What Is the Difference Between ITIN and EIN?

The U.S. tax system uses unique identification numbers for accurate reporting and compliance. These numbers help the Internal Revenue Service (IRS) track financial activities and process tax obligations. Understanding their distinct purposes is important for anyone engaging with the U.S. tax system, ensuring proper compliance.

Individual Taxpayer Identification Number (ITIN)

An Individual Taxpayer Identification Number (ITIN) is a nine-digit tax processing number issued by the IRS. It is for individuals who need a U.S. taxpayer identification number but are not eligible for a Social Security Number (SSN). ITINs enable these individuals to comply with federal tax laws and fulfill their tax filing and reporting responsibilities.

Individuals who need an ITIN include non-resident aliens, resident aliens, and their dependents with U.S. tax filing or reporting requirements. Examples encompass foreign investors, students, professors, researchers, and spouses or dependents of U.S. citizens or resident aliens. An ITIN is solely for tax purposes; it does not authorize U.S. employment, provide Social Security benefits, or confer immigration status.

To obtain an ITIN, individuals apply to the IRS using Form W-7, Application for IRS Individual Taxpayer Identification Number. This form requires documentation to substantiate foreign status and true identity. An ITIN is formatted as XXX-XX-XXXX and always begins with the number nine.

Employer Identification Number (EIN)

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number (FTIN), is a unique nine-digit number assigned by the IRS to identify businesses and certain other entities for tax purposes. Its primary purpose is to identify business entities for tax reporting, particularly for those with employees.

Most businesses with employees must obtain an EIN. Corporations, partnerships, multi-member limited liability companies (LLCs), non-profit organizations, trusts, and estates generally need an EIN. An EIN is necessary for various business activities, such as opening a business bank account, applying for business licenses, and filing different business tax returns.

An EIN is obtained by applying to the IRS, most commonly online, using Form SS-4, Application for Employer Identification Number. An EIN is formatted as XX-XXXXXXX.

Comparing ITIN and EIN

While both the Individual Taxpayer Identification Number (ITIN) and the Employer Identification Number (EIN) are tax identification numbers issued by the IRS, they serve entirely different functions within the U.S. tax system. An ITIN is a personal identification number used primarily for individual tax processing, especially for those ineligible for a Social Security Number. In contrast, an EIN is a business identification number designed to identify businesses and other entities for tax purposes.

The primary purpose of an ITIN is to allow individuals who lack an SSN to comply with their U.S. tax obligations, such as filing individual income tax returns (e.g., Form 1040). Conversely, an EIN’s main role is to facilitate tax reporting for businesses, particularly for employment taxes (e.g., Form 941) and business income tax returns (e.g., Form 1120, Form 1065).

The application forms for these identifiers reflect their distinct purposes: individuals apply for an ITIN using Form W-7, while businesses and entities apply for an EIN using Form SS-4. An ITIN does not grant work authorization or immigration status. An EIN, however, is fundamental for formal business operations, allowing entities to hire employees, open business bank accounts, and apply for necessary licenses. These numbers are not interchangeable and are specifically tailored to the unique tax compliance needs of individuals versus business entities.