What is a Tax Identification Number (TIN) for US Companies?

In the US, a tax identification number (TIN) is a nine-digit number used to identify a company or an individual in tax returns and other documents you file with the Internal Revenue Service (IRS). TIN is an abroad name including identification numbers such as:

• Social Security number (SSN)
• Employer Identification Number
• Individual tax identification number
• Adoption tax identification number

The IRS issues these USA TINs except the SSN, which the US Social Security Administration issues. As a taxpayer, you must include your TIN on the tax-related documents or when claiming benefits. 

Is Tax Identification Number Important?

TIN is a crucial set of numbers that identifies people, corporations, and even non-profit organizations. Every entity and person must apply for the US TIN. This number is a must when filling out annual tax returns with the Internal Revenue Service. You can also use TIN for these purposes.

• For credit: financial institutions require the Social Security number when applying for credit. The number confirms to lenders that the right person is applying for the loan. Credit bureaus also use your TIN to report and track your credit history.
• For State agencies: companies need state identification numbers to file taxes with their state tax agencies. The state taxing authority will issue you the ID directly.
• For employment: Every employer requires an employee's SSN when applying. The TIN shows the person is authorized to work in America. Once you give your TIN to the employer, they verify it with the issuing agency.

Remember to keep your TIN secure because if it falls into the hands of a fraudster, they can use the information to commit fraud, like tax fraud or stealing money.

Types of Tax Identification Numbers in the US

Here are types of TINs used in the US

Social Security Number (SSN)

This numerical identifier is given to US residents to track their income and determine their benefits. The intention of the SSN at the time of its creation in 1936 was to provide retirement benefits. It was used to track earnings and offer disability benefits. Today, it is used for additional purposes like identifying people for tax purposes and checking credit reports.

You will provide your SSN when:

• Obtaining credit
• Opening a bank account
• Getting government benefits
• Applying for a driver's license
• Obtaining a passport
• Enrolling in Medicare
• When making major purchases

All US permanent residents, citizens, and working and non-residents must use the SSN because of its use in government entities and businesses. The SSN tracks your yearly earnings and the years you've worked. These figures calculate your financial benefits, such as disability income, retirement income, or health insurance.

How to obtain an SSN

Here is the process of obtaining the SSN

You can get the SSN by filling out the SS-5 Form and printing it.

• Collect the required documentation
• Submit that application to the Social Security Administration office
• Wait for about two weeks for your Social Security Card, and it will be sent through mail.
• Keep your Social Security Card safely

Employer Identification Numbers (EINs)

The EIN, also called the employer ID, is a number you receive from the IRS after application. EIN's purpose is to identify companies operating in the US. EIN is also commonly referred to as the Federal Tax ID Number. Business owners use this number to file returns and other purposes. You must apply for this number per single business to prevent duplicate numbers. This means if you have several companies, you can get several EINs.

EIN is similar to SSN but is for business entities only. Business owners use EIN when:

• Opening a bank account
• Filling companies' tax returns
• Applying for business licenses

Applying an EIN when opening a business that retains employees is crucial. You can also obtain an EIN if you're a non-employer but operate a partnership or corporation. Check this IRS guide for more information on whether you need an EIN.

How to Apply for EIN

• You can apply for an EIN online through the IRS EIN Assistant, and once your application is complete, you will be issued your EIN. This service is free and straightforward.
• You can also obtain it via fax or mail

Individual Identification Number (ITIN)

 ITIN is a number issued by the IRS to US non-residents who want to file a tax return for taxable income, such as scholarships, but are not eligible for SSN. Remember, SSN is issued to non-US residents who are employed.

You need to apply for ITIN if

• You don't have SSN
• You don't plan to work while on campus
• You're in J-1 or F-1 status
• You receive scholarship
• You receive non-employment income that is taxable from a United States source.

How to Apply for ITIN

 To use for ITIN, you need

• Scan or have a photo scholarship/grant or fellowship letter
• Answer if you can claim tax treaty benefit. If unsure, check the IRS US Tax Treaties before proceeding with the request.

Adoption Tax Identification Number (ATIN)

ATIN is a nine-digit temporary number IRS issued to a child who cannot get an SNN in the adoption process. This number of adoptive parents use it to earn credits and tax deductions from the government that help you reduce the burden of raising that kid. You apply for ATIN if the child has no SSN or the child is unknown. Once you have the child's ATIN, you can tax return as the adopted child's dependent, and with the ATIN, you are eligible for these tax credits.:

• Adoption tax credit
• Child tax credit
• Child and dependent care credit

Bottom line

Applying for a TIN is necessary for every individual working in the US. This is because you need the TIN to file a tax return. You need to reach out to the right agency and apply to obtain one. For instance, if you need an SSN, get it from the Social Security Administration. As for your company or your TIN, you can get it from the IRS. If you're not a US citizen, you can obtain your TIN from Citizenship and Immigration Services or the IRS. If you don't know how to get this, there are websites ready to help, but be wary of fraudsters before giving them your information. If you need any assistance or have a question, you can reach out to Foundeck today.