Legal Definitions - taxpayer identification number (TIN)

A Taxpayer Identification Number (TIN) is a unique nine-digit number used by the U.S. government, primarily the Internal Revenue Service (IRS), to identify individuals and entities for tax purposes. These numbers are essential for managing tax obligations, filing tax returns, and claiming various tax benefits or deductions. Different types of TINs exist, each serving a specific purpose, such as identifying individuals, businesses, or tax preparers.

Common types of TINs include:

• Social Security Number (SSN): Issued by the Social Security Administration, primarily for U.S. citizens and permanent residents.
• Employer Identification Number (EIN): Issued by the IRS to businesses and other entities.
• Individual Taxpayer Identification Number (ITIN): Issued by the IRS to non-resident and resident aliens, their spouses, and dependents who cannot obtain an SSN.
• Preparer Taxpayer Identification Number (PTIN): Issued by the IRS to paid tax preparers.

Here are some examples illustrating how TINs are used:

• Example 1: Filing an Individual Tax Return

  Maria, a U.S. citizen, works as a software engineer. Each year, when she prepares her federal income tax return, she must include her Social Security Number (SSN) on the forms. This SSN acts as her unique Taxpayer Identification Number, allowing the IRS to accurately link her reported income, deductions, and tax payments to her specific tax record.

• Example 2: A New Business Hiring Employees

  David decides to open a small bakery and plans to hire several employees. Before he can pay wages, withhold taxes, or file payroll tax returns, he needs to apply for an Employer Identification Number (EIN) from the IRS. This EIN serves as the bakery's unique Taxpayer Identification Number, identifying the business to the IRS for all its employment-related tax obligations.

• Example 3: A Foreign Investor Receiving U.S. Income

  Dr. Lee, a medical researcher from South Korea, invests in a U.S. stock market fund and receives dividend income. Since Dr. Lee is not eligible for a Social Security Number but needs to report this U.S. income and potentially claim treaty benefits to reduce his tax liability, he applies for an Individual Taxpayer Identification Number (ITIN). This ITIN functions as his Taxpayer Identification Number, enabling him to comply with U.S. tax laws despite not being a U.S. resident or citizen.