EIN Series Part Three — What’s the Difference Between an EIN, TIN, and ITIN?

Welcome to the final installment of MyCorp’s three-part series for Guidant Financial covering the (e) the ins and outs of Employer Identification Numbers (EINs)! With this installment, we’ll cover the differences between an EIN, TIN, and ITIN.

Did you miss the first two parts of the series? Let’s get you caught up to speed.

Part one covered employer identification number (EIN) basics. Here, you’ll discover what an EIN is, how it is formatted, and why some entrepreneurs choose to use an EIN over their social security number (SSN). You’ll also get a glimpse at nine reasons why an EIN comes in handy for running a small business.

Part two takes a deep dive into how to obtain an EIN. This post covers what entrepreneurs should do before applying for an EIN. Then, we explore how to apply for an EIN. Popular methods include applying to file through mail, fax, telephone, and online.

We defined EINs and went through the step-by-step process for how to register for and obtain an EIN. We now know what an EIN is, but what about TINs or ITINs? These acronyms may pop up with entrepreneurs from time to time, so let’s take a moment to define the meaning of each one.

Taxpayer Identification Number (TIN)

As defined by the IRS, a taxpayer identification number (TIN) is an identification number used by the IRS in the administration of tax laws. Other taxpayer identification numbers (TINs) include SSNs, EINs, individual taxpayer identification numbers (ITINs — more about these in a moment), ATINs (taxpayer identification number for pending U.S. adoptions), and PTINs (preparer taxpayer identification numbers).

Why Do I Need a TIN?

A TIN may be furnished on tax-related documents. These include filing your tax returns and claiming treaty benefits. Keep in mind, however, that if the beneficial owner claims an exemption for effectively connected income and certain annuities, and tax treaty benefits, the TIN must be on a withholding certificate.

Ready to put what you’ve learned from the EIN series into practice and start your small business? We’re here to help.

How to Obtain a TIN

If you don’t already have a TIN, the good news is that it’s a fairly straightforward process to obtaining the number. The IRS includes a step-by-step process for how to get a TIN if you have an SSN, EIN, and ITIN.

Since this is a series about EINs, let’s explore what you need to know about obtaining TINs if you have an EIN. Your EIN, as a quick refresher, is a federal tax identification number. It is issued by the IRS to identify a business entity. An EIN may be used for multiple purposes, such as opening a business bank account and hiring employees. An EIN is also used by estates and trusts on Form 1041 U.S. Income Tax Return for Estates and Trusts. If these estates and trusts have income that is required to be reported, the firm’s EIN and EIN of fiduciary (if a financial institution) must be reported on the paperwork. The trust TIN must also be noted on the same document.

What If I Don’t Have an EIN, But I Want to Obtain a TIN?

For those without an EIN but with an SSN seeking to obtain a TIN, they must complete Form SS-5. This is the application for a Social Security Card from the Social Security Administration. Remember to include substantial evidence of your identity, age, and U.S. citizenship (or lawful alien status). You may find these free forms at your local Social Security office and by downloading Form SS-5 from the Social Security Administration.

Individual Taxpayer Identification Number (ITIN)

Imagine that you are a U.S. resident or nonresident alien. You find yourself in a situation where you must file a U.S. tax return or present that you have a federal tax ID number. However, you don’t have a social security number (SSN) — and are not eligible for one. You would need to apply for an individual taxpayer identification number (ITIN) to be issued out to you by the IRS.

Why Do I Need an ITIN?

An ITIN is a tax processing number. It has a limited number of functions. ITINs largely exist to keep individuals compliant with United States tax laws.

Do any of the following items apply to you? Then, you would need an ITIN.

  • You don’t have and are not eligible for an SSN.
  • You find yourself in a circumstance where you must present a federal tax ID number.
  • You have to file a federal tax return.
  • You are a nonresident alien or U.S. resident alien that must file a U.S. tax return. You may also be a dependent or spouse of a U.S. citizen or nonresident alien visa holder, a nonresident alien claiming a tax treaty benefit, or nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception.

What Does an ITIN Not Do?

As mentioned above, ITINs really exist as tax processing numbers to keep you in compliance with the tax laws of the United States. It should be noted that having an ITIN does not authorize you to work in the United States. You will also not be eligible for Social Security benefits because you have an ITIN or qualify a dependent for Earned Income Tax Credit Purposes.

Do not let this deter you from obtaining an ITIN! Remember that this number still serves an incredibly important purpose to ensure you file your U.S. tax returns.

EINs In Review

What’s next for our readers as we come to a close in this series? We highly recommend that shortly after the formation of your small business, entrepreneurs decide to file for an employer identification number (EIN). The best time to file for an EIN, after all, is right after your business has been legally formed. By applying for an EIN, the IRS will assume (correctly, if you are honest about the process!) that your business is already in existence.

You know all of the benefits that come with an EIN and how to obtain one. Now, it’s time to get an EIN for your newly formed startup!

Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.

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