What is a Tax Identification Number (TIN)?
When it comes to filing tax returns with the IRS, there are several pieces of information the IRS requires depending on the capacity under which you are filing. You can get one tax ID number (TIN) per entity, however, there are various types of TINs that each serve different purposes, so it’s important that you understand what these are.
In this guide to TINs, you will better understand the answer to “what is a TIN?”, the different types of TINs, and when you should apply for, or use a specific one.
TIN Number Meaning: What is a TIN?
A TIN (Tax Identification Number) is a 9-digit number assigned to you that tells the IRS about your current tax status. The IRS usually requests this number to help them identify who you are and the type of tax you need to be paying. There are five common types of TIN, which we will explain further on in this post.
The Importance of TINs
A TIN is the identifier for individuals and businesses and assists the IRS in keeping up with personal and business financial affairs. For individuals, a TIN, often in the form of a Social Security Number (SSN), is essential for filing taxes, securing employment, and accessing government benefits. TINS help to ensure accurate income reporting, assess and confirm eligibility for tax credits, and help certain individuals access retirement benefits.
For businesses, an Employer Identification Number (EIN) serves as the corporate TIN, enabling accurate tax reporting for the organization, ensuring compliance with employment tax regulations, and helping companies build business credit.
Overall, a TIN is an essential component of the US tax system. It helps to ensure that the IRS collects and allocates tax accurately and fairly while supporting the financial well-being of citizens and organizations.
Types of TINs
Let’s take a closer look at some of the types of TIN you can expect to come across and their role in the US tax system. The IRS will require these for different individuals, depending on their circumstances.
Social Security Number (SSN)
If you’re reading this post, this is probably the TIN you are most familiar with. A Social Security Number (SSN) is a nine-digit number issued to US citizens by the Social Security Administration (SSA). Its primary use is to track and record an individual’s earnings. This allows them to access tax benefits for retirement and other circumstances. SSNs are also used for employment verification, tax filing, and eligibility for government grant and benefits schemes.
Employer Identification Number (EIN)
An EIN is like a social security number for businesses whose principal business is located in the USA. It helps businesses to report company income, file their taxes correctly, and follow employment tax rules. EINs are also helpful in helping businesses establish corporate credit, set up bank accounts, and handle financial transactions in the company’s name. Many companies have EINs, as it also adds to their professional credibility.
Individual Taxpayer Identification Number (ITIN)
Although they may sound similar, an ITIN is different from an SSN. These numbers are issued to members of the US public who do not qualify for SSNs. Anyone who is deemed a foreign national can be assigned an ITIN by the IRS. It helps these individuals become employed legally and ensures they integrate legally into the IRS’s system.
ITINs also help foreign nationals open bank accounts. These TINs are also available to resident foreign national’s spouses and dependents, whether they are classified as nonresident or resident.
Adoption Tax Identification Number (ATIN)
As an individual who is in the process of adopting a child, you will be required to get an ATIN for the adoptee. This is a temporary identifier that the IRS will use in place of an SSN for a child who is being adopted and cannot yet obtain an SSN. It’s an important piece of information as it allows adoptive parents to claim the child as a dependent and claim tax benefits while awaiting the child’s social security number.
How to Apply for a TIN
To obtain an SSN, US citizens and those deemed eligible non-citizens can apply through the SSA. If you require an SSN, you must complete an SS-5 form and submit proof of identity, citizenship, and immigration status. Once you have gathered this information, you can submit it to the SSA.
To apply for an EIN, authorized, individual business representatives can apply online through the IRS website. The application requires details about the business structure, purpose, and ownership and usually takes around 30 minutes. This is free of charge.
To acquire an ITIN, non-citizens must fill out a W-7 form and submit it to the IRS. They must attach valid identification documents and a tax return if possible and applicable.
An ATIN is obtained by submitting a completed W-7A form to the IRS. The easiest way to do this is by going to your nearest IRS office for a walk-in application. Applicants must provide necessary adoption documentation.
If you are looking for a TIN for yourself, you can get a hold of the IRS to verify this information. You will not be able to look up an SSN, ITIN, or ATIN for other individuals, as this is classified as sensitive and confidential information. However, this is somewhat different in a professional capacity.
You can use a TIN matching service like EINsearch.com to validate other companies’ EINs, through making sure that it is correctly matched with their entity.
Having an overall understanding of the different types of TINs is important for navigating the sometimes complex IRS and US tax systems. Once you know which ones you should have, you must undergo the necessary application processes to ensure that you have all the information you need.
It’s essential to report your earnings and tax status accurately to ensure that you remain legally compliant with the rules laid out by the IRS. It also ensures that you pay the right amount of tax and that you have access to the tax benefits and government grant schemes you’re entitled to.