What's the difference between an ITIN and a PTIN? What's a CAF number for, and what kinds of businesses need an EIN? We've got all the answers you're looking for.
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It doesn’t take long working with tax forms to realize that the IRS uses a bewildering variety of acronyms. As confusing as the never-ending grouping of letters may seem, it is important that you understand the difference between a PTIN, ITIN, and CAF number.
So we’ve put together an easy reference for the most common identification numbers the IRS will ask for. Read on to see what each one means, who needs each one, and when you might need to use them.
Tax Identification Numbers
A TIN is a general term used to refer to all types of IRS issued identification numbers. If an IRS form asks for a TIN, you will almost always use your client’s EIN, ITIN, or SSN, depending on the client.
Preparer Tax Identification Number
A PTIN is specific to tax professionals who prepare IRS forms for their clients. There are a few IRS forms that don't require you to submit your PTIN, but most will. PTINs can’t be shared by groups or offices, so every individual who is compensated for preparing or helping prepare tax returns or tax forms must have their own PTIN. You can apply for a PTIN online or using Form W-12.
Centralized Authorization File Number
A CAF number is also specific to tax preparers. In this case, only accountants and tax professionals who wish to access their client’s confidential tax information (via IRS Form 8821) or represent their clients before the IRS (via IRS Form 2848) typically need a CAF number. You can get a CAF number by submitting Form 2848 or 8821 and writing “None” in the space designated for the CAF number. The IRS will send you a CAF number within a few weeks.
Social Security Number
Social security numbers are generally only used by US citizens. These nine-digit numbers are assigned upon birth or when a person is granted citizenship. This will likely be the most common tax identification number you will use when filling out IRS forms for your individual clients.
Individual Tax Identification Number
An ITIN is a number used to ensure federal tax compliance for anyone who pays taxes in the US and does not have (and is not eligible for) a social security number. ITINs are not used for anything other than tax compliance and do not grant residency, legal worker status, or social security benefits to the individual. Individuals are required to file for an ITIN regardless of their immigration status.
Employer Identification Number
EINs are used to identify business entities on business tax returns and other business-related tax forms. Not all businesses need an EIN. Typically, only businesses that pay wages to employees or operate as a partnership or corporation need an EIN. You can check the IRS website for the complete list of EIN qualifications. If you or a client does need to file for an EIN, you can do so online.
Need more information about IRS forms? Check out this guide to commonly used IRS forms.
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Lauren Miller is a content writer for Canopy.
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