIN or LLC Formation Documents (Optional but Recommended)

If you already have a U.S. LLC or corporation, submit the EIN confirmation letter (CP 575) or the 147C letter from the IRS. This speeds up verification because it shows you have a registered U.S. entity.

Completed IRS Form W-7

Choose the correct category code. For freelancers working independently, use code “b(3)” to claim treaty benefits. E-commerce sellers using a U.S. LLC typically use “b(4)” if filing as a responsible party for that entity.

Any U.S. Tax Return or Statement from a Withholding Agent

If you have already filed tax returns in the U.S., attach a copy. Otherwise, a letter from Amazon or Upwork confirming they will issue a Form 1099 is enough.

Certified Acceptance Agent vs. Do-It-Yourself (DIY)

Working with a CAA (for example, Business Globalizer)

Pros

They verify your original passport in person (in the U.S.) or via secure channels.

They fill out Form W-7 correctly and reduce the chance of rejection.

They courier your application with a prepaid return envelope so you get your original passport and ITIN notice back safely.

Cons

Small service fee on top of IRS processing times.

DIY Approach

Pros

No agent fees—you submit directly to IRS Austin, Texas.

Cons

You must notarize or apostille your documents according to U.S. Embassy or Bangladesh Ministry of Foreign Affairs rules.

Higher risk of rejection if the W-7 is incomplete or if documents lack proper certification.

Courier costs and longer waiting times to get originals back.

Step-by-Step Timeline

Gather and Notarize Documents (1–2 Weeks)

Renew your passport if necessary.

Get your passport photocopy notarized by a public notary or through the U.S. Embassy in Dhaka. Alternatively, let your CAA handle verification if they offer a local partner in Dhaka.

Fill Out Form W-7 Accurately (1–2 Days)

Double-check your category code, name spelling (must match passport), and mailing address.

Submit Application to IRS (Via CAA or USPS/DHL) (1 Week)

Your CAA consolidates all documents and mails them, or you send them yourself with a trackable courier.

IRS Processing (16–18 Weeks)

Wait patiently. During this period the IRS may send a letter requesting additional evidence.

Receive ITIN Letter & Original Documents (1–2 Weeks After Approval)

IRS returns your certified documents and issues your ITIN.

Use Your ITIN

Provide it to Amazon, Upwork, PayPal, banks, or any U.S. payer so they can adjust withholding and report taxes correctly.

Common Pitfalls to Avoid

Expired or Soon-to-Expire Passport

The IRS will reject any W-7 with a passport that expires within six months. Always check your passport date before applying and renew if necessary.

Incorrect W-7 Category Code

Freelancers usually use code “b(3)” to claim tax treaty benefits under “Services Performed by a Foreign Person.” If you mistakenly choose “b(2)” or “b(4),” your application can be rejected. Consult with a CAA or review IRS instructions carefully.

Missing or Illegible Signatures

Your signature on Form W-7 must match the signature on your passport. If it is smudged or different, the IRS will send your application back. Always sign in black ink and avoid cursive flourishes that can look messy when scanned.

Insufficient Proof of Foreign Status

A bank statement in your spouse’s name does not count. You must show your own name and address. If you try to submit utility bills from six months ago, ensure they are recent (not older than three months) or the IRS will reject them.

Mailing Delays and Lost Packages

If you send your original passport documents without using a reliable courier, you risk losing them. Always use DHL, FedEx, or another trackable provider. If you use a CAA, confirm they include a prepaid return envelope that is also trackable.

Benefits of Obtaining an ITIN

Reduced Withholding and Tax Treaty Advantages

Under the Bangladesh-U.S. tax treaty, service fees, royalties, or sale proceeds from U.S. sources may be taxed at 0 percent or 10 percent instead of 30 percent. With an ITIN you claim that benefit directly on Form W-8BEN. Over time, this adds up to significant savings for any Amazon seller or freelancer receiving U.S. payments.

Easier Access to U.S. Financial Ecosystem

Once you have an ITIN, opening a U.S. bank account becomes far simpler. With a U.S. account you can:

Avoid double currency conversion fees when Amazon pays you in dollars.

Receive ACH deposits from Upwork or Payoneer within 2–3 business days.

Potentially qualify for U.S. credit cards that help you build an onshore credit history.

Professional Credibility

Presenting an ITIN shows your U.S. clients and partners that you take taxes seriously. It sends a signal that you are compliant with U.S. regulations, which can strengthen trust when negotiating contracts or pricing projects.

Smoother Payment Processing

Payment gateways like PayPal or Stripe often impose holds on accounts without a valid U.S. tax ID. With an ITIN, those holds disappear. You can also lift withdrawal limits, access merchant services faster, and reduce customer disputes related to account verification.

Conclusion and Next Steps

Any freelancer or Amazon seller in Bangladesh who earns from U.S. platforms should seriously consider obtaining an ITIN. By holding that taxpayer ID, you avoid hefty withholding, reduce or eliminate backup withholding through tax treaty claims, gain easier access to U.S. banking, and streamline payment verification on PayPal, Stripe, and other processors. Yes, there is paperwork involved—Form W-7, notarized passport copies, and proof of foreign residency—but the benefits far outweigh the initial effort.

Ready to Get Started?

Download Your Free ITIN Prep Checklist (PDF)

A simple step-by-step list of everything you need before you fill out Form W-7.

Consider Using a Certified Acceptance Agent

Business Globalizer’s IRS-certified agents handle your entire application from document verification to mailing and status updates. Skip the guesswork and reduce the risk of rejection.

Begin Your Application Process

Gather your passport, proof of residence, and any U.S. tax or EIN documents. Complete Form W-7 with the correct category code (usually “b(3)” for independent contractors).

By following these guidelines you will be well on your way to securing an ITIN, reducing unnecessary withholding, and tapping into the full potential of U.S. financial services. Don’t let paperwork hold back your digital-entrepreneur journey. Get that ITIN and unlock new opportunities today.