SSN vs. ITIN vs. EIN: Guide to Taxpayer US Identification Numbers
Some people are different from others by appearance, cultural and political views, foods they like and don’t like, obviously by their names, and so on. And that’s predominantly how We, the people, distinguish and recognize other people.
Governments, or in this case, the US government, have a completely different way of identifying people. The US government doesn’t care about your name, hair color, or favorite drink. The way the US government, and in particular the IRS, distinguishes people is through their unique Taxpayer Identification Number. These numbers allow the IRS to identify and account for individuals and business entities’ tax obligations and financial information.
In this article, we’re going to talk about the three main taxpayer numbers: SSN, ITIN, and EIN. We’ll share with you what those numbers are and give you a short and simple definition of each. We’ll also tell you what the main difference between EIN and, ITIN and SSN are, and will also tell you a bit about how to get each of the three taxpayer numbers. By the end of it, you’ll hopefully be able to tell which one of the individual taxpayer’s numbers you need to get (SSN or ITIN).
Let’s begin.
SSN or ITIN or EIN: Definitions
Before we tell you about the main differences between these taxpayer US identification numbers (i.e., SSN, ITIN, and EIN), let’s first briefly discuss each of those three numbers and review some basic information about them.
What Is SSN?
SSN or Social Security Number is a 9-digit identification number that the United States Social Security Administration (SSA) issues to:
- Every US citizen
- Every permanent resident (usually Green Card holders)
- Some non-permanent residents who moved to the US with appropriate/eligible types of Visas (e.g., J-1, H-1B, TN, orO-1)
The SSN is unique to each individual person (i.e., recipient of the number) and can be used for various purposes, including:
- Enabling the US government and its agencies to identify people in their records
- Allowing businesses to track financial information about individuals
- Allowing SSN holders to apply for different government benefits programs (e.g., Social Security, Medicare, and similar)
- Filing US taxes, claiming benefits and dependents
- Opening bank accounts in the US
- Making the process of applying for bank loans a bit easier
- Establishing credit and job history
- Creating credit reports for or about SSN holders
How to Get an SSN?
If you’re eligible, you can get an SSN by completing the form SS-5 and sending your application to the United States Social Security Administration. But before you apply, make sure to have all the necessary documentation (e.g., proof of identity, legal status in the US, age, and similar).
What Is ITIN?
ITIN, or Individual Taxpayer Identification Number, is a tax processing number issued by the US Internal Revenue Service (IRS). It’s a 9-digit number mostly used by people who are required to pay taxes in the US or have other US tax obligations but are not eligible to get a Social Security Number (SSN). For the most part, these individuals include:
- Nonresidents who are legally in the US and need to file taxes due to the number of days they spent in the US (i.e., nonresidents that pass the Substantial Presence Test or SPT; sometimes called resident aliens)
- Nonresidents who live and own a business in the US
- Nonresidents who own a business in the US that generates US source income
- Dependants of nonresidents or resident aliens
ITIN, unlike SSN, always has the number 9 as its first digit. Another key difference between these two numbers is that an individual can lose their ITIN if they don’t use it to file taxes for five consecutive years. This means that every time someone files for taxes with ITIN, they get a 5-year extension on it. On the other hand, a person can never lose their SSN.
The reasons why people get ITIN are different, and they include things such as:
- Filing federal tax returns with the IRS (e.g., filing the 1040NR tax form)
- Opening a personal US bank account (it’s possible to get one without ITIN, but having it makes the whole process much easier)
- Claiming dependents on tax returns
- Ensuring compliance with US tax laws
- Using ITIN to get mortgage loans
- Getting a driver’s license in certain US states (e.g., California, Colorado, Delaware, New York, Rhode Island, etc.)
- Building US credit score with ITIN
- Open private US bank account as a foreigner
- Opening a US PayPal account
Need help getting an ITIN? For a fee of $400 we can assist you in getting your own ITIN number.
How to Get an ITIN?
In order to get an ITIN, apart from preparing all the required documentation, you must also fill out the IRS W-7, Application for IRS Individual Taxpayer Identification Number form. After completing the form and making sure the information in it is completely accurate (if it isn’t, you can end up paying additional fees and penalties to the IRS), you can send it to the IRS via mail, bring it directly to an IRS-designated office, or process it via IRS-certified acceptance agents for international taxpayers.
What Is EIN?
EIN, or Employer Identification Number, is a unique 9-digit number issued by the IRS. This number is predominately for businesses and other entities (like LLCs) that operate in the US. While ITIN and SSN are both used to identify individuals, EIN is primarily used to identify companies and businesses for federal tax purposes.
EIN is mostly used for:
- Filing tax returns
- Legally hiring employees in the US
- Speeding up the process of getting US loans (such as DSCR loans)
- Opening a bank account for a business
- Applying and getting a business credit card
- Establishing and building business credit (similar to personal credit history and score, but for a business. It’s used to establish the creditworthiness of a particular business)
- Renting an apartment in the US
- Applying for and getting various business permits
It’s important to note here that the Employer Identification Number is vital for foreigners who open LLCs in the US (or want to) because it allows them to get a US business account. Foreigners and non-citizens can get EIN even if they don’t have an SSN.
Need help getting an EIN? For a fee of $300 we can assist you in getting an EIN for your business.
How to Get EIN?
The process of getting an EIN is much easier and a lot quicker for those who have an SSN. It’s pretty straightforward and doesn’t require completing the SS-4 form if you do it online. On the other hand, if you apply for an EIN without an SSN, you should expect the process to last a bit longer and be a little bit more complicated.
There are several ways you can apply to get an EIN, and they are:
- Online
- By phone
- By fax
- By regular mail
- By completing the SS-4 form
SSN or ITIN: Main Differences
The main differences between SSN and ITIN are:
- SSN is issued by the United States Social Security Administration (SSA), while ITIN is issued by the Internal Revenue Service (IRS)
- Since 2011, SSN has been a randomly generated 9-digit number. ITIN is a 9-digit number, with its first digit always being number 9
- SSN is predominantly issued to US citizens and eligible permanent residents. ITIN is for nonresident and resident aliens who are not eligible to get an SSN but still have certain tax obligations in the US.
- SSNs can be used for various purposes, including getting Social Security or Medicare. ITIN has a much more limited scope of uses when compared to an SSN and is mostly used for tax-related reasons.
What Is The Difference Between EIN and ITIN
The main differences between EIN and ITIN are:
- EIN is primarily used by businesses, while ITIN is mostly for individual taxpayers.
- EIN is a randomized 9-digit number. ITIN is also a 9-digit number, with the main difference being that it always starts with 9.
- ITIN can be used to claim dependents on tax forms, while EIN can not be used for such a purpose.
- EIN can be issued to both US citizens and foreigners (or, more specifically, entities owned by them). ITIN is only for foreigners.
Need Help Getting an EIN or ITIN? Looking to Open an LLC in the US? Check out NRI
NRI is a one-stop solution for nonresidents needing specific tax and legal advice in the US. As a part of our service package, we offer help to nonresidents looking to get an ITIN or EIN. We charge a fixed fee of $400 for ITIN and $300 for EIN. Additionally, we offer a Complete LLC package, which includes getting both ITIN and EIN, helping you with legal documents and operating agreements, and opening an official company bank account in the US, all the while guiding you through the entire process. For the Complete LLC service, we charge $1500.
Book a free call to find out how to get your US Taxpayer Identification Number!
