What Is a Taxpayer Identification Number (TIN)?
A taxpayer identification number (TIN) is a unique nine-digit number used to identify an individual, business, or other entity in tax returns and other documents filed with the Internal Revenue Service (IRS).
- For most individual taxpayers and many sole proprietors, the TIN is the person's Social Security number.
- For most businesses, an EIN issued by the IRS is needed.
- The EIN can be obtained by applying online.
Most individuals simply use their Social Security numbers as their TIN. Sole proprietors who have no employees may use either their Social Security numbers or an employer identification number (EIN). Corporations, partnerships, trusts, and estates must use an EIN assigned by the IRS.
The TIN is also known as the 95-number or the tax-ID number.
Understanding the TIN
A TIN is formatted in the same way as a Social Security number, that is, xxx-xx-xxxx.
Businesses and other entities that cannot use a Social Security number as a TIN obtain the number from the IRS.
TIN is an umbrella term that may refer to any of five primary types of identification numbers:
The Social Security Administration issues Social Security numbers to U.S. citizens and qualified aliens. Certain resident and nonresident aliens who are ineligible to obtain Social Security numbers may file form W-7 with the IRS to get an ITIN. The IRS authorizes acceptance agents such as colleges, financial institutions, and accounting firms, to assist applicants in obtaining ITINs.
How TINS Are Used
The IRS requires the use of taxpayer identification numbers on many tax-related documents. These documents include tax returns, statements, and reports. Banks and other businesses use TIN numbers when interacting with other entities.
A tax identification number must appear on all materials submitted to the IRS to claim tax benefits or exclusions, or to pay taxes. For example, taxpayers filing annual tax returns must furnish a TIN on the return, and employers reporting wages paid to employees must furnish the employees' TINs.
The IRS sometimes issues an adoption taxpayer identification number (ATIN) for a child who is in the process of being adopted by U.S. taxpayers. In these cases, the number is temporary and will be replaced when the child is eligible to receive a Social Security number.
The IRS requires paid tax preparers to include a preparer individual taxpayer identification number (PTIN) on all tax returns or claims for refunds that they prepare, substantially or in full. Tax preparers may apply for these numbers by mail or online. Special rules apply to foreign tax preparers who are unable to obtain Social Security numbers.
When an EIN Is Needed
Employer identification numbers (EINs) are also known as federal employer identification numbers. The IRS requires businesses, including corporations and partnerships as well as some trusts and estates, to use EINs.
Sole proprietors who do not have employees may use an EIN or a Social Security number. A sole proprietor who employs at least one other individual must obtain an EIN from the IRS.
In addition, the IRS requires entities to use an EIN under various special circumstances, including if they have a Keogh plan, if they file returns related to sales of alcohol, tobacco, or firearms, or if they do business with certain types of organizations.
How to Get an EIN
Obtaining an EIN is free and can be done online. The IRS advises that responsible parties ensure a business is legally formed before obtaining an EIN. Typically, a new EIN must be obtained if a business' ownership or structure changes. The document assigning the EIN must be kept by the business or individual to whom it is assigned.