What Is the Difference Between an EIN and ITIN?

The Internal Revenue Service (IRS) uses unique tax identification numbers to track financial activities for individuals and entities. The Employer Identification Number (EIN) and the Individual Taxpayer Identification Number (ITIN) serve distinct purposes, each playing a significant role in tax administration.

Employer Identification Number

An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to identify a business entity. It functions as a federal tax identification number, much like a Social Security number does for an individual.

Many types of organizations are required to obtain an EIN. This includes businesses operating as corporations or partnerships, entities with employees, and those filing employment, excise, or alcohol, tobacco, and firearms tax returns. Trusts, estates, and non-profit organizations also typically need an EIN. An EIN is essential for various business activities, such as opening a business bank account, filing federal tax returns, and managing payroll for employees.

Individual Taxpayer Identification Number

An Individual Taxpayer Identification Number (ITIN) is a nine-digit tax processing number issued by the IRS. It is specifically for individuals who are required to have a U.S. taxpayer identification number but do not have, and are not eligible to obtain, a Social Security number (SSN). ITINs are formatted like SSNs, but always begin with the number “9”.

Individuals who typically need an ITIN include non-resident aliens and resident aliens, along with their spouses and dependents, who are required to file U.S. tax returns. This applies even if they do not have work authorization. It is important to understand that an ITIN is solely for tax processing and does not authorize work in the U.S., provide eligibility for Social Security benefits, or qualify an individual for the Earned Income Tax Credit.

Applying for an EIN

Applying for an EIN involves completing Form SS-4. The application can be submitted through several methods, including online, by fax, or by mail. International applicants also have the option to apply by telephone.

When filling out Form SS-4, applicants must provide specific information about the entity. This includes the legal name of the business or entity, its mailing and physical addresses, and the type of entity. Details about the responsible party, such as their name and existing Taxpayer Identification Number (SSN, ITIN, or EIN), are also required. The form also asks for the reason for applying, such as starting a new business or hiring employees.

Applying for an ITIN

To apply for an ITIN, individuals must complete Form W-7. This form requires personal details such as the applicant’s full legal name, mailing address, date of birth, country of citizenship, and U.S. visa information if applicable. A crucial part of the application is providing supporting documentation to prove both identity and foreign status.

Applicants must generally include original documents or certified copies from the issuing agency, with a passport being a common stand-alone document for both identity and foreign status. The application package, including Form W-7 and supporting documents, can be submitted by mail to the IRS ITIN Operation. Alternatively, individuals can apply through an IRS-authorized Acceptance Agent or at designated IRS Taxpayer Assistance Centers, which may allow for document verification without mailing originals. Most first-time ITIN applicants must attach a valid federal income tax return to their Form W-7.