There are two certainties in life: dying and paying taxes — as the saying goes. It’s easy to get lost in the sea of government and tax jargon, but it’s hard to find education about this important part of our lives — even regarding the very first step: your taxpayer identification number.
Here, you’ll know all about the taxpayer identification number: when you’re required to have one and how it impact your financial life. Go ahead and take this step towards better financial education
What is a taxpayer identification number?
A taxpayer identification number (TIN) is a number issued by the government and used as a tracking number by the Internal Revenue Service (IRS). This identification number is required when filing tax returns and claiming benefits.
For any tax returns to be filed, a taxpayer identification number is required, meaning this identification number is used by the IRS in the administration of tax laws. They’re used to identifying an individual on returns, statements, and other tax-related documents.
Both the IRS and the Social Security Administration (SSA) are responsible to issue the taxpayer identification number, depending on the type of identification. Several types of identification numbers can be used as a TIN. Keep reading to know more about them.
TIN and SSA
Is the taxpayer identification number the same as SSN? Yes! The Social Security Number (SSN) is a type of taxpayer identification number. Various forms of identification can be used as a taxpayer identification number.
- Social Security Number (SSN): issued exclusively by the Social Security Administration (SSA). For filing for an SSN, you need to submit an Application for a Security Card, providing evidence of your identity, age, US citizenship status, or immigration status;
- Individual Taxpayer Identification Number (ITIN): available only for people who can’t get a Social Security Number, such as certain types of foreign citizens and their dependents;
- Employer Identification Number (EIN): used to identify a business. It’s required for businesses to file their taxes;
- Taxpayer Identification Number for Pending US Adoptions (ATIN): temporary number issued by the IRS to people who are in the process of adopting a child who’s a US citizen or resident and can’t get an SSN for them in time to file a tax return;
- Preparer Taxpayer Identification Number (PTIN): required for paid tax preparers to use on tax returns they prepare.
How can I get a taxpayer identification number?
If you’re a US citizen or legal alien, you need to file for a Social Security Number by submitting an Application for a Security Card. For other types of taxpayer identification, whatever the case, you may file a request for a taxpayer identification number in the respective branch of government.
Why should I have a taxpayer identification number?
To file a tax return, you need some sort of official identification number — SSN, ITIN, EIN, ATIN, or PTIN, depending on your status or the type of taxes you’re filing, as seen above. Thus, each entity or person should apply for a taxpayer identification number.
With these number identifiers, you’re also granted access to social security services. You need some form of taxpayer identification (usually SSN) even to get paid by your employer.
Why should I file for tax returns?
Not everyone’s required to file for federal tax return yearly — it depends on your total income for that year. The income necessary to file a tax return depends on your age, your filing status, and the type of income.
Even if you aren’t required to file a tax return, there are benefits to it. From tax refunds to having a registered picture of your financial life, there are a series of tangible and intangible benefits to those who regularly file a tax return.
If you’ve federal taxes withheld from your paycheck and didn’t meet the minimum income to be required to pay taxes, you’re entitled to a tax refund. Since the IRS doesn’t issue refunds automatically, you need to file your tax return to get a tax refund.
Other social security and internal revenue services accessible by filing your taxes returns include credits for sick leaves or family leaves, American Opportunity credit to cover expenses for college students, and health coverage tax credit to help certain individuals pay for health insurance.
When you’re a taxpayer, you also show you’re responsible. Voluntarily keeping a public record of income makes it easier for individuals and businesses to enter subsequent transactions.
More benefits of having a taxpayer identification number
A taxpayer identification number is used by the government and companies to gather and access information regarding your finances. Since the TIN is an SSN for most individuals, they’re required to have one when applying for a loan.
If you plan to get a mortgage in the future, you should file your tax return early on. When evaluating a large loan, such as a home loan, lenders tend to require a steady record of tax returns. The same goes for spouses who plan to apply as co-borrowers — you need a taxpayer identification number for that.
Your TIN can help you get a loan!
Credit bureaus and credit reporting agencies use the TIN to track a person’s credit or financial history. This is particularly useful when applying for a loan: when you’ve all your information in one place, lenders can assess your financial profile and offer more competitive rates.
At OneBlinc, we don’t do credit checks when applying for a loan — we use our own technology to gather information and paint a sharper picture of your financial life. OneBlinc provides a range of financial solutions for all types of people, always striving to help you with your financial decisions.
Unexpected things happen more often than we would like them to. That’s why OneBlinc is here to help, whether you have an emergency or just need that extra cash to go through the end of the month. We believe in people, and we understand that everyone might need money someday, somehow.