Understanding the Taxpayer Identification Numbers
If you’ve been living in the US for a while, you might have heard of the TINS or taxpayer Identification Numbers. They are very crucial when you’re conducting a financial transaction or filing for taxes. The most common examples include Employer Identification Number and the Individual Taxpayer Identification Number.
For some people, it can be a bit confusing to decipher between the two. Moreover, both TINS are used for different purposes, are acquired a certain way, and aren’t always needed by everyone. So how do you know which one is the right option for you? In this blog, we will explore the differences between ITIN and EIN and talk about which one would apply to you.
The Employer Identification Number (EIN)
The EIN is given to nonprofits, corporations, and businesses and is also known as the Federal Employer Identification Number. The aim of issuing an EIN is to allow corporations to file taxes and carry out administrative tasks given the guidelines and the law. It’s issued by the Internal Revenue Service (IRS) and consists of 9 digits.
Businesses such as corporations, proprietorships, limited liabilities, or partnerships cannot report tax, hire employees, or open a business bank account without an EIN. Therefore, it serves as a crucial component in ensuring a smooth business operation.
Getting an EIN
Applying for an EIN is not all that daunting. You’d be amazed at how quick and easy the process is. Here are some ways for you to file an EIN. Get EIN with robinhoodtaxservices.com
Apply Via Mail: It will take just a couple of weeks to get your EIN if you go through the mail channel. You have to ensure that the SS-4 form has all the information that you need. The EIN will then be issued if the authorities believe that the entity qualifies for one and mailed to the concerned entity.
Applying through Fax: If you’re a taxpayer, you can fill the Form SS-4 and send it to the appropriate fax number. If the IRS believes that you qualify for the EIN, it will issue it to you by faxing it within a couple of days.
Phone Application: You can call the IRS from Monday to Friday if you’re an international applicant at 267-941-1099 to get an EIN. If you’re making a call, be certain that you are authorized to get the EIN. You will also have to answer questions from the SS-4.
Apply Online: The Internet EIN is one of the most common methods to apply for an EIN and probably the fastest. All you have to do is fill out an application form and the information is then cross-checked for validity. The EIN is issued immediately. This option can be used for people who are in the United States and whose legal residence, principal business, agency, or office is in the US as well.
On the other hand, the Individual Taxpayer Identification Number is also issued by the IRS but it’s for individuals who are not eligible for a Social Security Number (SSN). ITINs are used only for tax purposes.Get ITIN with robinhoodtaxservices.com
Who Needs an ITIN?
Not everyone needs an ITIN. That’s news, isn’t it? ITIN is needed by people who are not US citizens nor do they qualify for SSN but still need to file taxes. These people are also known as non-resident aliens. Similarly, dependents in the US also need an ITIN as they don’t have the SSN to file tax returns. These dependents include non-resident aliens and spouses.
How to Apply for an ITIN
Applying for an ITIN is also simple. Here are some steps that should help you with the process and ensure that the whole process is seamless for you:
Completing the W-7 Form: Form W-7 is easily available on the IRS website. It’s an important document for ITIN as it contains all the information
Gather all the Documents: Make sure that you have all documents with you when you apply for the ITIN. You will need your passport to prove your status to the government. However, if that’s not available, you can use any other foreign ID as that will also be acceptable.
Send the Application: Once you’re done filling out the form and attaching the relevant documents, you will need to mail the application to the IRS form. You can find the address on the W-7 form along with the instructions. Just follow it to the T and you should have no problems!
Waiting for Approval: While it can take several weeks for your application to be approved, you can always check for updates on the IRS website or by speaking to them directly for a faster and more accurate update.
Differences: As you can see, the EIN and the ITIN are two different TINS and are used for different purposes as well. Moreover, there is a clear-cut difference in the format of the EINs as well. The format for EIN is XX-XXXXXXX while for ITIN, it’s XXX-XX-XXXX. Additionally, businesses can apply for EIN online while they must fill out the ITIN form to get an ITIN number.
Additionally, Entities with EIN use it to report income or file tax returns while for ITIN, individuals use it to file their tax returns.
Individuals as well as business entities must understand the unique features of their businesses, delve into what they need, and plan out the next step accordingly. If you’re unsure of what to do, what step to take, or even how to begin, you can always reach out to an experienced professional to help you. They have the knowledge, skills, and expertise needed to navigate the process. It’s always a better idea to spend some money and get the job done properly instead of being fined by the government for taking the wrong step! Good luck! More information please visit IRS website.