Employer Identification Number
The Federal Tax Identification Number is also known as the Employer Identification Number (EIN). It is a nine digit number assigned by the Internal Revenue Service (IRS) to identify tax accounts of employers and certain other who have no employees. In the past you had to file a Form SS-4 but the entire process can now be done free online by going to the IRS website. After typing in (keyword “EIN”) you will find the EIN application in an interview style format.
It is important for sole proprietors to know that you may only have one EIN, no matter how many different businesses you operate.
Those that have been assigned an EIN as a Household Employer must also use that number for their sole proprietor needs as well. The IRS uses that number to identify taxpayers that are required to file various business tax returns. Employers, sole proprietors, corporations, partnerships, non-profit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities all use EINs. However, the EIN does not replace your personal Social Security Number and should only be used for business transactions. In some States
Other ways to apply
In Person – Someone authorized to receive the number should have the information from Form-SS4 in front of them to readily answer any questions. The IRS representative will assign you a EIN.
By Fax – This process will take up to four (4) business days and it is suggested that you do not send a fax and call the toll-free number to avoid a duplicate EIN being assigned. You will still fill out all of the required information in the Form-SS4. The number to fax to varies by states. The fax number is available 24/7 and you should include your own information as the IRS will fax back your EIN.
By Mail – Applying by mail will take about four (4) weeks. You will still be required to download and fill out all the required information for a Form-SS4.
Common mistakes to avoid while applying for your individual taxpayer identification number (ITIN)
1. Not just the resident alien earning income in US, even those who will appear on a tax return as a spouse or dependent should apply for ITIN in order to claim exemption. There should be a separate application for each taxpayer, spouse, and dependent children.
2. You must submit original documentation such as passports and birth certificates, or certified copies of these documents by the issuing agency along with your application for IRS ITIN. Notarized or Apostle copies of documentation are not accepted.
3. You need to fill the Form W-7 completely. This means that all lines on the form must be completed. In case you don’t have anything or any information to write on a line, mark “N/A” but do not make the mistake of leaving it blank.
4. We often write our birth dates in Date/Month/Year format but for W7 Form, you need to write all dates in Month/Date/Year style.
5. If you are a citizen of more than one country, you should list both the countries with a slash between them. Write down the full names of the countries without abbreviating. The form allows listing two countries at max.
6. When you are filling out the form for an applicant who is under 14, it must be signed by the parent or guardian on his or her behalf. In that case, the parent or guardian’s name is to be written where the form asks for the “Name of delegate.” Do not forget to mark the relationship of the applicant on the right side. For all those applicants who are above 14 years, they must sign their application themselves.
7. Form W-7 asks for a proof of your “foreign status” or “identity.” Submitting an original valid passport (or a certified copy from the issuing agency) is enough and no other documents are needed to prove it further.If your passport has expired or you are unable to submit it, you must submit at least two of the documents listed in the requirement and at least one document of those two must have your photo.
ITIN application should be filled with due diligence so that you do not face the risk of application being rejected. Taking help of Acceptance Agents or tax experts will save you from a lot of troubles.