International entrepreneurs who expand to the US have a lot to learn about taxes, and essential part of the business. So now you will learn the differences between each US tax identification, EIN, ITIN, SSN and tax ID in the US.
What is a tax ID in the US?
A tax ID is an identification number that an individual or a company assigns and a tax agency issues. In the US, the Internal Revenue Service (IRS) is responsible for levying and controlling tax at a federal level. In addition to that, they are in charge of assigning tax ID. And also accountable for the Social Security Administration in the case of social security number.
The most important US tax IDs for business are the social security number (SSN), the employer identification number (EIN), and the individual taxpayer identification number (ITIN).
What is the Social Security Number?
The IRS or the Social Security Administration (SSA) issues the Social Secutiry Number to all American residents.The purpose of this tax ID is to track individual income and collect taxes. The SSN is not available for non-US residents.
When it comes to paying taxes, the ITIN is the non-US resident equivalent of the SSN. But not in terms of employment or social benefits.
What is ITIN?
You need an individual taxpayer identification number if:
- You do not have an SSN and are not eligible to obtain one.
- You must provide a federal tax identification number or file a federal tax return.
- As a non-resident alien, you have to file a US tax return. The same goes if you are a non-resident alien claiming a tax treaty benefit.
To apply for the ITIN, you need to fill out Form W-7 and submit it to the IRS. Also, an accountant has to prepare the US income tax return. Besides, you need proof of identity and foreign status.
Foreign LLC members or Corp shareholders need their ITIN to file for US federal income tax and be compliant with US agencies. Something similar happens with the companies themselves that also need a different tax ID to carry out business in the US.
The ITIN will expire if you don’t use it to pay taxes in 3 years, which is why Globalfy’s US-tax-free plan clients should not bother getting it in the first place.
What is the EIN?
The EIN is the tax ID assigned by the IRS to American companies to be able to file taxes, hire personnel, and open business bank accounts.
For you to get an EIN you need to fill out and submit Form SS4 to the IRS. You can also open a business in the US without any type of US tax ID with Globalfy.
With Globalfy’s all-in-one business platform, you’ll get an LLC or a Corp in the US. Besides that, you will have an EIN, a business bank account, a virtual address in the US, a Registered Agent, and over US$200,000 in discounts and rewards.
What are the differences between SSN, EIN, ITIN and tax ID in the US?
To put it in short: SSN is the tax identification number issued by the IRS to US residents. As for the EIN , it is the ID for companies. ITIN is the SSN equivalent for non-US residents who want to do business in the US and be compliant with American laws and tax agencies.
You can get both EIN and ITIN with Globalfy, at the best prices and as soon as possible. EIN processing is also included free of charge in Globalfy’s all-in-one business formation plan. Check it here and see how to do business in the US from abroad, 100% online.