What Are Federal Tax ID Numbers Used For?


Quick Answer

Federal Tax Identification Numbers are used for opening a bank account or brokerage account, and for reporting withholding tax. A Federal Tax Identification Number is also known as an Employer Identification Number or EIN, and is equivalent to a social security number for businesses or corporations.

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Full Answer

Federal Tax Identification Numbers are issued to individuals, organizations and businesses that are required to pay withholding taxes on employees. The number is used to identify a specific business or corporation tax account. Federal Tax Identification Numbers are also issued to other entities that include state or government agencies, limited liability companies, trusts, non-profit organizations and other businesses that use the number for identification purposes.

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