April is usually the deadline for filing tax returns on the previous financial year in the USA. This process often leads to questions: How do I determine my earnings? What can be deducted? Which forms need to be filled out? What are the deadlines and extensions? Something that often escapes many freelancers is that sticking to some small organization and recordkeeping habits throughout the year...
The IRS have to process huge amounts of data from millions of different US citizens. Organizing this is a real challenge, not only because of the sheer volume of data to be processed, but also because identifying people can be quite tricky without the right system. For example, according to the Whitepages name “William Smith” has over 1,000 entries in the State of Alabama alone. Across the USA this number increases, and the likelihood is that some of these individuals will have the same date of birth, for example, which is often used to identify people. This means that there needs to be another system for keeping track of individuals for tax purposes in the US other than just their names: A taxpayer identification number serves this purpose.
A Taxpayer Identification Number is often abbreviated to TIN and is used by the Internal Revenue Service (IRS) to identify individuals efficiently. Where you get your TIN, how it is structured, and whether a TIN is the right form of identification for your purposes sometimes seems like it isn’t as straightforward as it should be. However, this guide will look at exactly these issues which should show that finding out this information can be as easy as 1,2,3. In this article, we want to concentrate on the tax number that you as an employee will need for your income tax return or the number that you as an employer require for invoicing, and we’ll explain exactly where you can get these numbers.
What is a taxpayer identification number?
The reason why some may find the prospect of finding out their taxpayer identification number daunting could be because there are three main types of abbreviations which refer to the taxpayer identification number, and you may not know which one you need. These three abbreviations are: TIN, ITIN, and EIN. The TIN stands for taxpayer identification number which is an umbrella term for what we are talking about. If you are US citizen who pays tax, you will have been issued a TIN which is identical to your social security number (SSN). What is your SSN? You can request a replacement SSN card at the SSA’s website to find out your social security number.
However, if you are an employer, you may also be wondering what your EIN is. You’ll need to file for an Employer Identification Number or EIN. This number is issued to individuals and legal entities, depending on a business’ legal structure. The IRS issues this number to various business structures, including sole proprietors, partnerships, and corporations (including LLCs). You can get more information on employer identifications numbers in this PDF file from the IRS: IRS Publication 1635, Understanding Your EIN. Note that you will need an EIN in addition to your SSN; one functions as your individual number, the other as your number as an employer.
So far we have seen that your TIN information may just be the same as your SSN, or it may be your SSN and an EIN. However, it may be that you are not eligible for an SSN. What to do then? What is your taxpayer identification number if you do not have a social security number? In this case, you will have to request an ITIN, which stands for Individual Taxpayer Identification Number.It is only issued to those non-resident and resident aliens, their spouses, and dependents who do not have and can’t be issued an SSN. This number can be requested regardless of immigration status.
To sum up, there are a few different types of TIN depending on your status:
- As an individual: Your TIN is the same as your social security number.
- As an entity: Your TIN is most likely the business entity’s Employer Identification Number (EIN). However, an entity with the legal structure of an S-corp corporations, for example, may have the TIN may be that of the owner. The specifics of your TIN as an entity should be reviewed with a legal advisor.
- As an individual without a SSN: Your TIN is issued as an ITIN, a 9 digit number you receive from the IRS.
Where can I find my taxpayer identification number?
The most important question you might ask yourself when starting your tax return may well be: What is my TIN, and where can I find it? The above sections should have clarified what a taxpayer identification number is, and in the following we will look at where to find it.
Your taxpayer identification number will either have been issued by the Social Security Administration (SSA) or by the IRS – this depends on what kind of TIN is required for your tax return (see above). The SSA will issue social security numbers (SSN), and the IRS is responsible for issuing all other taxpayer identification numbers. Knowing this, you’ll look for the right document; there’s no use looking for mail from the SSA when the number you really need came from the IRS. Your TIN may be found on a variety of documents, including tax returns and also any forms filed with the IRS. Your SSN will be found on a social security card issued by the Social Security Administration. But how do you even get issued these crucial numbers in the first place?
SSN – where can I get it?
In order to get an SSN, you’ll need to fill out an application form. This form is known as SS-5, and can be found at the SSA’s forms page online. As well as this form, you should prepare to submit proof of identity, age, and U.S. citizenship or lawful alien status. If you need further information, you can read this article on applying for a personal taxpayer identification number.
EIN – where can I get it?
Structure of a TIN
You can recognize a TIN by its specific format. However, the various TINs discussed in this article have different formats. An SSN looks like this: xxx-xx-xxxx. The first three digits used to be known as the area number, the next two digits used to be known as the group-number, and the last four digits were always random. However, to increase security, SSNs are now all issued at random, so new SSNs do not have geographical significance in the first three digits. An EIN has the following format: xx-xxxxxxx. An ITIN can easily be recognized, because it always starts with the number 9, and is 9 digits long. It has the following format: 9xx-xx-xxxx.
What do I need a TIN for?
Once you know what your TIN is, you may be wondering when and why you’ll need it. You as a taxpayer will need to provide your TIN (SSN, EIN or ITIN) on all tax returns and other documents sent to the IRS. Even if you do not have a number issued to you by the IRS, your SSN must be on forms submitted to it. You have to provide your taxpayer identification number to others who use the identification number on any returns or documents that are sent to the IRS – this is especially the case for business transactions that may be subject to Reverse-Charge procedures. This may also be the case when you are interacting with a bank as an entity.
Aside from using your EIN for tax returns and business to business transactions – also known as B2B – you’ll need to keep your SSN in mind for other purposes too. As well as for personal tax returns, your Social Security number is vital in daily life, because without it you won’t be able to get a job or collect Social Security benefits if necessary. It is also a confidential piece of identity information, so avoid just telling anyone what it is. Keep it safe with other important documents.
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