TINs and EINs are not the same thing, but they are often confused with each other.
One of the reasons why many people confuse them is that Employer Identification Numbers are sometimes referred to as Federal Taxpayer Identification Numbers. The most important difference to know is that TIN is an umbrella concept. The employer identification number is just one of the numbers within this umbrella term.
Your personal taxes and business taxes are different. That’s why it’s important to understand the differences between them.
Taxpayer Identification Numbers (TINs) used by the IRS come in a variety of forms, but they do not all serve the same purpose. Some of the numbers with different formats show commercial taxes in tax IDs, and some show personal taxes.
Difference Between TIN and EIN
A tax identification number is used when you need to fill out personal or business documents. There are several numbers you can enter for the same purpose; the most common are TIN and the employer identification number.
TIN and EIN, which are used interchangeably by people who don’t know the difference, are not the same thing. There is a fundamental difference between the two.
TIN is a general tax identification number, while the other one is specifically an employer identification number. Therefore, the employer identification number is a type of TIN. However, a Taxpayer Identification Number can also identify other tax identification numbers besides the employer identification number
What is a TIN?
A Taxpayer Identification Number also known as TIN is a business tax identification number. Specially designed to identify a person or entity on tax return forms.
TINs have expanded to serve a wide variety of purposes. It can be used in the following cases:
- Buying a house or car
- Opening a personal or business bank account
- Get a credit limit
- sign up for Medicare
- Applying for government-approved identification, such as a passport or driver’s license.
The IRS or the Social Security Administration may issue a TIN. There are different types of Taxpayer Identification Numbers. TIN is an umbrella term that covers many other numbers. Essentially, the purpose of these numbers is to administer and administer US tax laws, as well as perform other functions.
When we talk about Taxpayer Identification Numbers we mean one of the numbers issued by the IRS or SSA.
The Social Security Number is issued by the SSA, and the Individual Taxpayer Identification Number is issued by the IRS.
Types of TIN
There are five types of Taxpayer Identification Number;
- SSN: Social Security numbers. Nine-digit numbers are used by the SSA and IRS to identify individuals. Everyone over the age of 18 working in the United States is legally required to have an SSN.
- EIN: Employer Identification Numbers. A unique identifier for a business entity or estates and trusts that generate income. These are mostly used by the IRS for tax purposes.
- ITIN: Individual Taxpayer Identification Numbers. For certain categories of nonresidents and resident aliens, their spouses, and dependents to use on their tax processing forms when they are not eligible to receive a Social Security number.
- ATIN: Adoption Taxpayer Identification Numbers. Temporary nine-digit numbers are used by individuals who plan to adopt a child who is a U.S. citizen or U.S. resident and cannot obtain an SSN in time to file a federal tax return.
- PTIN: An eight-digit Preparer Tax Identification Number if you are a paid tax prepare.
What is an EIN?
Stands for an employer identification number. It identifies businesses that will file business tax returns. You need an employer identification number to open a business checking account, file your business tax returns, and apply for necessary licenses.
The number consists of nine numbers in the format XX-XXXXXXXX. An employer identification number can be applied to an employer, sole proprietor, partnership, corporation, nonprofit organization, decedent’s estate, government agency, foundation, specific individuals, or business entity
When to use an EIN
Is an Employer Identification Number issued by the IRS to business entities operating in the United States. It is mainly used to identify and report companies; it is also necessary to open bank accounts, obtain permits and licenses, and manage employee payrolls.
The IRS states that businesses that meet certain guidelines must have an employer identification number.
Some examples of businesses that need employer identification numbers include:
- Pay wages to employees
- Have a Keogh plan
- Operate as a partnership or cooperation
- Estates and real estate mortgage
- Non-profit organizations
- Farmers’ cooperatives.
How to Get a TIN Number
Since Taxpayer Identification Number is an umbrella term, it’s important to be more specific about which number you need. There are five different types of taxpayer identification numbers. The IRS and SSN are published to provide numbers. If you need an SSN, you need to contact the Social Security Administration. Other numbers are provided by the IRS.
How to Get an EIN Number
LLCs are issued an employer identification number by the IRS. After verification, can be obtained immediately and free of charge. There are several types of receiving the number by mail, phone, or fax.
After registering as a limited liability company (LLC), you must obtain an employer identification number for your business from the IRS.
The employer identification number is another name for your business’s nine-digit federal tax identification number. If you have one or more employees, you must obtain an employer identification number. If you are a single-member LLC, you don’t need to get a number for your business, but it still makes sense to have one.
Why do you need your TIN/EIN?
The IRS uses this number to identify taxpayers who are required to file various business tax returns. TIN/EIN is used by employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities.
Therefore, having these numbers helps in performing the necessary actions.
Types of Tax ID Numbers
It is very important to understand that there are different tax ID numbers because of the umbrella term. Those are;
- Social Security number (SSN)
- Employer identification number (EIN)
- Individual taxpayer identification number (ITIN)
- Adoption taxpayer identification number (ATIN)
- Preparer tax identification number (PTIN)
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