What is the difference between ITIN and EIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number for individuals who aren’t eligible for a Social Security Number (SSN); whereas, an Employer Identification Number (EIN) is the tax processing number for businesses. Although they are both tax processing numbers, they are used for different entity types. A business owner who is not eligible for an SSN may need to apply for an ITIN for his or her individual tax filings and an EIN for his or her business’ tax filings.
Who Needs an ITIN?
Anyone who needs to submit a tax filing with the Internal Revenue Service (IRS) but is not eligible to receive an SSN must apply for an ITIN. For example, non-resident aliens who have a requirement to file a U.S. federal tax return should have an ITIN. Similarly, dependents and spouses of U.S. citizens, resident aliens, and non-resident alien visa holders often need ITINs.
An ITIN can also be used in place of an SSN to build a credit history. Some lenders will accept applicants using an ITIN seeking credit card, auto loans, home loans and other types of credit.
Who Needs an EIN?
Businesses in the United States use an EIN as a tax processing number. An EIN may also be required for opening a business bank account, paying employees, and completing other types of official filings.
You can apply for an EIN for your business without an ITIN or an SSN. Simply complete the proper documentation to register the business with state and federal authorities. Once that paperwork is complete, you will receive an EIN.
ITIN vs EIN, Which Should I Use?
If you have an ITIN and an EIN or think you need either, remember that an ITIN is for individuals and an EIN is for businesses. Depending on your business tax structure, you may need to make separate tax filings for yourself and your business.