ITIN vs. EIN: Understanding the Differenc

If you're a non-U.S. resident and planning to start a business in the United States, you may be wondering about the tax identification numbers you need. Two of the most commonly used tax identification numbers are the ITIN and EIN. While these numbers are similar in many ways, there are some key differences that you need to understand.

ITIN, or Individual Taxpayer Identification Number, is a nine-digit number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number but need to file taxes or open a U.S. bank account. ITINs are primarily used by non-U.S. residents, including foreign students, foreign workers, and other non-U.S. citizens who have income or other tax obligations in the United States.

On the other hand, EIN, or Employer Identification Number, is a nine-digit number issued by the IRS to businesses and other entities that have employees or engage in certain types of business activities in the United States. An EIN is required for various reasons, including filing business tax returns, opening a business bank account, and hiring employees.

While both ITIN and EIN are issued by the IRS, they serve different purposes. ITIN is used to file individual income tax returns, while EIN is used to identify a business entity for tax purposes. Additionally, the application process and eligibility criteria for each number are different.

Individuals who need to obtain an ITIN must complete Form W-7 and provide documentation that verifies their identity and foreign status. In contrast, businesses that need an EIN can apply online through the IRS website, by fax, or by mail using Form SS-4.

In summary, if you're a non-U.S. resident who needs to file taxes or open a U.S. bank account, you need an ITIN. If you're a business owner who has employees or engages in certain types of business activities in the United States, you need an EIN. Understanding the differences between ITIN and EIN can help you navigate the tax system in the United States more easily.