What is a taxpayer identification number?
A taxpayer identification number (TIN) is used by the Internal Revenue Service to process tax related documents, including tax returns, W-2s, or 1099 forms. Most U.S. citizens and permanent residents use their Social Security number as a TIN, but the IRS also accepts numbers it issues to people who do not qualify for a Social Security number. These numbers include the following:
- Employer identification number, or EIN, to identify businesses, estates and trusts.
- Individual taxpayer identification number, or ITIN, provided by the IRS to nonresident and resident foreign nationals as well as their spouses and children who do not qualify for a Social Security number.
- Adoption taxpayer identification number, or ATIN, for individuals adopting a child for whom they cannot obtain a Social Security number before they must file their taxes.
- Preparer tax identification number, or PTIN, for professional tax preparers to use when preparing returns for other people.
Everyone who conducts business with the IRS needs a taxpayer identification number. This includes individuals filing returns, corporations and limited liability companies.
How to apply for a taxpayer identification number
Individuals applying for a taxpayer identification number must know which number best suits their needs. Then they must complete the necessary paperwork and follow the specific instructions to file the paperwork and receive the number.
Employer identification number
An employer identification number, also known as a federal tax identification number, is used by businesses. This includes companies that operate as corporations or partnerships or file tax returns related to employment, excise, alcohol, tobacco and firearms. Entities involved with trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers' cooperatives and plan administers also need an EIN. To apply for an EIN, a representative from the company may apply online or complete Form SS-4 to submit via mail or fax. International applicants have the option to complete the application over the phone.
Individual taxpayer identification number
According to the IRS, nonresident and resident aliens as well as their spouses and dependent children must have an ITIN if they need to file or report tax-related information and do not qualify for a Social Security number. To apply for the ITIN, these taxpayers complete Form W-7, Application for IRS Individual Taxpayer Identification Number. They then mail the form along with a completed tax return to the IRS' Austin Service Center. Or they can take the form and tax return in person to an IRS Certified Acceptance Agent. After reviewing the necessary proof of identity and the applicant's foreign status, the IRS processes the return and sends the ITIN through the mail within seven weeks.
Adoption taxpayer identification number
Individuals and couples in the process of adopting a child who is currently residing in their homes may apply for an adoption taxpayer identification number if they cannot obtain a Social Security number for the child before their tax return is due. This gives them the opportunity to claim the child as a dependent for the current tax year. To apply for the number, they complete Form W-7A and send it to the IRS along with placement documentation related to the adoption. As an alternative, they may take the form and documentation to a local IRS walk-in office.
Preparer Tax Identification Number
Paid tax preparers apply for a PTIN through the IRS's online sign-up system or by sending Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal, to the IRS. Completing the paper version takes four to six weeks to process. These professionals must renew their numbers each year and pay a fee to the IRS for both new and renewal PTINs. The IRS also has provisions for foreign tax preparers who do not have a Social Security number.