For most Americans, their identity for tax purposes is simply their individual nine-digit Social Security number. In some cases, however, another number is required. That number, known as a taxpayer identification number, is issued by the Internal Revenue Service. Read on for more information about the types of taxpayer identification numbers and the circumstances under which each type is used.
What is a taxpayer identification number?
A taxpayer identification number is a unique, nine-digit number the IRS uses to identify individual taxpayers. Although most taxpayer identification numbers consist of the nine digits of the person's Social Security number, there are several exceptions.
The numbers are important because they’re used by the IRS to ensure that tax data is accurate and identifiable. Taxpayer identification numbers are required to be provided to the government when filing tax returns or claiming treaty benefits.
Types of taxpayer identification numbers
Besides Social Security numbers, other types of taxpayer identification numbers currently include:
Individual Taxpayer Identification Number (ITIN)
Resident and non-resident aliens, including lawful permanent residents, as well as dependents, may apply for an ITIN. The number allows those individuals to file individual income tax returns and seek tax treaty benefits that they may be eligible to receive.
An ITIN application, Form W-7, can be mailed to the IRS or presented in person at an IRS service center. The IRS requires supporting documentation, including a Form 1040 tax return and supporting documents.
Employer Identification Number (EIN)
Companies should request an EIN from the IRS is they have employees; they need to pay employment, excise, or alcohol, tobacco, and firearms taxes; or they withhold taxes on non-wage income paid to a non-resident alien. Even if your business isn't required to have an EIN for federal tax purposes, businesses will often need one for banking or state tax purposes.
EINs are also required to operate these types of businesses:
- Partnership.
- Limited liability company (LLC).
- Corporation.
- Tax-exempt organization.
- Estate.
- Trust (except certain grantor-owned revocable trusts).
- Retirement plan or individual retirement account (IRA).
- Real estate mortgage investment conduit.
- Farmers' cooperative.
Fortunately for businesses, the EIN is one of the simplest interactions that it's possible to have with the IRS. If your business is based in the United States, you can get an EIN in one of three ways:
- Apply online (turnaround, immediate);
- Fax Form SS-4 to 855-641-6935 (turnaround, four business days); or
- Mail Form SS-4 to IRS, Attn: EIN Operation, Cincinnati, Ohio 45999 (turnaround, four weeks).
Preparer Tax Identification Number (PTIN)
Since January 2011, all paid tax preparers have been required to have a PTIN, including those who previously had preparer tax identification numbers. The IRS defines paid tax preparers as individuals or businesses that "for compensation, prepare all or substantially all of any federal tax return or claim for refund."
A PTIN can be obtained online or via Form W-12, which takes four to six weeks to process.
Related investment topics
Adoption Tax Identification Number (ATIN)
An ATIN is a temporary nine-digit number given by the IRS to individuals who are in the process of adopting a U.S. citizen or U.S. resident child but who cannot obtain a Social Security number for the child in time to file taxes. Form W-7A is required to obtain an ATIN.
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