In the United States, navigating the complexities of tax identification and filing requirements is essential for both individuals and businesses. 

Key to this process are the Employer Identification Number (EIN) and the Individual Taxpayer Identification Number (ITIN). 

If you are doing business or earning income in the US, you may need to obtain a tax identification number from the IRS. 

There are two main types of tax identification numbers: EIN and ITIN. 

The EIN, issued by the Internal Revenue Service (IRS), serves as a unique identifier for businesses, enabling them to report taxes and handle other financial obligations. 

On the other hand, the ITIN is designed for individuals who are not eligible for a Social Security Number (SSN) but still need to comply with U.S. tax laws. 

The term “taxpayer identification number or tax id no” (TIN) sometimes gets used interchangeably with EIN (Employer Identification Number):

EINs are a type of TIN: TIN is a broader umbrella term used by the IRS. It covers various identification numbers for tax purposes, including Social Security Numbers (SSNs) for individuals, Individual Taxpayer Identification Numbers (ITINs) for non-residents, and of course, EINs for businesses and other entities. So, while an EIN is a specific type of TIN, all EINs fall under the TIN category.

Similar Function: Both EINs and TINs ultimately serve the same core purpose: identifying taxpayers for the IRS. They allow the agency to track income, file tax returns, and ensure compliance. This functional overlap can lead to people using the terms interchangeably, especially in informal settings.

Other Terms used for EIN: As now we know that EIN is a type of tax id no in the USA, which is also referred to as FEIN, Federal EIN, FED EIN, Federal Employer Identification Number in the USA. All refers to EIN (Employer Identification Number).

FEIN, Federal EIN, FED EIN, Federal Employer Identification Number all are different ways of saying same thing, that is EIN (Employer Identification Number).

However, for official purposes, it’s crucial to use the precise term “EIN” when referring to the business identification number. This avoids confusion with other types of tax identification numbers used by the IRS.

Understanding the distinctions between these identifiers, the application procedures, and the subsequent tax filing requirements is crucial for maintaining compliance and ensuring smooth financial operations within the U.S. tax system. 

EIN & ITIN

What is an EIN?

For taxation, a unique nine-digit number that the IRS assigns to businesses is an EIN, or Employer Identification Number. It is also known as a Federal Tax Identification Number or a Business Tax ID Number. 

EIN is a vital tax code assigned by the Internal Revenue Service (IRS) to businesses and other entities. It functions like a Social Security number for your business, allowing the IRS to identify you for tax purposes.

A business entity needs an EIN if it:

• Has employees
• Has tax status as a corporation or a partnership
• Is withholding taxes on income paid to non-US residents
• Has certain types of trusts, estates, or non-profit organizations

An EIN helps the IRS identify your business and track your tax obligations and payments. 

It also allows you to open a business bank account, apply for business licenses and permits, file employment tax returns, report payroll taxes, and establish business credit.

What is an ITIN?

IRS issues an ITIN, or Individual Taxpayer Identification Number, a unique nine-digit number to individuals who are not eligible for Social Security number (SSN) but need to file a US federal tax return or claim a tax benefit. 

An ITIN is also used by foreign nationals who have US income or investments but do not have an SSN.

An ITIN helps the IRS identify you as a taxpayer and process your tax return and payments. It also allows you to open a personal bank account, report income from US sources, claim certain tax credits or deductions, and comply with US tax laws.

How do EIN and ITIN differ from each other?

EIN – Employer Identification Number and ITIN – Individual Taxpayer Identification Number are both used to identify taxpayers and report taxes to the IRS. 

However, they have different purposes and eligibility criteria. Some of the differences between the EIN and ITIN are as:

i. EIN is for businesses and ITIN is for individuals.

ii. EIN is required for businesses that have certain characteristics or activities, while ITIN is 

iii. required for individuals who do not have and cannot get a SSN.

iv. EIN does not expire, but ITIN can expire if not used on a tax return for three consecutive years.

v. EIN does not grant any legal status or work authorization in the US, but ITIN may allow some non-US residents to claim certain tax benefits or credits.

vi. For tax purposes, EIN is used to identify a business and ITIN is used to identify an individual.

When to use an ITIN instead of an SSN in the USA?

ITIN stands for Individual Taxpayer Identification Number. It is a nine-digit number issued by the Internal Revenue Service (IRS) to individuals who do not have a Social Security Number (SSN) but need to file a U.S. federal tax return or claim a tax benefit.

SSN stands for Social Security Number. It is a nine-digit number issued by the Social Security Administration (SSA) to U.S. citizens and authorized non-citizens.

Generally speaking, you cannot use your ITIN instead of your SSN. 

However, there are some cases where you can use your ITIN as a substitute for your SSN, such as:

• Filing your taxes

• Claiming certain tax credits

• Applying for some personal loans

• Opening a bank account with few banks in some states

• Obtaining a driver’s license in certain states

• Applying for government benefits in certain states or for certain programs
  
  

Here are some examples of when you should use your ITIN instead of your SSN:

• If you are a non-US resident alien who needs to file a U.S. federal tax return because you have income from U.S. sources.

• If you are a foreign/ non-US residents student who needs to file a U.S. federal tax return because you have income from a U.S. scholarship or fellowship.

• If you are a taxpayer who needs to claim certain tax credits, such as the Earned Income Tax Credit or the Child Tax Credit, but you are not eligible for an SSN.

• If you are applying for a personal loan and the lender accepts ITINs.

• If you are opening a bank account in a state that allows ITINs to be used as identification.

• If you are applying for a driver’s license in a state that allows ITINs to be used as identification.

• If you are applying for government benefits in a state or program that allows ITINs to be used as identification.
  
  

It is important to note that there are some restrictions and limitations on using an ITIN instead of an SSN. For example, ITIN can’t be used to apply for certain government jobs or to obtain certain types of professional licenses.

If you have both an ITIN and an SSN, you should use your SSN for most purposes. Only use your ITIN for tax filing or claiming tax benefits.

If you only have an ITIN, you may be able to use it for some limited purposes where an SSN is not mandatory, but you should be aware of the restrictions and limitations of using an ITIN instead of an SSN.

Eligibility

What are the eligibility criteria for obtaining Employer Identification Number (EIN) or Individual Taxpayer Identification Number (ITIN)?

Understanding the Eligibility Criteria for EIN and ITIN: A Comprehensive Guide

Employer Identification Number (EIN) Eligibility

An Employer Identification Number (EIN) is a unique identifier issued by the Internal Revenue Service (IRS) to businesses operating in the United States. It is essential for various tax reporting purposes and business operations. Here are the eligibility criteria for obtaining an EIN:

• Business Entity: Any business entity, including sole proprietorships, partnerships, corporations, limited liability companies (LLCs), and non-profit organizations, can apply for an EIN. The entity must be legally recognized within its state of formation.

• U.S. Location: The business must be located in the United States or its territories. Entities with a principal place of business or legal residence outside the U.S. have a different process for obtaining an EIN.

• Responsible Party: The application must be completed by an individual who is authorized to act on behalf of the business. This person is referred to as the “responsible party” and must have a valid Taxpayer Identification Number (TIN), such as a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).

• Legal Formation: The business must be legally formed and recognized in its state of operation. For instance, corporations and LLCs must have filed articles of incorporation or organization with their state’s Secretary of State office.

• Reason for Application: The business must have a valid reason for requesting an EIN. Common reasons include starting a new business, hiring employees, banking purposes, and compliance with IRS regulations.
  
  

Individual Taxpayer Identification Number (ITIN) Eligibility

The ITIN (Individual Taxpayer Identification Number) is primarily used for federal tax reporting purposes. Following are the eligibility criteria for obtaining an ITIN:

• Non-U.S. Citizens: ITINs are primarily issued to non-U.S. individuals who are ineligible for an SSN. Which includes (i) non-resident aliens, (ii) resident aliens (based on the number of days present in the U.S.), and (iii) dependents or spouses of U.S. citizens or resident aliens.

• Tax Filing Requirement: Individuals applying for an ITIN must have a requirement to file a federal tax return or must be listed on a tax return as a spouse or dependent. This includes those who are eligible for a tax treaty benefit or need to claim a refund of over-withheld taxes.

• Valid Foreign Status: Applicants must provide documentation proving their foreign status and identity. Acceptable documents include passports, national identification cards, and U.S. visa documents.

• Supporting Documentation: Individuals applying for ITIN, also must submit a duly completed federal tax return, except they meet an exemption to the filing requirement. Exceptions include individuals with a tax withholding obligation or those who are eligible for a tax treaty benefit.
  
  

Both EINs and ITINs play crucial roles in the U.S. tax system, serving different purposes for businesses and individuals. Understanding the eligibility criteria for each is essential for ensuring compliance with IRS regulations. 

Businesses operating in the U.S. must obtain an EIN for tax reporting and other official purposes, while non-U.S. citizens needing to fulfill federal tax obligations can apply for an ITIN. 

By adhering to the specified criteria and following the appropriate application processes, businesses and individuals can secure the identification numbers necessary for their tax-related needs.

Benefits

Which tax credits that require an EIN?

If you are a business owner in the US, you may be able to reduce your tax bill by taking advantage of some tax credits that are available to you. 

These tax credits are based on various criteria, such as the type of business, the number of employees, the benefits offered, and the activities performed. However, to claim these tax credits, you need to have an EIN or Employer Identification Number.

Some tax credits that require an EIN are:

i). The Employer Credit for Paid Family and Medical Leave, which is a credit for employers who provide paid family and medical leave to their employees. 

The credit is equal to a percentage of the wages paid to qualifying employees who take leave for certain reasons, such as the birth or adoption of a child, a serious illness, or military service obligations of a family member. 

To claim the credit, employers need an EIN and must file Form 8994, Employer Credit for Paid Family and Medical Leave.

ii). The Work Opportunity Tax Credit (WOTC), which is a credit for employers who hire individuals from certain targeted groups that face barriers to employment, such as veterans, ex-felons, or long-term unemployed. 

The credit is based on the amount of wages paid to eligible employees during the first year of employment. The credit ranges from $1,200 to $9,600 per employee, depending on the group and the hours worked. 

To claim the credit, employers need an EIN and must file Form 5884, Work Opportunity Credit.

iii). The Credit for Increasing Research Activities, which is a credit for businesses that engage in qualified research and development activities in the US. 

The credit is designed to encourage innovation and technological advancement. The credit is equal to a percentage of the excess of qualified research expenses over a base amount, or a simplified alternative calculation. 

The credit can be claimed by corporations, partnerships, sole proprietors, and other entities that have an EIN and file Form 6765, Credit for Increasing Research Activities⁴⁵.

iv). The Small Business Health Care Tax Credit, is a credit for small businesses who offer health insurance coverage to their employees. 

The credit is available to businesses having fewer than 25 full-time employees, pay an average annual wage which is less than $50,000 per employee, and pay at minimum 50% of the premiums for qualified health plans offered through a Small Business Health Options Program (SHOP) Marketplace. 

The credit can be claimed by eligible employers who have an EIN and file Form 8941, Credit for Small Employer Health Insurance Premiums.

Which tax credits that require an ITIN?

Individual Taxpayer Identification Numbers (ITINs) are issued by the Internal Revenue Service (IRS) to individuals who do not have Social Security numbers (SSNs) but are required to file a tax return or pay taxes. Many tax credits are available to taxpayers with ITINs, but some require specific eligibility requirements.

Here are some tax credits that require an ITIN:

i). Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC): These credits are available to taxpayers who have qualifying children under 17 years old who are US citizens or residents and have an SSN or ITIN. ITIN filers can claim these credits for their eligible children who have an ITIN.

The Child Tax Credit (CTC) is a credit of up to $2,000 per qualifying child under the age of 17, whereas the ACTC is an additional credit of up to $500 for each qualifying child below 17 years of age. To qualify for the CTC and ACTC, the child must be a US citizen or resident and have an SSN or ITIN. The child must also live with the concerned taxpayer for more than six months (180 days).

ii). American Opportunity Tax Credit (AOTC): The AOTC is for the qualified educational costs paid for a student for the first four years of the post-secondary education. ITIN filers can claim this credit for themselves or their dependents who have an ITIN.

The AOTC credit is up to $2,500 per student. To qualify for the AOTC, the student must be enrolled in at least half-time at an eligible educational institution and must be working towards a degree or certificate. The student must also meet certain income requirements.

iii). Other Dependent Credit (ODC): This credit is for a dependent who is not a qualifying child and does not have an SSN, but is a US resident and has an ITIN. ITIN filers can claim this credit for their eligible dependents who have an ITIN.

The ODC is a credit of up to $500 for a dependent who is not a qualifying child and does not have a SSN, but is a US resident and has an ITIN. To qualify for the ODC, the dependent must live with the taxpayer for more than half of the year and must meet certain income requirements.

iv). Child and Dependent Care Credit (CDCC): This credit is given for the expenses paid for the care of a qualifying person while the concern taxpayer either works or looks for work. ITIN filers can claim this credit for themselves or their dependents who have an ITIN.

The CDCC is a credit of up to 35% of qualified child and dependent care expenses, up to a maximum of $3,000 for one child or dependent and $6,000 for two or more children or dependents. To qualify for the CDCC, the taxpayer must have worked or looked for work for at least one day during the year and must have paid for the care of a qualifying person who is under the age of 13 or who is physically or mentally incapable of self-care.

v). Lifetime Learning Credit (LLC): This credit applies to qualified education expenses paid for themselves or their dependents who also have an ITIN. Individuals filing tax returns with ITIN are eligible to claim the Lifetime Learning Credit (LLC)

In addition to these credits, ITIN filers may also be eligible for other tax credits, such as the Earned Income Tax Credit (EITC) and the Earned Income Tax Credit (Additional Child Tax Credit). Taxpayers with ITINs should consult with a tax professional to determine which tax credits they are eligible for.

Documents

Which documents are required to obtain either EIN or ITIN?

Documents Required to Obtain EIN or ITIN: Here is an idea on the required documents for each.

Documents Required for EIN Application

The process of obtaining an EIN involves minimal documentation but requires accurate and complete information about the business.

1. Form SS-4, Application for Employer Identification Number: This is the primary form used to apply for an EIN. Foreign and US Global applicants can choose to apply online, by mail, fax, or telephone. The SS-4 form requires detailed business information, including:

• Legal name of the entity
• Trade name (if applicable)
• Mailing address
• Name and SSN or ITIN of the applicant
• Type of business entity [e.g., corporation (S-Corp or C-Corp), LLC, partnership, sole proprietorship, etc.]
• Reason for applying
• Date of starting the business operations or date of acquiring of business

   

2. Responsible Party’s Information: The responsible party is the individual who controls, manages, or directs the entity and the disposition of its funds and assets. This person must provide their Taxpayer Identification Number (TIN), such as an SSN or ITIN.

3. Legal Formation Documents: While not required to be submitted with the EIN application, having legal formation documents on hand is essential. These include:

• Articles of incorporation for corporations
• Articles of organization for LLCs
• Partnership agreements for partnerships
• Trust agreements for trusts

4. Supporting Information for the Business: Depending on the entity type, additional information might be required:

• Number of employees/staffs/workers expected to join in the next one year (12 months)
• Principal activity of the business
• Specific products or services offered

   

Documents Required for ITIN Application

The application process for an Individual Taxpayer Identification Number (ITIN) requires more documentation to prove the identity of applicants and their foreign status.

1. Form W-7, Application for IRS Individual Taxpayer Identification Number: This is the primary form used to apply for an ITIN. The form requires the following information:

• Reason for applying
• Name as it appears on the documents provided
• Mailing address
• Foreign address (if applicable)
• Birth related information (date, country, and city of birth)
• Other information such as previous ITIN applications or U.S. visa information

2. Supporting Documentation: Applicants must submit original documents or certified copies from the issuing agency to prove identity and foreign status. The documents commonly accepted include:

• Passport: This is the most common, comprehensive, and accepted document, as the passport proves both identity and foreign status of the applicant. It is the only document that can be submitted alone without additional documents.
• National Identification Card: NIC must have name, date of birth, photo, current address, and expiration date.
• U.S. Visa: This is required for individuals having a U.S. visa.
• Foreign Birth Certificate: Must be accompanied by a valid photo ID.
• Other Documents: These can include a driver’s license, U.S. Citizenship and Immigration Services (USCIS) photo identification, or a foreign military identification card.

   

3. Federal Tax Return: A duly completed federal tax return must be submitted with the Form W-7, except the applicant meets an exemption. Exemption includes:

• Individuals claiming benefits under tax treaty 
• Non-resident aliens required to obtain an ITIN to claim tax treaty benefits
• Dependents and/or spouses of U.S. citizens/resident aliens
• Dependents and/or spouses of non-resident alien visa holders

Obtaining an EIN or ITIN involves specific documentation to ensure compliance with IRS regulations. For businesses, having the correct information and legal documents ready simplifies the EIN application process. 

For individuals applying for an ITIN, providing the necessary forms and supporting documentation is crucial for verifying identity and foreign status. 

By understanding and preparing the required documents, applicants can ensure a smoother and more efficient application process for their EIN or ITIN needs.

Formalities

What is the process to obtain EIN or ITIN in USA? 

The Process to Obtain EIN or ITIN: A step-by-step guide on the processes to obtain each identification number.

A. The Process to Obtain an EIN (Employer Identification Number)

Following is a step-by-step guide on how to obtain an EIN:

1. Determine Eligibility: Ensure your business is eligible to apply for an EIN. Generally, any business operating in the United States or its territories can apply for an EIN, including sole proprietorships, partnerships, corporations, LLCs, non-profit organizations, estates, trusts, and government agencies.

2. Collate Required Information: Collate all the necessary information before applying:

• Legal name of the business entity
• Trade name (if applicable)
• Mailing address for your posts and physical location of the business
• Name and the Taxpayer Identification Number, such as SSN, ITIN, or EIN of the applicant
• Type of entity and the reason for applying (e.g., new business, hiring employees)
• Date on which the business operation was started or the business was acquired 
• Principal activity and products or services offered

3. Choose the Application Method: The IRS offers numerous ways to apply for an EIN:

• Online: The fastest and most convenient way to apply for EIN is through the IRS website. The online application is available for businesses in the U.S. and its territories, and an EIN is issued immediately upon completion.
• Mail: Complete Form SS-4, Application for Employer Identification Number, and mail it to the IRS. Processing typically takes about four weeks.
• Fax: One of the ways is to fax the duly completed Form SS-4 to the appropriate IRS fax number, simple. An EIN may be issued probably within four to five business days.
• Telephone: International applicants can also choose to apply for EIN by calling the appropriate IRS designated phone numbers. An IRS representative will assist with the application process, and an EIN is issued immediately.
• Complete and Submit the Application: Follow the instructions for the chosen application method and make sure that all the information is accurate and complete to avoid any delays.
• Receive and Use the EIN: Once the EIN is issued, use it for all federal tax-related purposes, including filing tax returns, opening business bank accounts, applying for business licenses, and hiring employees.

B. The Process to Obtain an ITIN (Individual Taxpayer Identification Number)

Following is a step-by-step guide to obtain an ITIN:

1. Determine Eligibility: Ensure you are eligible for an ITIN. ITINs are issued to non-resident aliens, resident aliens who need to file a tax return, dependents or spouses of U.S. citizens or resident aliens, and non-resident alien students, professors, or researchers filing for tax treaty benefits.

2. Gather Required Documentation: Prepare the necessary documents before starting the application:

• Form W-7, Application for IRS Individual Taxpayer Identification Number: The primary application form.
• Supporting Identification Documents: Submit original documents or certified copies to prove your identity and foreign status. A passport is the most comprehensive document. Other acceptable documents include national identification cards, visas, foreign birth certificates, and U.S. driver’s licenses.
• Federal Tax Return: Submit a duly completed federal tax return with your Form W-7, until unless you qualify for an exemption such as claiming a tax treaty benefit, etc.
  
  

3. Choose the Application Method: The IRS offers numerous ways to apply for an ITIN:

• Mail: Send Form W-7, the tax return, and original identification documents or certified copies to the IRS address provided in the form instructions.
• In Person: Submit your application in person at designated IRS Taxpayer Assistance Centers (TACs) or through an IRS-authorized Certifying Acceptance Agent (CAA). These agents can verify your documents and forward your application to the IRS.
• Overseas: Certain United States embassies and consulates offer ITIN application services. International applicants can also apply for ITIN through them.
  
  

4. Complete and Submit the Application: Ensure all information is accurate and complete. Understand that the incomplete applications in any manner or insufficient documentation can delay your ITIN processing.

5. Receive and use the ITIN: Once the IRS processes your application, you will receive your ITIN via mail. Use your ITIN for federal tax reporting and compliance purposes.

The processes for obtaining an EIN or ITIN are straightforward but require accurate and complete information. For businesses, an EIN is crucial for various tax reporting, banking, and hiring employees. For individuals who cannot obtain an SSN, an ITIN ensures compliance with U.S. tax laws. 

By following the outlined steps and preparing the necessary documentation, applicants can secure the identification numbers needed for their specific tax-related needs.

Compliance

What is the various compliance for EIN and ITIN?

Both the EIN (Employer Identification Number) and ITIN (Individual Taxpayer Identification Number) serve critical roles in the U.S. tax system. While obtaining these numbers is an essential first step, understanding and adhering to the associated compliance requirements is crucial for businesses and individuals. Here’s a look at the compliance requirements for maintaining an EIN and ITIN.

Compliance Requirements for EIN

An Employer Identification Number (EIN) is necessary for various business activities, such as filing tax returns, hiring employees, and opening business bank accounts. Once obtained, businesses must adhere to specific compliance requirements to maintain their EIN status.

1. Filing Tax Returns:

• Monthly or Quarterly Filings: Business entities in U.S. with employees must file employment tax returns or Form 941, Employer’s Quarterly Federal Tax Return, or Form 944, Employer’s Annual Federal Tax Return. 

• Annual Filings: Businesses must file an annual income tax return. The type of return depends on the business structure (e.g., Form 1120 for corporations, Form 1065 for partnerships, and Schedule C for sole proprietorships).
• W-2 and 1099 Forms: Employers must file Form W-2 for each employee and provide copies to employees by January 31 each year. Similarly, Form 1099-MISC or 1099-NEC must be filed for independent contractors.
  
  

2. Payroll Tax Deposits:

Monthly or Semi-weekly Deposits: Employers must deposit federal income tax withheld and both the employer and employee portions of Social Security and Medicare taxes based on their deposit schedule. This can be monthly or semi-weekly, depending on the total taxes reported in the look-back period.

3. Estimated Tax Payments:

• Quarterly Payments: Sole proprietors, partners, and S corporation shareholders who expect to owe $1,000 or more in tax when their return is filed must make estimated tax payments quarterly using Form 1040-ES.
  
  

4. State and Local Compliance:

• State Taxes: Depending on the state, businesses may need to file additional state-specific tax returns and make payments for state income tax, sales tax, and other state-specific taxes.

• Local Taxes: Some local jurisdictions require businesses to file local tax returns and pay local business taxes.
  
  

5. Record Keeping:

• Maintain Records: Business entities must keep detailed records of all financial transactions, including income, expenses, payroll, and tax filings. They must retain the records minimum for three years from the date of filing the return or two years from the date the tax was paid, whichever is later.
  
  

Compliance Requirements for ITIN

Compliance requirements for ITIN holders primarily revolve around federal tax obligations.

1. Filing Tax Returns:

• Annual Filing: ITIN holders must file a federal income tax return annually using their ITIN. This ensures compliance with U.S. tax laws and is necessary for individuals who need to claim tax treaty benefits or report income.
• Deductions and Credits: ITIN holders can claim certain tax credits and deductions on their federal tax return, provided they meet the eligibility criteria.
  
  

2. Renewing ITIN:

• Expiration and Renewal: If an ITINs is not used for a federal tax return once in the last three consecutive years, it will expire. Whereas, few ITINs issued prior to 2013 need to be renewed as per the rolling schedule. The IRS notifies individuals when their ITIN is set to expire and provides instructions for renewal.

• Renewal Process: To renew an ITIN, individuals must submit a completed Form W-7, Application for IRS Individual Taxpayer Identification Number, along with the required identification documents. This can be done by mail, in person at designated IRS offices, or through an IRS-authorized Certifying Acceptance Agent (CAA).
  
  

3. Record Keeping:

• Maintain Records: ITIN holders should keep copies of their tax returns and any documents supporting income, deductions, and credits claimed. All the records must be retained for minimum three years from the date of filing such tax return.
  
  Maintaining an EIN or ITIN involves adhering to various compliance requirements to ensure continued legitimacy and compliance with U.S. tax laws.
  
  For businesses with an EIN, this includes regular tax filings, payroll tax deposits, estimated tax payments, and maintaining detailed financial records.
  
  For individuals with an ITIN, compliance primarily involves filing annual tax returns and renewing the ITIN as necessary.
  
  Understanding these requirements and staying current with tax obligations is crucial for both businesses and individuals to avoid penalties and ensure smooth operation within the U.S. tax system.

Timeframe

How Long Does It Take to Obtain an EIN or ITIN?

The time required to obtain an Employer Identification Number (EIN) or Individual Taxpayer Identification Number (ITIN) varies depending on the method of application.

Obtaining an EIN

• Online Application: Generally, the quickest method. You can expect an EIN immediately upon duly completing the online application process on the IRS website.

• Phone Application: This method can be time-consuming due to potential wait times. After successful application, you can expect your EIN within a few weeks.

• Fax or Mail Application: Processing times can range from one to two weeks for fax applications and four to five weeks for mail-in applications.
  
  

Obtaining an ITIN

• ITIN Processing Time: Obtaining an ITIN can take significantly longer, especially during tax season (January to April). Usually, the processing times for issuance of an ITIN is usually range between six to eight weeks. However, during peak periods, it can take up to ten weeks or more.
• Document Verification: The IRS requires specific documentation to verify the identity of ITIN applicants. This verification process can add to the overall processing time.
  
  

Factors Affecting Processing Time

Numerous aspects can influence the time it takes to obtain an EIN or ITIN:

• Time of Year: Tax season (January to April) is typically busier for the IRS, which can lead to longer processing times.

• Completeness of Application: Errors or missing information on your application may cause delays.

• Method of Application: Online applications are generally faster than phone, fax, or mail applications.

   

Important Considerations

• Allow Sufficient Time: It’s crucial to apply for an EIN or ITIN well in advance of when you need it to avoid potential delays.

• Check Application Status: You can often check the status of your EIN or ITIN application online or by phone.

• Seek Professional Help: If you encounter difficulties or have complex tax situations, consider consulting a tax professional for assistance.

While obtaining an EIN can be relatively quick, especially through the online method, acquiring an ITIN may involve a longer wait time. Careful planning and preparation can help streamline the process.

Fee

What are the fees and charges associated to obtain EIN or ITIN?

Cost of Obtaining an EIN or ITIN

The good news is that there is no direct cost to apply for either an EIN (Employer Identification Number) or an ITIN (Individual Taxpayer Identification Number). Both are issued free of charge by the Internal Revenue Service (IRS).

However, there are other costs/ fees/ charges may be associated with obtaining either EIN or ITIN.

Factors Affecting Costs

While the application process itself is free, there might be indirect costs associated with obtaining an EIN or ITIN:

• Professional Fees: If you decide to use a tax professional or a registered agent to assist you with the application process, you might incur fees for their services.

• Document Preparation: Gathering and organizing the necessary documents for the application can involve costs, such as photocopying or courier services.

• Business Formation Costs: If you’re applying for an EIN as part of starting a business, there might be costs associated with business formation, such as filing fees with the state.

Obtaining an EIN or ITIN doesn’t have to break the bank. The application process itself is free. However, depending on your circumstances, there might be indirect costs involved. 

By understanding the process and being cautious of potential scams, you can successfully obtain the necessary number without incurring unnecessary expenses.

FAQs

1. What is an EIN?

IRS for tax identification of business entities, assign a unique nine-digit number to them, that is an EIN (Employer Identification Number). It is used to identify the tax accounts of employers and certain other entities.

2. Who needs an EIN?

An EIN is required for businesses that have employees, operate as a corporation or partnership, withhold taxes on income (other than wages) paid to a non-resident alien, have a Keogh plan, and are involved with trusts, estates, or non-profit organizations.

3. How can I apply for an EIN?

You can apply for an EIN online through the IRS website, by faxing Form SS-4 to the IRS, or by mailing the form. Definitely, out of all other methods available the fastest and hassle free method is online application to obtain an EIN immediately upon completion.

4. How much does IRS charges for obtaining an EIN?

Obtaining an EIN from the IRS is free. There are no charges for applying for or receiving an EIN.

5. How long does it take to receive an EIN?

Time taken to receive an EIN is definitely depend on the method of application too. You may receive your EIN immediately upon online application. Fax applications typically take about four business days, while mail applications can take four to six weeks.

6. Would it be helpful to use a third-party service to obtain an EIN?

Yes, definitely it would be helpful to take help of competent professionals. You can use third-party services. It’s important to note that the IRS provides EINs free of charge, but the third-party will charge a fee for their expert assistance.

7. What is an ITIN?

An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the IRS to individuals who are required to have a taxpayer identification number in the US but they are ineligible to obtain a Social Security Number (SSN) because of number of reasons.

8. Who needs an ITIN?

ITINs are required for non-resident, U.S. resident aliens*, dependents or spouses of U.S. citizens or resident aliens, and dependents or spouses of non-resident visa holders.

* Based on days present in the US and filing a tax return in United States

9. How do I apply for an ITIN?

To apply for an ITIN, complete Form W-7 and submit it along with the required original documentation or certified copies and your federal income tax return. Applications can be mailed to the IRS, taken to an IRS Taxpayer Assistance Center, or processed through an IRS-authorized Certifying Acceptance Agent (CAA).

10. How much does it cost to obtain an ITIN?

There is no application fee for an ITIN from the IRS. However, you may incur costs related to mailing your application, obtaining certified copies of your documents, or using a Certifying Acceptance Agent.

11. How long does it take to receive an ITIN?

Usually, it takes between seven and eleven weeks to receive an ITIN on successful application with appropriate documentation. During peak tax season (January 15 through April 30), it can take up to 14 weeks.

12. Can I apply for an ITIN separately without a tax return?

No, you generally must attach a federal income tax return to your ITIN application. There are some exceptions, such as if you qualify for an exception under IRS guidelines.

13. Can I renew my ITIN?

You can renew an expired ITIN by submitting Form W-7 along with the required documentation. Remember, if an ITIN is not used three consecutive years on a federal tax return, it will expire.

14. What documents are required to apply for an ITIN?

Acceptable documents include passports, national identification cards, U.S. driver’s licenses, birth certificates, and various other documents that prove identity and foreign status. The documents must be original or certified copies from the issuing agency.

15. Is it possible to expedite the ITIN application process?

The IRS does not offer an expedited process for ITIN applications. It’s important to apply well in advance of when the ITIN is needed to ensure timely processing.