In the United States, whether it is an individual or a company, as long as there is income, it must file taxes. There are three types of identification numbers or tax IDs that need to be provided when filing taxes, SSN, ITIN, and EIN. Today we will talk about the differences between the three.
SSN, short for Social Security Number, is a nine-digit number issued by the Social Security Administration to U.S. citizens, U.S. green card holders, and temporary (working) residents. SSNs were originally intended to track an individual’s tax status, but their use has now been expanded to include identifying individuals, similar to China’s “resident ID numbers”, and binding to an individual’s credit. Social security numbers are required to apply for loans, credit cards, and even rent apartments in the United States, so social security numbers are crucial for individuals in the United States. International students on F1 visas do not have an SSN, but if they work on campus or are in the OPT/CPT stage.
ITIN, the abbreviation of Individual Taxpayer Identification Number, is a tax return number specially established by the U.S. Federal Revenue Service for individuals who are not U.S. citizens who do not have an SSN Social Security number but have tax filing needs. It should be noted that having an ITIN does not mean that you can legally work in the United States or enjoy social benefits in the United States, and it can be said that the role of the ITIN is only for non-SSN individuals to file individual tax returns.
EIN, short for Employer Identification Number, is the number that the Federal Tax Bureau identifies each company taxpayer. Every U.S. corporation must apply for a federal tax ID for future corporate tax purposes, except for individual-owned companies that do not employ employees. An EIN is also one of the corporate documents that must be provided when opening a business bank account in the United States.
It is not difficult to see that SSN and ITIN are tax ID numbers used by individuals to file taxes, while EIN is tax ID numbers used by companies or businesses to file taxes. SSN is associated with personal credit, while EIN is linked to the credit of companies and enterprises. Banks review business loan applications based on EIN records, which are higher than personal loans. In terms of tax deduction, many expenses can be counted as company expenses, which can directly deduct the company’s profits to achieve the purpose of tax reduction, so EIN tax deduction is also more advantageous.
Many individuals who open a store on eBay or Amazon in the United States receive a 1099 tax return from eBay or Amazon at the beginning or end of each year.
Method 1: Register a company in the United States, apply for an EIN federal tax ID, and file taxes in the name of the company;
Method 2: Apply for an ITIN individual tax number and use ITIN to file taxes.
International students in the United States need to pay special attention to the fact that since international students cannot work off-campus (except OPT and CPT), the best way to receive a 1099 tax return is to register a U.S. company to file taxes.