What is the difference between ITIN and EIN?

In the United States, there are numerous identification numbers used to identify individuals and companies. These numbers are like social security numbers that are valid in the United States.

ITIN (Individual Taxpayer Identification Number) and EIN (Federal Employer Tax ID Number) are the two most important and frequently confused among these identification numbers.

An Individual Taxpayer Identification Number, abbreviated as ITIN, is an identification number that can only be obtained by certain individuals who are not U.S. citizens. 

It is a compulsory tax identification number for most people who want to start a company in the United States. This may be necessary even if the person is not going to live in the USA. The criterion here is whether the person is required to file a tax return with the IRS. If such a tax return is required, the ITIN must also be obtained. 

For example, if a company receives revenues, profits, or losses from the United States and these amounts are traded on company members or shareholders, then the owners of the company will need to obtain an ITIN; because they are required to file a tax return with the IRS. 

It is worth mentioning again; that an ITIN is an obligatory identification number for anyone who will file a tax return with the IRS regardless of immigration status. 

An Employer Identification Number which is abbreviated as EIN is issued by the Internal Revenue Service (IRS). It is used to identify a business for tax purposes. 

In its most basic features, this tax identification number is required for companies to open a business bank account, operate legitimately, and hire employees. An EIN is also used on business documents and payments. It may be considered as a Social Security Number (SSN). 

In conclusion; 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. 

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