Each year, tens of millions of people in the United States file tax returns. With so many people to keep track of — many of them with similar names, birthdates and addresses — it could be pretty difficult for the IRS to keep up with who’s who and ensure the correct payments are allocated to the right people’s records. That’s why the IRS uses something a bit more specific than names and birthdates to keep up with taxpayers’ filings: a taxpayer identification number (TIN).
Every taxpayer has a unique TIN. There are also multiple types of TINs that the IRS and other entities accept as identification. One person may have more than one type of TIN, but multiple people never share a TIN. You’ll need to know your TIN when you file taxes, which is one important reason why it’s a great idea to learn more about TINs before it’s time to submit your return. Take a look at the basics of TINs, including what they are, how to get one and how to use yours.
TIN Basics: What Are They, and Where Do They Come From?
A TIN is a unique number that the IRS and other businesses and financial institutions use to clearly identify an individual taxpayer. These numbers are always unique to the individual, and both people and businesses can have TINs. No one can share a TIN, and no government entity will issue the same TIN to multiple people, even if the original owner of the TIN has passed away.
TINs are always issued by a government agency. The only two agencies that have the authority to issue TINs are the IRS and the Social Security Administration. Because these numbers are so unique, traceable and trustworthy, there are also many uses for TINs outside of filing tax returns.
What Are the Different Types of TINs?
There are six primary types of TINs. Three of them — Social Security numbers, Employer Identification Numbers and Individual Taxpayer Identification Numbers — and much more commonly used than the remaining three types.
Social Security Number (SSN)
A Social Security number is the most common type of TIN, and it’s the one that most taxpayers use on their returns when they file taxes. Social Security numbers have nine digits. They’re formatted as the first three digits, a dash, the next two digits, another dash and the final four digits. The first grouping of three digits is called the Area Number and is assigned based on geographic location. The grouping of two digits is what’s known as the Group Number; it once served as a tool for organizing Social Security records in the days when they weren’t stored digitally. The last grouping of four numbers is called the Serial Number and is issued chronologically.
Employer Identification Number (EIN)
An employer identification number provides a method of identifying a business for tax purposes. EINs are nine-digit numbers. They start with two digits, and the remaining seven digits are separated by a dash. Businesses of all sizes use EINs. A corporation uses an EIN, and a self-employed individual running a sole proprietorship can also choose to use an EIN. Sometimes, EINs are also called federal tax identification numbers. Some businesses apply for EINs to make banking and other business functions easier, even if the IRS doesn’t require them to get an EIN. All businesses that pay employees and all corporations and partnerships are required to have EINs.
Individual Taxpayer Identification Numbers (ITIN)
Individual taxpayer identification numbers are meant for use by people who live in the United States and need to file taxes but don’t have Social Security numbers. ITINS are nine-digit numbers written in the same format as SSNs, and they always begin with “9.”
The remaining TIN types are used less often and only apply to people in very specific situations. Professionals who prepare taxes for others must add their Preparer Tax Identification Number (PTIN) to all the returns they work on. Parents who are in the adoption process may have to file for an adoption taxpayer identification number (ATIN) if the child doesn’t have a Social Security number. Most countries have some form of TIN, and businesses from other countries use foreign TINs to identify themselves if they owe taxes to the U.S. government.
How to Get a TIN
The process for obtaining a TIN differs depending on the type of TIN you need to get. Most U.S. citizens are assigned Social Security numbers at birth. People who were born outside the U.S. can apply for a Social Security number by submitting Form SS-5 to the Social Security Administration.
The IRS issues EINs, and businesses can apply for these online. It also issues ITINs, and taxpayers can use Form W-7 to apply by mail or in person. Tax preparers can apply and pay for a PTIN by mail with Form W-12 or by using the IRS online portal. Parents and legal guardians can submit Form W-7a to get ATINs for children they’ve adopted.
When Do You Need to Use a TIN?
You’ll primarily use a TIN when you’re dealing with income tax-related matters. Taxpayers, whether people or business entities, must clearly identify themselves and their dependents using their personal TIN or their organization’s TIN. Many non-tax institutions also rely on TINs for identification because TINs are unique and verified by trusted government agencies.
When you’re newly hired at a job, you’re required to submit at least one type of TIN while completing the I-9 Employment Eligibility Verification form to prove your citizenship or legal resident status. When you provide your TIN to your employer, this also ensures the business will accurately report any wages you earn to the IRS and the IRS will correctly associate those wages with you.
Credit histories are unique to individuals, too. That’s why you need to provide your Social Security number (as an individual) or an EIN (for a business) when applying for a new line of credit. This ensures that the creditor pulls the correct credit reports and can review the right information related to you or the business entity before it makes a decision about your creditworthiness.
Your TIN follows you throughout your life, and you’ll most often use your TIN for financial purposes and identification purposes. You’ll need to provide your TIN if you’re filling out the Free Application for Federal Student Aid (FAFSA) application to see if you’re eligible to receive federal funding for your college tuition. You’ll even need a TIN to apply for Social Security benefits.
People applying for government benefits, such as unemployment, housing vouchers or Supplemental Nutrition Assistance Program (SNAP) benefits, also need to supply their TINs. In the case of businesses, a company will likely need to provide its EIN to apply for financial products that are only available to commercial companies, such as business checking accounts, employer retirement accounts and payroll services.
A wide variety of businesses and government entities have a legitimate need to receive and retain TINs. However, you should always be prudent about giving out your TIN. It’s important to protect this information; unscrupulous people can use a TIN to file a fraudulent tax return on your behalf and claim your refund, among other serious outcomes. Always research whether the situation you’re in requires you to provide your TIN to the person or company asking for it.