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If you’re wondering about how your personal taxes and business taxes differ, it’s important to understand the differences between EIN and TIN. Used by the IRS, Tax ID numbers (TINs) come in various forms, but they all serve the same purpose. Some tax IDs earmark business taxes, others personal taxes. The following information will clarify the difference between EIN vs TIN identifiers. Read on to learn everything you need to know about the difference between an EIN and tax ID and how these terms apply to your business accounting.
What Is the Difference Between EIN and TIN?
In order to understand how tax IDs work, it helps to know the difference between a TIN and EIN. These are identifying acronyms that the Internal Revenue Service (IRS) uses to distinguish different types of tax IDs. Some people think these numbers are one and the same, and they are right to some degree. A TIN is a general tax ID number, whereas an EIN is specifically an employer ID number. So, an EIN is a type of TIN. However, a TIN can describe other tax identification numbers besides an EIN.
To further examine what the difference is between an EIN and a TIN, we’ll start with the US-based business tax number: the EIN. This will help clarify the main differences.
What Is an EIN Number?
EIN stands for employer identification number. Just as your Social Security number (SSN) identifies you on your personal tax return, your EIN identifies your business for filing a business tax return. You need an EIN to open a business checking account, file your business tax returns, and apply for required licenses. Therefore, the difference between EIN and tax ID numbers relates to their purpose for filing.
An EIN consists of nine digits in an XX-XXXXXXX format. For employee plans, a letter—such as “P” for plan—and the plan number (i.e., 002) may follow the EIN. An EIN may apply to an employer, sole proprietor, partnership, corporation, non-profit, the estate of a decedent, governmental agency, trust, certain individuals, or a business entity. If you think you have one but you’re unsure, you can always use an EIN lookup tool.
EIN tax considerations for businesses
Not all business owners need to get an EIN. Sole proprietors and limited liability corporations (LLCs) that do not have employees may use the owner’s personal Social Security number (SSN) in place of an EIN when filing their taxes.
A sole proprietorship is not technically a legal entity, so it does not exist separately from its owner. Therefore, a sole proprietorship without employees can file taxes using an SSN.
Although an LLC serves as a separate legal entity, it is not a separate tax entity. Income passes through an LLC, as it does for a sole proprietorship, and therefore an LLC owner reports his or her income on their personal tax return. If the LLC does not employ workers, the LLC owner is essentially a sole proprietor. However, he or she can avoid liability issues that can affect his or her personal assets.
For more details, check out our guide on sole proprietorship vs LLC.
How to get one
You can easily get an EIN online through the Internal Revenue Service (IRS). Make sure you apply for the number in time to include it on your return. You can either apply online or complete and fax IRS Form SS-4 to your state’s IRS service center. (You don’t need to fill out the SS-4 form if you apply online.) In about seven business days, the service center will fax you your business’s EIN.
Should you choose to apply by snail mail, send your completed Form SS-4 at least five weeks before you have to file your tax return.
What Is a TIN?
When noting the difference between TIN and EIN, a TIN, or taxpayer identification number, includes all numbers used for reporting taxes. Each TIN has specific purposes when used on a tax form. These include:
- EIN: Employer identification number
- SSN: Social security number
- ITIN: Individual taxpayer identification number
- ATIN: Adoption taxpayer identification number
- PTIN: Preparer taxpayer identification number
When comparing an EIN vs TIN, keep the above information in mind. While an EIN is a type of TIN, a TIN is a generic term for several types of taxpayer numbers.
How to get one
Except for SSNs, all TINs are obtained through the IRS website, or by filling out the applicable IRS form and submitting it by fax or mail. SSNs are only issued through the Social Security Administration (SSA).
If you’re not sure whether or not you already have a TIN, you can perform a tax ID lookup.
Key Takeaways: TIN vs EIN
Let’s review the key takeaways when differentiating between TIN vs EIN identifiers:
- A TIN—whether an SSN, EIN, or ITIN—must be furnished when you file your taxes or when claiming certain benefits.
- While you can use a TIN in various ways, an EIN must be used solely for filing business taxes by U.S. residents.
- When you compare a TIN number vs EIN, the EIN, again, is a type of TIN used for reporting tax. A TIN covers a broader definition for identifying numbers for tax reporting purposes.
Other Types of Tax ID Numbers
While it’s critical to know the difference between EIN vs TIN, there are other types of tax ID numbers that it’s important to know as well.
Social Security number (SSN)
Taxpayers must include their Social Security number (SSN) when preparing their personal income tax forms. An SSN is always in the XXX-XX-XXXX format. To obtain a Social Security number and card, you must fill out form SS-5. You can also receive further details by visiting the Social Security Administration (SSA) website.
Employer identification number (EIN)
Businesses must include their EIN on all tax forms and provide their EIN to open a business bank account. The 9 digits of the number follow this format: XX-XXXXXXX. The EIN is also called a federal tax identification number.
Additionally, businesses wishing to process credit card payments must obtain a merchant account. In order to apply for a merchant account, businesses must provide their EIN.
Individual taxpayer identification number (ITIN)
An individual taxpayer identification number (ITIN) is for non-citizen residents and non-residents. This includes their dependents or spouses who cannot get a Social Security number (SSN).
Therefore, an ITIN is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security number (SSN). It is a 9-digit number, beginning with the number “9,” formatted like an SSN (XXX-XX-XXXX).
Adoption taxpayer identification number (ATIN)
An adoption taxpayer identification number (ATIN), according to the IRS, represents a temporary taxpayer ID number, designed for an adopted child who currently does not have a Social Security number (SSN).
This number is required if:
- You adopt a child in the U.S. for domestic adoption or the adoption is foreign and the child has a certificate of citizenship or permanent resident alien card.
- The adoption is not final and you cannot get an SSN for that reason.
- You could not get an SSN for the adopted child or obtain it from the biological parent(s) or the adoption agency.
- You claim the adopted child on your personal tax return.
Preparer tax identification number (PTIN)
A preparer tax identification number (PTIN) is for a paid tax preparer or accountant to use when preparing federal tax returns. You can quickly apply for or renew a PTIN online, but can also fill out IRS Form W-12 and mail or fax it. Applying for the PTIN online takes about 15 minutes, compared to filling out a W-12, which has a 4- to 6-week processing time.
EIN vs TIN: Final Thoughts
By distinguishing the difference between EIN vs TIN tax identification, you circumvent any confusion about TINs in general. Besides an EIN, the IRS lists 4 other basic TINs—SSN, ITIN, ATIN, and PTIN—that you can use while preparing federal taxes. Regardless of their specific purpose, each tax ID number makes it possible for the IRS to identify the taxpayer, dependent, or preparer on a federal tax return form. But the importance of obtaining an EIN for your business doesn’t stop at tax season. There are a host of crucial merchant services, such as a merchant account, for which you must provide your EIN to obtain.