SSN, ITIN, Tax ID, EIN: What are they and what are the differences?

If you are an international entrepreneur or simply someone who needs to better understand the differences between SSN, ITIN, Tax ID and EIN, you are in the right place. There is no need to deal with the confusion and frustration that often accompanies the task of obtaining a tax identification number in the US.

This article will provide you with a clear and complete view of each of these numbers, so that you can make informed decisions and take the necessary steps to join the US market. So, without further ado, let's dive into this essential topic for anyone who wants to succeed in business in the US!

What is Tax ID?

A Tax ID or Tax Identification Number is a nine-digit number issued by a US tax agency and assigned to both natural and legal persons. 

Obtaining a tax ID is important, since this tax identification number must be included on all tax-related documents. Also, the TIN or tax ID is necessary when applying for credit or work.

All United States tax identification numbers are issued by the IRS, except for Social Security numbers (SSN) which are issued by the Social Security Administration. 

There are different types of Tax ID, among which we can highlight the SSN, the ITIN, and the EIN.

What is SSN?

An SSN is a nine-digit Social Security number (xxx-xx-xxxx) issued by the Social Security Administration (SSA). US citizens and authorized residents have an SSN. Non-American Residents do not have the possibility of obtaining it. 

Every individual who wants to work in the USA must obtain an SSN. This is because companies request it to declare the employee's salaries. Also, parents must also obtain an SSN for each child that is included on the tax return. Banks and credit companies may also request an SSN to provide you with services. 

Anyone who qualifies for an SSN can apply for one by filling out an application known as Form SS-5. 

What is the ITIN?

The ITIN (Individual Taxpayer Identification Number) is a tax identification number issued by the IRS to individuals who do not qualify to apply for an SSN. 

The ITIN will be necessary to file and pay certain federal taxes. In this way, owners of LLC or shareholders of foreign corporations usually require an ITIN. 

To obtain an ITIN, you must complete the IRS Form W-7. It is important to note that a person cannot process an ITIN and an SSN at the same time. For example, if you are awaiting an SSN application, an ITIN will not be issued. 

What is the EIN?

An EIN is a unique nine-digit number that the IRS uses to identify companies for tax purposes. The secretary of state issues EINs and uses them on state tax forms. The EIN is basically the SSN of companies. 

Most businesses need it to carry out essential tasks such as creating a bank account, hiring employees, paying taxes, or applying for business loans. Businesses that must have EINs according to the IRS include:

• Corporations
• Partnerships
• Limited liability companies
• Nonprofit organizations

The IRS EIN application process is free and easy to complete. You can apply for an EIN on the IRS website, or you can contact us and we will take care of everything for you. 

Conclusion

In conclusion, we can say that Tax IDs are essential to comply with tax obligations and conduct business in the United States.

The SSN is the tax identification number issued to American residents by the Social Security Administration, while the EIN is the equivalent for companies. On the other hand, the ITIN is the tax identification number that must be obtained by people who cannot apply for an SSN and who wish to do business in the US and comply with American tax laws and agencies.