An Employer Identification Number (EIN) is a nine-digit identification number issued by the Internal Revenue Service (IRS) for businesses who are required to submit tax returns. This could include corporations, non profits, and private companies. Sometimes called a "Tax ID" number, the two actually have some significant differences.
Significance
An EIN is an Employer Identification Number, a number that is only issued to businesses. An EIN is type of Tax ID number. The Tax Identification Number (TIN), is a number issued by either the Social Security Administration (SSA) or the IRS for taxes and other reporting and can be issued by individuals or businesses.
Types
There is only one type of EIN, and that is a nine-digit number that is issued to businesses by the IRS. There are several types of TIN: social security number (SSN), Individual Taxpayer Identification Number (ITIN),
Taxpayer Identification Number for Pending U.S. Adoptions (ATIN), Preparer Taxpayer Identification Number (PTIN), and the EIN.
Considerations
Everyone who files taxes in the U.S. is required to have a TIN. Citizens and legal residents of the U.S. normally have a social security number, which is a type of TIN. However, there may be circumstances when some nonresident or resident aliens are unable to obtain a social security number (however, they must still pay taxes). In those circumstances, the IRS will issue that individual an ITIN. The nine-digit number begins with a "9" and is formatted like a social security number. However, you cannot claim the earned income credit using an ITIN.
Applying for an EIN or TIN
The IRS allows businesses to apply for an EIN online. Other forms of TIN must be applied for on paper forms. Visit your local social security office for a social security application (form SS-5) or download the application from the link in the Resources section. The requirements are stringent and you will be required to provide proof of legal residency or birth. Foreign individuals who cannot obtain a social security number should use IRS form W-7 to apply for a ITIN; include a federal income tax return with your application.
Expert Insight
Even illegal aliens and persons who work "under the table" must pay taxes on their earnings. Check out your local library or call your local college or university and ask for assistance in filling out the application forms for a taxpayer identification numbers. Many of these places offer free filing assistance for taxes and tax-related matters.
