A tax identification number (TIN) is unique nine-digit number issued to anyone who pays personal or business taxes. You can get this number from the Social Security Administration or the Internal Revenue Service.
Your TIN is required for use when filing taxes with the IRS — but it can be used for other verification purposes as well. Here’s everything you need to know about tax identification numbers:
Read More:
Why Tax ID Numbers Are Important
You’ll need your Tax ID number to be able to file your taxes, and it’s how the IRS tracks tax compliance. Without a Tax ID number, it is illegal to work and earn taxable income in the United States.
Tax ID numbers are also used for identity and financial verification in many other instances. For example; An employer may use your Tax ID number to verify your identity to be eligible for a job. Or a bank may use your Tax ID number when applying for a mortgage or opening a bank account.
If you live and work in the United States, it’s important to have the right Tax ID number to ensure compliance with the IRS and the ability to verify your identity nationwide.
Types of Tax ID Numbers
There are five different types of tax ID numbers. Which one you need varies based on your situation.
| Type | Use Case | Issued By |
|---|---|---|
| SSN | U.S. citizens | Social Security Administration |
| ITIN | Non-resident taxpayers | IRS |
| EIN | Businesses and employers | IRS |
| ATIN | Adoption dependents (temporary) | IRS |
| PTIN | Paid tax preparers | IRS |
1. Social Security Number
Social Security Numbers (SSNs) are assigned by the Social Security Administration to all U.S. citizens when they are born. Your SSN is a unique nine-digit number that is used in various ways to verify your identity.
The IRS uses your Social Security Number when submitting your personal tax return, but your SSN may also be used to prove your identity on medical or educational forms.
2. Individual Tax ID Number
If you live and work in the U.S, but are not a U.S. resident or are a resident alien who doesn’t qualify for an SSN, you must apply for an Individual Taxpayer Identification Number or ITIN.
The ITIN is required to file and pay taxes with the IRS. Your spouse and dependents may also need an ITIN. All ITINs are issued by the IRS, and it is not tied to your immigration status or ability to work in the United States.
An individual with an ITIN cannot claim the earned income tax credit, or EITC, on their tax return.
3. Employer Identification Number
If you own a business that pays taxes, you’ll usually need to apply for an Employer Identification Number (EIN) with the IRS.
The EIN — also known as a federal tax identification number — is designed for businesses as a way to track and report income for tax purposes. EINs are also used by estates and trusts with income that they are required to report to the IRS.
4. Adoption Tax ID Number
An adoption tax ID number is a temporary tax ID number the IRS assigns to a child in the adoption process so the adoptive parents can claim them as a dependent on their taxes.
This number is valid until you inform the IRS that you’ve gotten your child’s SSN. If you don’t notify the IRS, the number expires after two years. If your adoption case is not resolved by then, you can apply for an extension.
Note that the adoptive tax ID number is used to claim the child tax credit, a common tax write-off for parents, but cannot be used to claim the EITC.
5. Preparer Tax ID Number
The IRS issues a preparer tax ID number to any paid tax preparer. The tax preparer must renew this number each year and pay a fee of $19.75.
People who commonly need a preparer tax ID number include:
- CPAs
- Enrolled agents
- Tax preparation specialists
- Tax attorneys
- Retirement plan specialists
These are professions where someone prepares a tax return for money.
Anyone who voluntarily prepares all or substantially all of a tax return does not need a preparer tax ID.
How to Apply for a Tax ID Number
If you need to apply for a tax ID number, here’s how it works:
Social Security Number (SSN). You can request a Social Security card from the Social Security Administration. You will need to fill out form SS-5 and provide documentation such as a driver’s license, birth certificate, and evidence of immigration status (if applicable).
Employer Identification Number (EIN). If you’re a business that is required to obtain an EIN, you can apply online or by mail through the IRS. You’ll need to submit form SS-4, and must have a valid taxpayer identification number (ITIN, SSN or EIN) to complete the application online.
Individual Taxpayer Identification Number (ITIN). To apply for an Individual Taxpayer Identification Number (ITIN), you’ll need to submit form W-7 to the IRS. You’ll need to submit documentation substantiating foreign/alien status and true identity for each applicant. You can submit Form W-7 by mail, in-person at an IRS office, or through an Acceptance Agent authorized by the IRS.
The Bottom Line
Your Tax ID number makes sure you are in compliance with the IRS. It can also verify your identity in important circumstances. As an individual taxpayer, your employer will use your Tax ID number to track your income and report it to the IRS.
All tax IDs are designed to help you function as a taxpayer in the United States. If you have any issues with your Tax ID or need help, you’ll want to reach out to the Social Security Administration or IRS for assistance.
FAQ
- Do I need a tax ID number to open a business?
- Yes. You will have to apply for one through the IRS by submitting form SS-4.
- Can I work in the U.S. without a tax ID?
- No. You will have to apply for one through the IRS by submitting form W-7.
- Is my EIN the same as my SSN?
- No. SSNs are for individuals. EINs are for organizations.
- What happens if I apply for the wrong tax ID?
- You will have to contact the IRS to get a new one.