What is the Full Form of TIN?
The full form of TIN is Taxpayer Identification Number. The TIN refers to the unique combinations of the number of nine digits allotted by the government of the country to their taxpayers, be it individual, business entity, or any other person depending on the rules of the country for the purpose of identification of that person in administering the tax laws.
Types of TIN
There are mainly five types of taxpayer identification number that are as listed below:
#1 – Social Security Number (SSN)
SSN or social security number is issued to citizens of the US, its permanent residents, and to certain temporary residents. The social security number is required to secure legal employment and receive social security benefits in the country, along with other government services. The government uses it to keep track of the lifetime earnings and working years of the person. The parents can apply SSAN on behalf of their dependent children.
#2 – Employer Identification Number (EIN)
Employer Identification Number is allotted to the businesses that include partnerships, corporations, and some trusts and estates that employ even a single employee individual. Even if the sole proprietor employs a single employee,; then it is also required to obtain EIN. The eligible mentioned persons use this EIN for reporting their income for taxation purposes.
#3 – Taxpayer Identification Number for Pending U.S. Adoptions (ATIN)
ATIN is the temporary tax ID number of nine digits that are allotted to people that are in the process of adoption of the child by the IRS provides in case adopting parents are not able to get timely SSN for the child to file a tax return.
#4 – Individual Taxpayer Identification Number (ITIN)
The Individual Taxpayer Identification Number (ITIN) is issued by the IRS issues certain non-resident of the country and its resident aliens along with their spouses and dependents (if ineligible for SSNs). in case the person is not eligible for SSN, it has to furnish the federal tax return it must apply for ITIN. For getting this, the applicant has to complete Form W-7 along with submitting necessary documents for supporting its resident status.
#5 – Preparer Taxpayer Identification Number (PTIN)
It is the tax ID number of nine digits that are allotted to the persons who assist or prepares in preparing the federal tax returns. All the enrolled agents must have a PTIN.
Example of TIN
For instance, there is a sole proprietor who currently is not having any of the individual employed and so no Employer Identification Number. But recently, there is a need to employ an individual in the firm. So, in this case, the sole proprietor has to apply for the Employer Identification Number as for the employee, even a single individual, obtaining the EIN is mandatory.
Uses of TIN
The following are the different uses of the TIN.
- The taxpayersThe TaxpayersA taxpayer is a person or a corporation who has to pay tax to the government based on their income, and in the technical sense, they are liable for, or subject to or obligated to pay tax to the government based on the country’s tax laws. are required to enter taxpayer-identification numbers on many of the tax-related documents as required by the Internal Revenue Service, such as tax returns, tax reports, etc. and thus is used by the IRS for processing all the tax-related documents.
- It enables the availability of all the tax-related details on one single unified platform.
- Taxpayer identification numbers are used by the banks as well as the businesses for interacting with the other entities.
- These are used for applying for Federal Loan, Opening an account with any of the U.S. financial institutions, Enrolling in Medicare, Applying for a Passport, Getting Driver’s License, etc.
The following are the limitations of the Taxpayer Identification Number:
- A person who is not eligible for getting the SSIN can obtain ITIN if it meets the specified criteria. However, it cannot use ITIN for claiming the earned IncomeEarned IncomeEarned income is any amount earned by an individual, such as a salary, wages, or employee compensation. It can also be an individual's income through their own business. Tax Credit, and ITIN is also not valid identification outside the tax system.
- This Taxpayer Identification Number can also be used by the criminals to commit identity theft.
Tax Identification Number vs Social Security Number
- The tax identification number is the unique number of government authorities’ issues to identify persons, i.e., individual or business, and it allows the person to file their income tax returns. There are different types of Tax identification numbers available, and the person can obtain them as per their requirement and eligibility.
- Whereas Social Security Number is one of the types of the Tax identification number, which is issued only to the individuals, which includes citizens of the US, its permanent residents, and to certain temporary residents. Thus the Tax identification number is the wider concept where the Social Security Number is one of its parts.
TIN is the abbreviation used for Taxpayer Identification Number. As the name implies, Taxpayer Identification Number is the unique combinations of the nine digits number allotted by the country’s government to their tax for the purpose of identification of that person in administering the tax laws, and the same is required by the person while filing their tax returns. This is a very important number that the person requires in various areas such as applying for Federal Loan, Enrolling in Medicare, Applying for a Passport, etc.
This has been a guide to the Full Form of TIN, i.e. (Taxpayer Identification Number). Here we discuss types and uses of TIN along with their example, structure, and differences. You may refer to the following articles to learn more about finance –