7 Key Differences between Individual Taxpayer Identification Number (ITIN) & Employer Identification Number (EIN)

Introduction

Every taxpayer requires a unique identification number, and the Internal Revenue Service (IRS) has provided two options for this purpose: the Individual Taxpayer Identification Number (ITIN) and the Employer Identification Number (EIN). While both the ITIN and EIN serve a similar purpose, there are several significant differences between the two identification numbers. One of the main differences between them is ITIN is issued to individuals for tax filing purposes, while EIN is issued to businesses for tax and administrative purposes.

What is ITIN?

ITIN stands for Individual Taxpayer Identification Number (ITIN). It is a nine-digit number issued by the Internal Revenue Service to individuals who are not eligible for a Social Security number but are required to file taxes. This includes non-resident aliens, foreign nationals, and dependents or spouses of U.S. citizens or residents.

How to Obtain an Individual Taxpayer Identification Number?

Here is the process to obtain an ITIN:

1. Fill out Form W-7.
2. Gather the required documents, such as a valid passport.
3. Submit the application by mail or in person at an IRS Taxpayer Assistance Center.
4. Wait for processing, which can take 7-11 weeks.
5. Check the application status by calling the IRS toll-free number.
6. Renew the ITIN as necessary.

What is an EIN?

EIN stands for Employer Identification Number (EIN) and is a nine-digit number assigned by the Internal Revenue Service to businesses and other entities for tax purposes. It is a requirement for any entity that operates as a business, has employees, or is required to file taxes.

To obtain an EIN, you must determine your eligibility and complete Form SS-4, providing all required information such as your business name and address. You can submit the application online, by mail, or by fax and wait for processing, which can take several weeks. Once your application is processed, you will receive your EIN in a confirmation notice, which you should keep on record for tax-related purposes.

7 Key Differences between ITIN & EIN

Here are the 7 key differences between ITIN and EIN:

Conclusion

In conclusion, the ITIN and the EIN may seem similar at first glance, but they are intended for different purposes and have different application processes. By understanding the differences between these two tax identification numbers, you can ensure that you are applying for the correct one and using it appropriately.