What is Taxpayer Identification Numbers (TIN)
How can you track the tax liabilities and payments you make to the IRS(Internal Revenue Service)? You can do it with Tax or Taxpayer-Identification Number (TIN).
It helps in finding all details of competent business entities relating to tax on a unified gateway. Also, the self-employed only need to state the Taxpayer Identification Number (TIN) to file their taxes and claim tax deductions.
This article clears every question or doubt you may have about TIN. It covers:
- What Is a Taxpayer Identification Number (TIN)?
- How Does a Taxpayer Identification Number (TIN) Work?
- Other Purposes of Taxpayer Identification Number (TIN)
- To obtain credit or loan advance
- To Get a Job
- For tax purposes
- Who Needs a Taxpayer Identification Number (TIN)?
- How to Find a Taxpayer Identification Number (TIN) Online?
- Types of Individual Taxpayer Identification Number (ITIN
- Social Security Number (SSN)
- Employer Identification Number (EIN )
- Adoption Taxpayer Identification Number (ATIN)
- Preparer Taxpayer Identification Number (PTIN)
- Foreign Persons and IRS Employer Identification Numbers
What Is a Taxpayer Identification Number (TIN)?
The Internal Revenue Service (IRS) issues a nine-digit tracking Taxpayer Identification Number (TIN) to businesses. Profit-earning organizations must file taxes with the IRS. Taxpayer Identification Number (TIN) is a statement of all tax returns that the business files. The IRS issues all other than Social Security Numbers (SSA). The SSA oversees social security programs that provide an accurate record of earnings and wages.
The IRS does not issue the foreign Taxpayer Identification Number(Foreign TIN) either. The country where the person resides and pays taxes uses the Foreign number, administers the income tax laws. The IRS issues an ITIN Individual Taxpayer Identification Numbers to Persons residing in the U.S. but does not have eligibility for an SSN.
How Does a Taxpayer Identification Number (TIN) Work?
The unique 9 digit number gives an identity to an entity —individual, profit-making, and non-profit making organizations. Any individual or corporation can obtain it by applying for it. On approval of the application, the IRS attaches a unique number to each body.
Every individual or concern must compulsorily have a without which they cannot file their annual Income Tax returns with the IRS. The IRS can track assesses only through this number. It is necessary for those who file their returns to state the on every tax-related document and to claim tax benefits or any other services from the Government.
Other Purposes of Taxpayer Identification Number (TIN)
Let us look at the purposes of TIN:
To Obtain Credit or Loan Advances
Individuals need to state their over SSNs on their applications for credit. That is how the credit bureaus verify the identity of the customer. Credit reporting agencies track a person’s credit history with the help of a Tax Identification Number (TIN).
To Get a Job
A person who holds a TIN like the Social Security Number (SSN) is authorized to work in the United States of America. That’s when the employer can check the identity of the job applicant with the Social Security Administration and hire them.
For Tax Purposes
Businesses require a State Identification Number to file their taxes with their State Agencies. State taxing authorities issue these to the assessees.
Who Needs a Taxpayer Identification Number (TIN)?
Every business entity or individual needs to state their TIN on all Income Tax-related Documents. Here are the situations in which they need to state it.
- To claim tax treaty benefits
- For tax reporting
The withholding certificate must state the Tax Identification Number (TIN) if they claim for any of these:
- All tax treaty benefits excluding the income from marketable securities
- Tax exemptions from Effectively Connected Income.
- Certain annuities are tax exempt
How to Find a Taxpayer Identification Number (TIN) Online?
You will receive an official document from the IRS informing you of your Taxpayer Identification Number (TIN). If it falls in the hands of fraudsters, they could misuse it. Maintain its confidentiality.
That is why you cannot retrieve it online.
If the related document is lost or you do not remember your number, connect with the issuing to recover it.
Types of Taxpayer Identification Numbers(TIN)
The issuing agencies issue in diverse forms; The criteria is to whom they issue it. While an individual receives a Social Security Number (SSN), businesses receive an Employer Identification Number (EIN) from them. There are other forms like Individual Taxpayer Identification Number (ITIN), Preparer Tax Identification Number (PTIN), or the Adoption Taxpayer Identification Number (ATIN).
Scroll down for details on each of the forms of TIN.
Individual Taxpayer Identification Number (ITIN)
The Internal Revenue Service issues a tax-processing number to individuals who do not have or are unable to obtain a Social Security number (SSN). The purpose of the issue is to enable all people to pay their taxes in the U.S. irrespective of their immigration status. Without the Individual Taxpayer Identification Number (ITIN) it would not be possible for the IRS to collect taxes from those who are not eligible for an SSN.
Social Security Number (SSN)
The Social Security Administration issues the Social Security Number (SSN) in the U.S. to the citizens of the country and permanent and temporary residents. It is widely used and is the most commonly issued and used. The format of an SSN is XXX-XX-XXXX. It is safer not to release the SSN to anyone other than the authorized persons as fraudsters could misuse them.
The number helps its holders in several ways; employment, social security benefits, and other government assistance. Before a parent declares their child as a dependent, it is essential for them to apply for an SSN for their child for the purpose of income tax. Parents can claim tax benefits for their children as dependents only if the children have either an SSN or an ITIN. The SSA processes these applications for no charge and offers to fill up the application forms on behalf of new parents for a fee.
Employer Identification Number (EIN)
The IRS issues unique to business entities for easy identification of taxpayers to report various business tax returns. Employers use them to file their taxes. It is inclusive of information concerning the state which houses the business. The format of an EIN is XX-XXXXXXX. On application, the IRS issues an EIN to a business in the U.S. Even before the commencement of operations, a business entity must apply for an EIN by fax, phone, online, or mail. It is the equivalent of SSN to individuals for business entities. Some refer to it as a Federal Business entities need an EIN to run their business, to employ, report tax or withhold tax from an income besides wages.
Adoption Taxpayer Identification Number (ATIN)
The IRS issues a temporary to a child in the course of an adoption process. The issuing agencies will comply only if the foster parents as taxpayers provide an identifying number for each person they list as dependents. It is helpful to foster parents of adoptive children who do not hold an SSN to complete tax reporting. An ATIN is only for children who are US citizens or permanent residents and the adoption process is not complete.
Preparer Taxpayer Identification Number (PTIN)
The IRS issues the Preparer Tax Identification Number (PTIN) to persons known as tax preparers. They help assess in preparing, calculating, and filing income tax returns. In return for their services, they receive remuneration. The issuing agency will comply and approve the application only if:
- The preparer satisfactorily answers a list of questions
- They renew their PTIN every year
Foreign Persons and IRS Employer Identification Numbers
There is a requirement for all foreign business and non-business entities to have a federal Employer Identification Number (EIN).
It helps them secure tax treaty exemptions. These business entities can get the EIN by submitting the Form SS-4, Application for Employer Identification Number to the IRS.
The IRS will issue them an EIN to foreign businesses to enable them to claim a tax treaty exemption. The criterion is that they have no tax liability in the U.S. concerning, income tax returns, employment tax returns, or excise tax returns.
The IRA grants them and approval and gives them an EIN only if they:
While filling the Form SS-4, the applicant checks and inserts the following in the other block:
- "For W-8BEN Purposes Only"
- "For Tax Treaty Purposes Only"
- "Required under Reg. 1.1441-1(e)(4)(viii)"
- "897(i) Election"
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Conclusion
Most of the countries in the world issue a Tax Identification Number (TIN). But the purpose for which they issue it may differ from one country to another. Ideally, they help the Government agencies in identifying taxpayers and business entities to report taxes.
Key Takeaway
- In keeping with the tax laws, the IRS issues a tax identification number, a nine-digit tracking code
- The issuing agency for all Tax Identification Numbers other than the SSN is the IRS
- To claim tax benefits, tax filer must state their TIN on all tax-related documents
- Credit applications receive quick approval when the applicants state their TIN on the application form
- Tax identification numbers are of various types; Individual tax identification number, Adoptive Tax Identification Number, etc.