What a Federal Tax ID Number Is and Who Needs One

A Federal Tax ID Number Is a Nine-Digit Identifier the IRS Uses to Track Your Tax Obligations

A Federal Tax ID Number, also called an Employer Identification Number (EIN) or Individual Taxpayer Identification Number (ITIN), is a nine-digit code the Internal Revenue Service assigns to identify you or your business for tax purposes. The IRS uses it to match your tax returns, W-2 forms, 1099 forms, and other tax documents to the right person or entity.

If you are a U.S. citizen or permanent resident working as an employee, your Social Security Number serves as your tax ID. If you are self-employed, own a business, or do not have a Social Security Number, you will need a separate Federal Tax ID Number. The format is always XX-XXXXXXX (two digits, hyphen, five digits).

The type of Federal Tax ID you need depends on your situation. A sole proprietor might use their Social Security Number. A business partnership, corporation, or nonprofit needs an EIN. A non-citizen without a Social Security Number needs an ITIN. Understanding which one applies to you prevents delays when filing taxes or opening a business bank account.

Key Takeaways

A Federal Tax ID Number is a nine-digit code the IRS uses to identify you or your business on tax documents and records.
If you are a U.S. citizen or permanent resident employee, your Social Security Number is your tax ID; you do not need a separate one.
Self-employed people, business owners, and non-citizens without a Social Security Number must obtain an EIN or ITIN from the IRS.
You will need your Federal Tax ID to open a business bank account, hire employees, file certain tax forms, and report business income.

The Difference Between an EIN and an ITIN

An Employer Identification Number (EIN) is issued to businesses, nonprofits, trusts, and other entities. You need an EIN if you operate as a sole proprietor with employees, form a partnership or corporation, start a nonprofit, or run a business that reports income on a Schedule C or Schedule F. The EIN is tied to your business, not to you personally, so it stays with the business even if ownership changes.

An Individual Taxpayer Identification Number (ITIN) is issued to individuals who are not may be able to access for a Social Security Number but need to file U.S. tax returns or report income. This includes non-citizens, foreign nationals, and dependents who do not have a Social Security Number. An ITIN is personal to you and does not change if your immigration status changes.

A sole proprietor without employees can use their Social Security Number instead of an EIN, though some choose to get an EIN for privacy or business banking reasons. The choice is yours. If you are unsure which type you need, the IRS website has a tool that walks you through the decision.

When You Need to Get a Federal Tax ID Number

You must obtain a Federal Tax ID Number before you can legally operate a business, hire employees, or open a business bank account. If you are self-employed and file a Schedule C on your personal tax return, you can use your Social Security Number, but many self-employed people get an EIN anyway to keep their business finances separate from their personal finances.

You also need a Federal Tax ID Number if you are forming a corporation, partnership, LLC, nonprofit, or trust. Banks will ask for it when you open a business account. Clients or customers may ask for it when they need to issue you a 1099 form. Payroll processors need it to file W-2 forms for your employees.

If you are a non-citizen without a Social Security Number, you need an ITIN to file a tax return, claim a refund, or report income from a job or self-employment. Dependents without a Social Security Number also need an ITIN if they are claimed on a parent's return.

How to Obtain an EIN From the IRS

You can obtain an EIN online, by mail, by fax, or by phone. The fastest method is the IRS online application at irs.gov/ein. The online form takes about 15 minutes and you receive your EIN immediately after submission. You do not need to pay a fee.

To apply online, you will need your Social Security Number or ITIN, the legal name of your business, a mailing address, and information about the type of business structure (sole proprietor, partnership, corporation, etc.). The IRS will ask why you need the EIN — select the reason that matches your situation, such as "hiring employees" or "opening a business bank account."

If you cannot apply online, you can mail Form SS-4 to the IRS, fax it, or call the IRS Business and Specialty Tax Line at 1-800-829-4933. Mail and fax applications take two to four weeks. Phone applications are processed the same day, but you must call during business hours and have all your information ready.

How to Obtain an ITIN From the IRS

You obtain an ITIN by filing Form W-7 with the IRS. Unlike an EIN, you cannot get an ITIN online or by phone. You must submit Form W-7 by mail or in person at an IRS office or an authorized acceptance agent.

Form W-7 requires proof of identity and proof of foreign status or residency. Acceptable identity documents include a passport, national ID card, or driver's license. You must also provide a tax return or other IRS form that shows you need the ITIN, such as a Form 1040 (individual income tax return) or Form 1040-NR (nonresident alien income tax return).

Processing takes four to six weeks by mail. If you file your tax return with Form W-7 attached, the IRS will issue your ITIN and process your return at the same time. You can track the status of your application on the IRS website using your date of birth and the date you mailed the form.

What You Can and Cannot Do With a Federal Tax ID Number

You can use your Federal Tax ID Number to open a business bank account, hire and pay employees, file business tax returns, apply for business loans or credit, and report income from self-employment or rental property. Clients and vendors will ask for it when they need to issue you a 1099 form or other tax document.

You cannot use a Federal Tax ID Number to replace a Social Security Number for personal credit, personal loans, or personal banking. An EIN is tied to a business entity, not to you as an individual, so lenders and credit bureaus will not accept it as a personal identifier. An ITIN can be used for personal tax filing and some personal financial accounts, but not all banks accept it for personal checking accounts.

If you are an employee, your employer will use your Social Security Number on your W-2, not your EIN or ITIN. Your Federal Tax ID Number appears only on business documents, business tax returns, and forms related to your business or self-employment income.

Frequently Asked Questions

Do I need a Federal Tax ID Number if I am self-employed?

Not necessarily. If you are self-employed and do not hire employees, you can use your Social Security Number on your Schedule C and pay self-employment tax. However, many self-employed people get an EIN to keep business and personal finances separate and to open a business bank account. Getting an EIN is free and takes 15 minutes online.

Can I use my Social Security Number as my business tax ID?

Yes, if you are a sole proprietor without employees. Your Social Security Number serves as your tax ID for business income reported on Schedule C. Once you hire employees or form a business entity like an LLC or corporation, you must obtain an EIN.

What happens if I do not have a Social Security Number?

If you are a non-citizen or do not have a Social Security Number, you can obtain an ITIN by filing Form W-7 with the IRS. An ITIN allows you to file a tax return, report income, and claim a refund. Processing takes four to six weeks by mail.

Is there a fee to get a Federal Tax ID Number?

No. The IRS does not charge a fee for an EIN or ITIN. Be cautious of websites or services that charge you to obtain one — you can apply directly to the IRS for free at irs.gov/ein or by mailing Form W-7.

Can I change my Federal Tax ID Number?

An EIN is permanent and tied to your business entity. If you close the business, the EIN is retired and cannot be reused. If you change your business structure (for example, converting from a sole proprietorship to an LLC), you will need a new EIN. An ITIN is also permanent and does not change if your immigration status changes.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.