TIN vs EIN: differences between these US tax ID numbers explained

What is a TIN?

A Taxpayer Identification Number is a nine-digit number the IRS assigns to individuals and entities for tax purposes. It tracks income and tax responsibilities and should be included on tax returns and other forms submitted to the IRS. 

Common types of TINs include:

• Social Security Numbers for individuals.
• Employer Identification Numbers for businesses.
• Individual Taxpayer Identification Numbers for those who are not eligible for an SSN.

Who needs a TIN?

It depends, but generally individuals or entities that need a TIN include:

• U.S. citizens or residents filing tax returns.
• Businesses paying employees or reporting taxes.
• Non-residents who file U.S. tax returns.
• Individuals opening a bank account or applying for a loan.
• People applying for government programs such as Medicare or obtaining government IDs (e.g., passport, driver’s license).

What is a TIN used for?

While primarily used for filing tax returns, a TIN has many other important uses in personal and business activities.

Here are some use cases of TIN:

• Individuals and businesses should provide their TIN to file taxes with the IRS.
• Banks require your TIN to verify your identity when setting up personal or business accounts.
• Lenders use TINs to check your credit history when you apply for loans or credit cards.
• Programs like Medicare and Social Security require your TIN.

How to get a TIN?

Getting a TIN depends on your specific needs and eligibility. You can apply for one through the IRS or the SSA. Here’s how:

• SSN: Submit Form SS-5 to the Social Security Administration (SSA) with proof of identity, age, and citizenship.
• EIN: Apply online through the IRS website if you need a TIN for your business.
• ITIN: Submit Form W-7 to the IRS if you’re not eligible for an SSN. You’ll need to provide proof of foreign status and identity.
• PTIN: Tax preparers should apply for a Preparer Tax Identification Number (PTIN) through the IRS.

What is an EIN?

An EIN, or Federal Employer Identification Number, is a unique nine-digit identifier issued by the IRS to recognize your business for tax-related purposes. Who needs an EIN?

You need an EIN if:

• You have employees.
• Your business operates as a partnership or corporation.
• You file taxes for certain businesses, including non-profits, trusts, estates, and more.

If you have a sole proprietorship or run a Limited Liability Company (LLC) without employees, you may use your SSN instead of an EIN.

What is an EIN used for?

An EIN is used for:

• Filing business taxes.
• Opening a business bank account.
• Applying for business licenses and permits.
• Hiring employees.
• Applying for business credit or loans.

How to get an EIN

You can apply for an EIN online through the IRS website for free. You should provide details about your business, such as its structure and reasons for applying. 

Additionally, submit Form SS-4 if you don’t yet have an EIN but need one for reporting purposes on any tax return, statement, or other document.

TIN vs. EIN

While these numbers serve a similar end goal—identifying individuals and entities for tax purposes—they differ significantly in their specific uses and applications. Here's how:

Similarities

The similarities between a TIN and EIN include:

• A TIN and an EIN are used by the IRS to identify entities for tax purposes.
• Depending on the specific type, these numbers are issued by the IRS or SSA.
• TIN and EIN follow a nine-digit structure, aiding in consistent identification for tax reporting and compliance.

Differences

The key differences between TIN and EIN include the following:

When to use a TIN vs. EIN

The applicability of TIN and EIN are:

• For individuals: Use a TIN (such as an SSN or ITIN) when filing personal tax returns or claiming dependents. Individuals without employees or businesses often only need a TIN.
• For businesses: If your business has employees, you should use an EIN for tax filing, obtaining licenses, or opening business bank accounts. Even sole proprietorships might need an EIN if they file specific tax forms like pension or excise taxes.

FAQs about TINs and EINs

What is a TIN/EIN?

A TIN number is a general term for any number used by the IRS to identify taxpayers, including SSNs and EINs. 

An EIN is specifically used to identify businesses for tax purposes.

Are a TIN and EIN the same thing?

No, a TIN and EIN are not the same thing. While both are used for tax identification, a TIN refers to a broader category that includes different types of identification numbers, whereas an EIN is a specific type of TIN used primarily by businesses.

Why do you need our TIN/EIN number?

Providing a TIN or EIN is essential for various financial and legal processes, including tax reporting and compliance. It helps ensure accurate identification and proper handling of tax-related documentation and transactions.

Conclusion

Understanding the differences between TIN and EIN is essential for navigating various tax and identification requirements.

Each number serves a specific purpose, from personal identification and business operations to tax filing and adoption processes. Using the correct type of number for your specific needs can help maintain compliance and efficiency in managing your personal or business finances.

Once you're ready to start looking for a business banking platform to put your EIN to use, consider Rho.

With it, you can streamline your expense management and create custom spending rules tailored to your needs. This includes setting rules by dollar amount, budget, and merchant. With Rho, you can ensure that all receipts and required information are captured in real time, making expense filing a straightforward task.

Interested to know more? Schedule a call with a Rho expert today!

Pia Mikhael is a guest contributor. The views expressed are theirs and do not necessarily reflect the views of Rho.

Any third-party links are provided for informational purposes only. The third-party sites and content are not endorsed or controlled by Rho.

Rho is a fintech company, not a bank. Checking and card services provided by Webster Bank, N.A., member FDIC; savings account services provided by American Deposit Management, LLC, and its partner banks.

Note: This content is for informational purposes only. It doesn't necessarily reflect the views of Rho and should not be construed as legal, tax, benefits, financial, accounting, or other advice. If you need specific advice for your business, please consult with an expert, as rules and regulations change regularly.

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