Over half of Americans say the federal tax system’s complexity bothers them immensely. When you see how many forms there are to fill out, then you’ll understand why. And if you’re a small business owner, your headache’s probably magnified even more.
As you go through the forms, there are countless acronyms swimming around as well. For example, there are the terms “ITIN” and “EIN,” which sound very similar to one another.
What’s an ITIN and EIN, and what’s the difference? Read on for a thorough ITIN vs. EIN discussion so you know which one(s) you need.
What Is an ITIN?
“ITIN” is the acronym for “Individual Taxpayer Identification Number.” It’s a nine-digit number that always begins with 9, then the numbers 70-88 in the fourth and fifth digits (i.e. 9XX-70-XXXX).
This is used by individuals who are required to have a US taxpayer identification number. However, they aren’t eligible for a Social Security Number (SSN) from the Social Security Administration (SSN).
What’s interesting to know though is that regardless of their immigration status, individuals can get ITINs. This means that both resident and nonresident aliens can obtain ITINs.
Typically, these people will use ITINs:
- Nonresident aliens who need to file a US tax return
- Resident aliens who need to file a US tax return
- Dependents or spouses of US citizens/resident aliens
- Dependents or spouses of nonresident alien visa holders
To get an ITIN, you’ll have to complete IRS Form W-7. You’ll also need to provide documentation that proves your identity and foreign status.
What Is an EIN?
“EIN” stands for “employer identification number.” EINs also are nine-digit numbers, and are formatted as XX-XXXXXXX.
These numbers are generally used by businesses. In some cases, certain individuals may use an EIN too.
Entities that need to report employment taxes, excise taxes, or any other business-related taxes will need EINs. These entities include:
- Employers
- Sole proprietors
- Corporations
- Partnerships
- Non-profit organizations
- Trusts and estates
- Government agencies
- Individuals who have to file employment or excise tax returns
To get an EIN, you’ll submit IRS form SS-4. You can use the online application, or you can send the application in by mail or fax too. If you’re not sure about how to go about this process, then our blog post on how to obtain an EIN for your LLC should help.
If you don’t have an LLC yet, then use our business registration service. We have completely personalized offers that are affordable for any entrepreneur.
ITIN vs EIN
The main difference between ITINs and EINs is that the former is for individuals and the latter is for businesses/employers. Also, ITINs are for people who need to file individual tax returns, while EINs are for entities that need to file various tax returns.
While the two both have nine digits, the formats are different. Not only are there two dashes in ITINs, but the fourth and fifth digits have a specific range (70-88).
Know the Difference Between ITIN and EIN
Knowing details regarding an ITIN vs EIN ensures that you don’t waste time and apply for the right identification number. And as a result, you’ll have proper tax filing and compliance with IRS regulations.
If you’re ever confused about what you should do, or have any concerns, you should speak to a tax professional. They’ll be able to explain things clearly and help you determine whether you need an ITIN or EIN.
Sign up for an account with Business Anywhere today to create an LLC if you’re clear on the ITIN vs EIN issue. We offer registered agent services, online notary, and virtual mailboxes too.
