What is the Difference Between Federal Tax ID and EIN?
🆚 Go to Comparative Table 🆚The primary difference between a Federal Tax ID and an Employer Identification Number (EIN) is that a Tax ID is used to identify people who can be taxed within the United States, while the EIN is used to identify companies. Both the Tax ID and EIN are nine-digit numbers used for tax purposes, but they serve different purposes and are issued at different levels of government.
- Federal Tax ID (TIN): A Taxpayer Identification Number (TIN) is a generic term for a tax identification number, which can be issued on the state or federal level. It is used to identify individuals, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates of decedents, government agencies, and other business entities. A Social Security Number (SSN) is an example of a TIN for individuals.
- Employer Identification Number (EIN): An EIN is a type of TIN that is specifically assigned to businesses. It is used to identify a business entity and is issued by the Internal Revenue Service (IRS) at the federal level. EINs are required for various business tax purposes, such as filing taxes or hiring employees.
In summary, a TIN is a broader term that can be issued on either the state or federal level, while an EIN is a specific type of TIN issued by the IRS to identify businesses at the federal level.
Comparative Table: Federal Tax ID vs EIN
The difference between a Federal Tax ID and an EIN is mainly in their purpose and the entities they are assigned to. Here is a table summarizing the differences:
| Federal Tax ID (TIN) | EIN (Employer Identification Number) |
|---|---|
| A generic term for a nine-digit identification number assigned by the IRS. | A specific type of TIN assigned to businesses for tax purposes. |
| Can be assigned to individuals, businesses, estates of decedents, government agencies, certain individuals, and other business entities. | Assigned only to businesses, such as limited liability companies (LLC), partnerships, and corporations. |
| Used by the IRS to identify taxpayers who are required to file various business tax returns. | Used by employers, sole proprietors, corporations, and other business entities for tax purposes. |
| Can be replaced by other forms of identification, such as Social Security Numbers (SSN) or Individual Taxpayer Identification Numbers (ITIN). | Cannot be replaced by other forms of identification, as it serves a specific purpose for businesses. |
In summary, a TIN is a general tax ID number that can be assigned to various entities, while an EIN is a specific type of TIN assigned to businesses for tax purposes. Although they share some similarities, their primary difference lies in their purpose and the entities they are assigned to.
- EIN vs TIN
- ITIN vs SSN
- Invoice vs Tax Invoice
- Payroll Tax vs Income Tax
- Federal vs National
- Capital Gains Tax vs Income Tax
- ABN vs TFN
- Financial vs Taxable Income
- TIN vs TAN
- IRS 1040 vs 1040A vs 1040EZ
- LLC vs INC
- Direct Tax vs Indirect Tax
- Tax Return vs Tax Refund
- Duty vs Tax
- Identity Theft vs Identity Fraud
- VAT vs Sales Tax
- ACH vs EFT
- Tax Evasion vs Tax Avoidance
- State vs Federal Legislation