Importance of a TIN and EIN
There are numerous different ways individuals in the United States are identified. Some of the most common include a Social Security number, driver’s license number, DUNS number, and passport number. Due to the vast number of possibilities, a lot of people become confused. In regard to taxation, there are two main types of identification numbers. These are a TIN or Taxpayer Identification number and an EIN or Employer Identification number.
A TIN is required for all tax-related documents, statements, and returns. A TIN is also necessary for filling a tax return or claiming treaty benefits. All withholding certificates require a TIN provided the owner claims any of the following.
• Exemptions for specific annuities
• Exemptions for connected income
• Tax treaty benefits excluding income derived from marketable securities
In most cases, the SSN or social security number for the person being claimed as an exemption must be listed for all individual income tax returns. If the spouse or dependent does not have or is ineligible to receive an SSN, the TIN must be listed instead of the social security number. Neither a TIN or SSN is necessary for a child that was born and died during the same tax year. As opposed to using a TIN or an SSN, a copy of the child’s birth certificate is attached. Died is then written on the correct exemption line for the tax return.
The Difference Between EIN and TIN
When a person needs to fill out documents for either business or personal use, a tax identification number is required. There are several different numbers that can be used in this situation. The most common is the EIN and TIN. Since these numbers are used interchangeably, many people do not understand the difference but EIN and TIN numbers are not the same. The difference between the two is fundamental.
What is a (TIN) Taxpayer Identification Number?
Both the Social Security Administration and the (IRS) Internal Revenue Service can issue a TIN number. It is important to note there are different types of Taxpayer Identification Numbers. The term TIN is essentially an umbrella term under which numerous other numbers are categorized. The main purpose of these numbers is to administer and govern United States tax laws. There are also other functions for a TIN.
This means when a Taxpayer Identification Number is mentioned, it is in reference to one of the numbers either the SSA or IRS issues. The Social Security Administration is responsible for issuing Social Security Numbers. The IRS issues Individual Taxpayer Identification numbers. A Taxpayer Identification Number is required to file taxes in the United States every year for all of the following.
• E2 Visa Taxes
• L1 Visa Taxes
• TN Visa Taxes
• Independent Contractor Taxes
• OPT Visa Taxes
The items listed above are not complete listings of visa-related taxes in the United States. Conducting research is important to make certain each individual understands which United States taxes are owed according to their given visa. If the requirements to obtain a Social Security Number are not met, a TIN can be assigned instead. This is basically a nine-digit number used as a personal tax ID. A TIN can be issued if the person is:
• A United States resident alien
• The dependent or spouse of a United States citizen or a resident alien
• A non-resident alien
• The dependent or spouse of the holder of a non-resident visa
If a personal tax ID is required for a form and the person does not have a Social Security Number, this is the number that is used.
What Is an (EIN) Employer Identification Number?
The IRS issues Employee Identification Numbers to businesses operating inside of the United States. This is called an FTIN or Federal Tax Identification Number or a FEIN or Federal Employer Identification Number. Despite the main purpose of these numbers being reporting and identifying companies, these numbers are also necessary for employee payrolls, receiving licenses and permits, and opening a bank account.
What is the Difference Between the Two?
The key difference between these numbers is a TIN is necessary for the identification of taxable individuals in the United States and an EIN is used to identify companies. Although both numbers are used for identification and reporting purposes, the difference is in the situations in which each number can be used. A good example is thinking of an EIN as a child and a TIN as a parent.
Although an EIN is one type of TIN, the reverse is not true. This means when an individual is asked for their EIN, a TIN can be used instead. If the person is asked for their TIN, an EIN is unable to be used in its place.
How to Get a TIN or an EIN
The process to receive an EIN or a TIN are different and both are explained in detail below.
How to Get A TIN
A TIN includes more than one specific thing. For this reason, the individual needs to be specific as to which number is needed. There are five different kinds of Taxpayer Identification Numbers. A Social Security Number is one of them and is received through the Social Security Administration. The IRS issues the remaining four.
How to Get an EIN
An EIN is also referred to as a Federal Tax Identification Number. The IRS issues this number to business entities. An EIN is different than a TIN because it can be received at no charge right away once verification has been completed. State guidelines must be checked before an EIN can be issued.
Applying by Fax
If an individual is interested in receiving an EIN by fax, Form SS-4 must be completed and faxed to the correct fax number for their state. This number can be found online. Before the fax is sent, it is important to make certain all the information on the application is updated and correct. The best option is to include a fax number in the application. This enables the IRS to send the individual an EIN in four to five working days.
An EIN can be applied for through Internet EIN online. The application process is convenient and should be completed within one to two days. Once the SS-4 has been completed for an Employer Identification Number, the information the individual provided it validated prior to receiving an EIN. All businesses legally residing in the United States or its territories can use the online procedure.
Applying by Telephone
When preferable, the individual can apply for their EIN simply by calling (267) 941-1099. To follow this process, the section for the Third Party Designee must be completed on the form. This gives the named individual authority to receive an EIN for their business. Once the EIN has been assigned and received by the designee, their authority is terminated.
Applying via Mail
Another option is to receive an EIN through the mail. It is important to understand this process is fairly lengthy and can require as long as four weeks to complete. To receive an EIN through the mail, Form SS-4 must be completed and filed at the IRS office for the individual’s state. The address of the appropriate office can be found online. Once the verification process has been completed, the EIN will be mailed by the IRS to the physical location entered by the applicant.
Other Taxpayer ID Numbers
The application process is different depending on the specific ITIN. The details for each process are detailed below.
(SSN) Social Security Number
The Social Security Administration issues a Social Security Number to every United States citizen. For an individual to receive an SSN, they must meet the eligibility criteria and apply for a Social Security Card by completing Form SS-5. This form can either be filed at the closest Social Security Office or online. In addition to the form, an ID issued by the government, alien status and age must also be submitted when applicable.
An ATIN or Adoption Taxpayer Identification Number is different than most Taxpayer Identification Numbers because it is only issued temporarily. An ATIN is a number containing nine digits for individuals in the process of adopting a United States child legally but unable to get a Social Security Number for the child. Form W-7A must be submitted. This is an application for a Taxpayer Identification Number for adoptions pending in the United States.
When an individual is disqualified from receiving a Social Security Number, an ITIN may be issued. This number contains nine digits in a specific format and can be used as an alternate number when paying taxes. In most instances, an ITIN is issued to nonresidents, their dependents, and their spouses. To apply for this number, the application for an Individual Taxpayer Identification Number or ITIN must be completed.
Form W-7 is then mailed including documentation to the appropriate IRS office. Filing can also take place using an authorized Acceptance Agent or any of its entities. This can include legal firms, financial institutions, and colleges. An ITIN can also be obtained from abroad, but this requires a completely different procedure.
Paid tax preparers are issued a PTIN when filing taxes on behalf of someone else. Prior to January 1st of 2011, this was optional. A PTIN is now required for a tax preparer to file their own tax returns. A PTIN can be obtained through an online application. Form W-12 must be completed then sent to the appropriate IRS center. This information is important for a foreign tax preparer that does not have or is unable to receive a Social Security Number.