EIN vs. ITIN: What is the difference?

In the United States, there are numerous identification numbers used to identify individuals and companies. These numbers are like social security numbers that are valid in the United States.

ITIN (Individual Taxpayer Identification Number) and EIN (Federal Employer Tax ID Number) are the two most important and frequently confused ones among these identification numbers.

Employer Identification Number which is abbreviated as EIN is issued by the Internal Revenue Service (IRS). It is used to identify a business for tax purposes.

In its most basic features, this tax identification number is required for companies to open a business bank account, operate legitimately, hire employees. EIN is also used on business documents and payments. It may be considered as a Social Security Number (SSN).

ITIN, an Individual Taxpayer Identification Number, is an identification number that can only be obtained by certain individuals who are not U.S. citizens. Only the following people can apply for ITIN:

  • Foreign nationals who are not eligible to obtain an SSN; however, obliged to file tax returns in the United States.
  • Non-U.S. residents who are not eligible to obtain an SSN; however, obliged to file tax returns in the United States.
  • Persons who have come to the United States to settle and file tax returns.
  • Spouses and / or dependents of US citizens or foreign nationals, who have come to the US to settle and are required to file tax returns.
  • Spouses and / or dependents of non-US visa holders who are required to file tax returns.

The ITIN numbers consist of 9 digits and all begin with 9, such as 9XX-XX-XXXX.

ITIN is a compulsory tax identification number for most people who want to start a company in the United States. This may be necessary even if the person is not going to live in the USA. The criterion here is whether the person is required to file a tax return with the IRS. If such a tax return is required, the ITIN must also be obtained.

For example, if a company receives revenues, profits or losses from the United States and these amounts are traded on company members or shareholders, then the owners of the company will need to obtain ITIN; because they are required to file a tax return with the IRS.

It is worth mentioning again; ITIN is an obligatory identification number for anyone who will file a tax return with the IRS regardless of immigration status.

If you have any further questions, please feel free to consult us!

Leave a Reply

Your email address will not be published. Required fields are marked *