What is a TIN?
A tax identification number (TIN) is required for tax purposes and is issued by the Internal Revenue Service (IRS). TINs are used to track taxpayers and identify them to the IRS. The following are the main types of TINs:
- Social Security Number (SSN)
- Individual Taxpayer Identification Number (ITIN)
- Employer Identification Number (EIN)
TINs have 9-12 digits, with the first nine digits identifying the taxpayer. Applying for a TIN is free. You must provide your TIN when filing taxes or communicating with the IRS.
Different Types of TINs
Social Security Number (SSN)
SSNs are used to identify individual taxpayers.
Individual Taxpayer Identification Number (ITIN)
ITINs are for nonresident and resident aliens and others who cannot obtain an SSN. ITINs have 9 digits, starting with the number 9 and are obtained by completing Form W-7 with proof of foreign status and identity.
Employer Identification Number (EIN)
EINs are 9-digit numbers that identify businesses for tax purposes. It is like a Social Security number for a business. Sole proprietors without employees often do not need EINs. If needed, businesses can apply for an EIN by completing Form SS-4. To get an EIN quickly, you can apply online, and your business must operate within the United States.
TIN Uses in Business Activities
A tax ID is often required for various business-related activities such as opening a business bank account, hiring employees, obtaining business licenses, and filing payroll taxes. In addition to the IRS, your tax ID is used by state and local governments, banks, creditors, and vendors to identify your business.
FAQs
Is an EIN the same as a tax ID?
No. An EIN is a specific type of tax ID assigned to businesses as a separate tax entity from individuals.
Why do I need an EIN?
If your business is a legally separate entity from you, such as a corporation or partnership, you need an EIN for tax purposes, business registration, obtaining loans, and other business-related reasons.
Can sole proprietors use their SSN in place of an EIN?
Yes. Sole proprietors without employees can use their SSN instead of an EIN for tax purposes. However, in most other types of businesses, an EIN is necessary.