Do You Know these Four IRS Terms —ITIN, EIN, SSN and TIN?

Have you ever seen these four IRS acronyms ITIN, EIN, SSN and TIN? When dealing with the IRS, you need to understand these different names, and how and when to use them? We will cover each one so you are educated about the differences.

ITIN or Individual Tax Identification Number

The Individual Tax Identification Number, or ITIN, allows taxpayers who don’t have a Social Security Number (SSN) such as a foreign national or nonresident alien to file income tax returns. You either have an ITIN OR an SSN — not both.

The IRS issues an ITIN which is a United States tax processing number. It is a nine-digit number in the format xxx-xx-xxx that begins with the number 9, and the 4th and 5th digits, also known as second section, range from 70 to 88, 90 to 92 and 94 to 99

It is issued by the IRS for individuals who are not eligible for an SSN, such as a foreign national or nonresident alien. They are still required to file certain federal tax or information returns.

An alien with foreign status should complete a Form W-7, Application for IRS Individual Taxpayer Identification Number, for an ITIN.

EIN or Employer Identification Number

An EIN is an Employer Identification Number and is used by the IRS to identify a business, such as an LLC. EINs are also nine digits, but formatted differently (xx-xxxxxxx). Every business that pays employees or is required to file any business tax returns is required to obtain an EIN.

The IRS issues employer identification numbers to sole proprietorships, partnerships, corporations, and LLCs.

You gain the following benefits:

• You may hire employees
• File income taxes for your business
• Open bank accounts for your business
• Establish business credit
• Separate business and personal related financial activity

SSN or Social Security Number

A Social Security Number (SSN) is issued by the Social Security Administration (SSA) to identify an individual person, such as a US citizen, permanent resident or temporary nonimmigrant worker.

SSNs are nine digits (xxx-xx-xxxx) and belong to US citizens and authorized residents.

Individuals who are employed and receive wages must have an SSN or apply for one. Every employer who sets up payroll and pays an individual wages must request the employee’s SSN and report the employee’s wages using that number. If you claim your child on your income tax return, you must obtain an SSN for that child.

SSNs are issued by the Social Security Administration (SSA), and anyone who is eligible to have an SSN may apply for one by completing an application known as the Form SS-5. Any taxpayer with an SSN must use the SSN as an identifying number on their tax returns.

TIN or Taxpayer ID Number

A United States Taxpayer ID Number (TIN) is issued by either the Internal Revenue Service (IRS) or the Social Security Administration (SSA). TINs are used to govern and administer US tax laws as well as perform other functions.

There are various types of Taxpayer ID Numbers (TINs), so a TIN is not necessarily a number. The Social Security Number (SSN) is the only TIN that is issued by the Social Security Administration. All other TINs are issued by the IRS.

A TIN must be used on tax returns, statements, and other tax documents. When dealing with the IRS, you must have some form of a TIN.

There are three types of TINs used by individuals and businesses:

1. Social Security Number (SSN)
2. Employer Identification Number (EIN)
3. Individual Taxpayer Identification Number (ITIN)

Joshua Wilson, CPA – Certified QuickBooks ProAdvisor

Joshua Wilson, CPA, is a Certified QuickBooks ProAdvisor. A Certified QuickBooks ProAdvisor is a certified independent accounting pro who can provide strategic insights to drive small business success.

QuickBooks is a valuable tool to help you manage your small business. Let us help you maximize your abilities to use QuickBooks properly in your office.

Joshua Wilson, CPA, PC, is a full-service public accounting firm that specializes in accounting, tax preparation, tax planning, & business development for small businesses in Winder, GA, and the surrounding areas. Give Joshua a call today to set up a consultation at 770-856-1309 or email him at josh@joshuawilsoncpa.com.