What Is the Difference Between a Federal Tax ID vs an EIN?

“Federal Tax ID,” a/k/a “Federal Tax ID Number,” is a generic term used to encompass the three types of nine-digit numbers the IRS requires for purposes of reporting and paying taxes:

1. Social Security Number (SSN)
2. Employer ID Number (EIN)
3. Individual Taxpayer ID Number (ITIN)

Which number an individual or business needs to put on a tax return depends on several things.

Social Security Number (SSN)

Nearly all U.S. residents have a Social Security Number, a unique number issued to them by the IRS for the primary purpose of tracking their earnings so as to determine the amount of their Social Security benefits. That’s the number they put on their Federal and State income tax returns. A sole proprietorship uses its owner’s SSN for tax purposes, as does a single-member LLC Form (Limited Liability Company).

Employer ID Number (EIN)

All other businesses use an Employer ID Number (EIN), whether or not they have employees. Banks often require businesses to have EINs before opening a business account. An EIN is a unique number issued by the IRS to legal entities such as corporations, partnerships, estates, non-profits, etc. so they can report the employment taxes they withhold and/or pay. However, to make matters more confusing, when s business uses its EIN for other business identification purposes, it’s often called a Taxpayer Identification Number (TIN) or a Federal Employer Identification Number (FEIN). You can apply for an EIN from online with the IRS or use a third-party provider like Gov Doc Filing.

Individual Taxpayer ID Number (ITIN)

The IRS issues an Individual Taxpayer ID Number (ITIN) to individuals who are not eligible for Social Security Numbers or Employer ID Numbers, but need an identification number for filing a U.S. tax return. ITINs are used by non-resident aliens, resident aliens not eligible for an SSN, and dependents or spouses of U.S. citizens, resident aliens, and non-resident alien visa holders. An ITIN cannot be used as proof of eligibility to obtain U.S. employment or apply for and receive Social Security or other benefits.