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Everything You Need to Know about Taxpayer Identification Number (TIN)

Everything You Need to Know about Taxpayer Identification Number (TIN)

A tax identification number, also known as TIN, is a distinct nine-digit number directed at individuals, businesses, or others for the sole purpose of taxes and other IRS issues. The taxpayer identification number can either be the employer identification number (EIN) or the Social Security number depending on who gets it.

Many taxpayers, including sole proprietors (without workers), use their Social Security Number as their TIN. Partnerships, corporations, trusts, etc., will have to use the EIN issued by Uncle Sam.

Taxpayer Identification Number (TIN): How It Works 

Tax Identification Number is a nine-digit number formatted the same way as a Social Security Number: xxx-xx-xxxx. Many individual taxpayers can use their Social Security number as their taxpayer identification number. Businesses and other entities, however, must get their TIN from the IRS.

TIN is a general term for either of the five basic taxpayers’ identification numbers:

  • Employer identification number (EIN)

  • Social Security number (SSN)

  • Individual taxpayer identification number (ITIN)

  • Preparer tax identification number (PTIN)

  • Adoption taxpayer identification number (ATIN)

U.S. citizens and qualified aliens can get the Social Security number from the Social Security Administration. For residents and aliens that do not qualify for the social security number, they might file form W-7 with the IRS to get an ITIN. 

Taxpayers can use TIN on many tax-related documents like reports, tax returns, and statements. Businesses like banks and others can use TIN in interacting with other entities. 

All their documents must reflect the tax identification number for a taxpayer who wants to claim benefits, pay their tax or exclusions. As a result, a taxpayer who files an annual tax return must present a TIN on their return the same way employers must show workers' TIN when reporting wages.

Adoption Tax Identification Number

There are times you might want to adopt a U.S. child. This child will get an adoption taxpayer identification number (ATIN). This number is temporary and will be replaced when the child grows up and qualifies for a Social Security Number. 

Employer Identification Number (EIN)

Also known as the federal employer identification number, it is a type of Tax Identification number. Mostly, businesses like corporations, partnerships, and others use EINs.

According to the IRS, a business must be legally formed before it should apply for an EIN. Also, should the structure or ownership of a business change, a new EIN should be gotten. The individual getting the EIN must keep the document assigning the unique number.

What purpose does ITIN Serve?

A lot of immigrants do use ITINs. People without lawful stay in the U.S. might obtain an ITIN. There are categories of people that do not qualify for an SSN but are legally in the country. These categories of people might obtain an ITIN.

  • A non-resident foreign national living in another country with a business or an investment in a U.S. business and gets taxable income.

  • A foreign national student that qualifies as resident judging by the days spent on U.S. soil

  • A spouse or dependent of U.S. citizens or foreign national on a temporary visa

It is essential to understand the following about ITIN.

  • It provides neither legal status nor work authorization.

  • It does not provide legal immigration status.

  • It does not provide work authorization status and cannot be used to prove work authorization status.

  • ITIN holders must pay taxes. As a result, ITIN opens the door for various people to pay taxes to Uncle Sam.

  • Sadly ITIN holders do not qualify for all the tax and public benefits of U.S. citizens and what other taxpayers qualify. As a result, an ITIN holder cannot enjoy the Earned Income Tax Credit (EITC) or Social Security benefits.

How to Apply for an ITIN 

To apply for the ITIN, applicants must fill the W-7 form and send it to Uncle Sam with a completed tax return. Approved applications are sent through the mail; hence individuals need not apply in person.

To apply, applicants have to submit original documents verifying identity and foreign status. There is a list of 13 documents that Uncle Sam accepts for this. The IRS will send this document within 60 days of receipt.

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