How Does a Taxpayer Identification Number (TIN) Work?
A Taxpayer Identification Number (TIN) ensures that the IRS can:
- Accurately track tax payments
- Process returns
- Enforce tax compliance
- Verify identities
- Ensure that the correct tax obligations are met
When you file a federal tax return, claim tax credits, or submit any tax-related forms such as Form W-7, you are required to provide a valid TIN. This number can take the form of a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or an Employer Identification Number (EIN). Each TIN type is used depending on the taxpayer’s specific circumstances.
For individuals, the SSN or ITIN is included on tax forms like W-2s, federal tax returns, and even applications for certain credits or benefits. For businesses, the EIN is used for filing business tax returns, managing employee payroll, and submitting reports related to income and expenses.
A TIN allows you to properly submit tax returns and qualify for potential tax credits. Without a valid TIN, it becomes difficult to file taxes or receive refunds. Lastly, failure to provide a TIN can result in penalties, delays in tax return processing, or rejection of your tax submissions altogether.
Types of Tax Identification Numbers
There are several types of Taxpayer Identification Numbers (TINs), each serving a specific group of individuals or entities. Each type of TIN ensures compliance with tax regulations and proper identification in the U.S. tax system. Here are the main types:
| Social Security Number (SSN) | Individual Taxpayer Identification Number (ITIN) | Employer Identification Number (EIN) | Adoption Taxpayer Identification Number (ATIN) | Preparer Tax Identification Number (PTIN) |
Who It Applies To | U.S. citizens, permanent residents, sole proprietors and certain temporary residents. | Non-resident aliens, resident aliens not eligible for an SSN, their dependents, and spouses. | Businesses, corporations, partnerships, and other entities. | Adoptive parents of a child who is legally placed for adoption but does not yet have an SSN. | Tax return preparers. |
Issued By | The Social Security Administration (SSA). | The Internal Revenue Service (IRS). | The IRS. | The IRS. | The IRS. |
Use | The SSN is the most commonly used TIN for individuals, particularly for filing tax returns, claiming tax credits, and receiving social security benefits. | ITINs are used by individuals who are required to file or pay U.S. taxes but are not eligible for an SSN. This includes certain foreign nationals, immigrants, and others who do not qualify for an SSN. These individuals have a requirement to file a Form W-7 application for the IRS Individual Taxpayer Identification Number (ITIN). | EINs are used for tax filing and reporting purposes by businesses, including filing business tax returns, managing payroll, and reporting wages. | The ATIN is a temporary TIN used on tax returns when adoptive parents claim the child as a dependent before they receive the child's SSN. | Tax preparers use a PTIN to include on tax returns they prepare for clients, as required by the IRS. |
How Do You Get A TIN:
The process for acquiring a TIN differs for individuals and businesses. It also depends on which TIN applies to you. Nevertheless, here are some general steps to follow to get your TIN:
Steps for individuals
To get a Taxpayer Identification Number (TIN) as an individual:
- Social Security Number (SSN): U.S. citizens and eligible residents can apply by completing Form SS-5 and submitting proof of identity and status to the Social Security Administration (SSA).
- Individual Taxpayer Identification Number (ITIN): Non-resident aliens or those ineligible for an SSN can apply by completing Form W-7, providing identity documentation, and submitting it with their federal tax return to the IRS.
- Adoption Taxpayer Identification Number (ATIN): Adoptive parents can apply for an ATIN by completing Form W-7A and submitting documentation showing legal placement for adoption.
Steps for businesses
To get a Taxpayer Identification Number (TIN) for a business entity, follow these steps:
- Determine Eligibility: Your business must be in the U.S. or U.S. territories, and you need a valid TIN (SSN or ITIN) to apply.
- Gather Information: Have your business details ready, including the legal name, type, address, and the responsible party's name.
- Submit Application: Apply for an Employer Identification Number (EIN) online (preferred), by fax, mail, or phone (for international applicants).
- Receive EIN: Once processed, you'll get your EIN for tax filing and business activities.
An EIN is necessary for businesses to file taxes, open bank accounts, and comply with IRS requirements.
Stay Compliant With Playroll
When you use Playroll, you're able to streamline global tax compliance in more than 180 countries with ease. Mitigate compliance risks with Playroll’s EOR solution and platform. For more information, chat to one of our experts about how we simplify global compliance and team management for your business.
How Does a Taxpayer Identification Number (TIN) Work?
A Taxpayer Identification Number (TIN) ensures that the IRS can:
- Accurately track tax payments
- Process returns
- Enforce tax compliance
- Verify identities
- Ensure that the correct tax obligations are met
When you file a federal tax return, claim tax credits, or submit any tax-related forms such as Form W-7, you are required to provide a valid TIN. This number can take the form of a Social Security Number (SSN), an Individual Taxpayer Identification Number (ITIN), or an Employer Identification Number (EIN). Each TIN type is used depending on the taxpayer’s specific circumstances.
For individuals, the SSN or ITIN is included on tax forms like W-2s, federal tax returns, and even applications for certain credits or benefits. For businesses, the EIN is used for filing business tax returns, managing employee payroll, and submitting reports related to income and expenses.
A TIN allows you to properly submit tax returns and qualify for potential tax credits. Without a valid TIN, it becomes difficult to file taxes or receive refunds. Lastly, failure to provide a TIN can result in penalties, delays in tax return processing, or rejection of your tax submissions altogether.
Types of Tax Identification Numbers
There are several types of Taxpayer Identification Numbers (TINs), each serving a specific group of individuals or entities. Each type of TIN ensures compliance with tax regulations and proper identification in the U.S. tax system. Here are the main types:
| Social Security Number (SSN) | Individual Taxpayer Identification Number (ITIN) | Employer Identification Number (EIN) | Adoption Taxpayer Identification Number (ATIN) | Preparer Tax Identification Number (PTIN) |
Who It Applies To | U.S. citizens, permanent residents, sole proprietors and certain temporary residents. | Non-resident aliens, resident aliens not eligible for an SSN, their dependents, and spouses. | Businesses, corporations, partnerships, and other entities. | Adoptive parents of a child who is legally placed for adoption but does not yet have an SSN. | Tax return preparers. |
Issued By | The Social Security Administration (SSA). | The Internal Revenue Service (IRS). | The IRS. | The IRS. | The IRS. |
Use | The SSN is the most commonly used TIN for individuals, particularly for filing tax returns, claiming tax credits, and receiving social security benefits. | ITINs are used by individuals who are required to file or pay U.S. taxes but are not eligible for an SSN. This includes certain foreign nationals, immigrants, and others who do not qualify for an SSN. These individuals have a requirement to file a Form W-7 application for the IRS Individual Taxpayer Identification Number (ITIN). | EINs are used for tax filing and reporting purposes by businesses, including filing business tax returns, managing payroll, and reporting wages. | The ATIN is a temporary TIN used on tax returns when adoptive parents claim the child as a dependent before they receive the child's SSN. | Tax preparers use a PTIN to include on tax returns they prepare for clients, as required by the IRS. |
How Do You Get A TIN:
The process for acquiring a TIN differs for individuals and businesses. It also depends on which TIN applies to you. Nevertheless, here are some general steps to follow to get your TIN:
Steps for individuals
To get a Taxpayer Identification Number (TIN) as an individual:
- Social Security Number (SSN): U.S. citizens and eligible residents can apply by completing Form SS-5 and submitting proof of identity and status to the Social Security Administration (SSA).
- Individual Taxpayer Identification Number (ITIN): Non-resident aliens or those ineligible for an SSN can apply by completing Form W-7, providing identity documentation, and submitting it with their federal tax return to the IRS.
- Adoption Taxpayer Identification Number (ATIN): Adoptive parents can apply for an ATIN by completing Form W-7A and submitting documentation showing legal placement for adoption.
Steps for businesses
To get a Taxpayer Identification Number (TIN) for a business entity, follow these steps:
- Determine Eligibility: Your business must be in the U.S. or U.S. territories, and you need a valid TIN (SSN or ITIN) to apply.
- Gather Information: Have your business details ready, including the legal name, type, address, and the responsible party's name.
- Submit Application: Apply for an Employer Identification Number (EIN) online (preferred), by fax, mail, or phone (for international applicants).
- Receive EIN: Once processed, you'll get your EIN for tax filing and business activities.
An EIN is necessary for businesses to file taxes, open bank accounts, and comply with IRS requirements.
Stay Compliant With Playroll
When you use Playroll, you're able to streamline global tax compliance in more than 180 countries with ease. Mitigate compliance risks with Playroll’s EOR solution and platform. For more information, chat to one of our experts about how we simplify global compliance and team management for your business.