ITIN and Self-Employment: What You Need to Know Individual Taxpayer Identification Number ITIN is a nine-digit tax processing number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number (SSN) but need to file a tax return. If you are self-employed and don't have an SSN, you may need an ITIN to report your income and file your tax returns.
If you are self-employed, you must file a tax return and pay self-employment taxes on your income. The self-employment tax includes Social Security and Medicare taxes. You must have an ITIN to file your tax returns and pay your taxes if you are not eligible for an SSN. To obtain an ITIN, you must complete Form W-7 and provide the required documentation.
As a self-employed individual, you may also need an Employer Identification Number (EIN) if you have employees or if you operate your business as a corporation or partnership. The EIN is a nine-digit number issued by the IRS to identify a business entity. Unlike an ITIN, which is issued to individuals, an EIN is issued to a business.
To obtain an EIN, you must complete Form SS-4 and provide the required documentation. You can apply for an EIN online, by fax, or by mail. If you have an ITIN and later obtain an EIN, you must continue to use your ITIN for your individual tax returns.
In conclusion, if you are self-employed and do not have an SSN, you need an ITIN to file your tax returns and pay your taxes. An EIN is required if you have employees or operate your business as a corporation or partnership. Understanding the difference between an ITIN and an EIN can help you avoid confusion and ensure that you are complying with the tax laws.