Many long-term travelers work online, freelance, or run a business and travel simultaneously. In these cases, taxing remains smooth if you precisely pick the Tax Identification Number (TIN) for them. It contains the two most popular in the U.S. EIN (Employer Taxpayer Identification Number), and ITIN (Individual Taxpayer Identifier Number). So, which one should long-term travelers use? Let's analyze it step by step.

Understanding the Basics of Tax I.D.s

Before going into details, let's explain ITIN and EIN. Less than half of these individuals are nonresident expatriates and have been issued an ITIN by the IRS, even though they're not eligible for an SSN. However, an EIN is primarily for businesses that need to let the IRS know about their money and hire people.

ITIN vs EIN: What's the Core Difference?

At the heart of the matter, an ITIN serves individuals for tax purposes, while an EIN applies to businesses. For long-term travelers who run their own business or freelance, understanding the difference is essential to keep everything compliant. If you're earning an income abroad, this comparison becomes especially important when deciding between tax I.D.s—ITIN vs EIN.

When Should a Long-Term Traveler Use an ITIN?

If you are a U.S. nonresident long-term visitor who must return U.S. taxes, you can use ITIN. It's very beneficial for those not qualifying for Social Security Number. This means if you're overseas freelancing remotely for U.S. clients, you'll probably need to work out how to file your income with an ITIN.

Is EIN Suitable for Travelers Running a Business?

You'll need an EIN if you're running a small business or startup as you travel. This tax I.D. allows you to manage taxes, open business bank accounts, and hire employees. Long-term travelers who balance running their business remotely will find an EIN beneficial.

Key Benefits of EIN for Remote Business Owners

Having an EIN provides several advantages. It makes applying for loans easier, protecting personal assets, and appearing more credible to clients. It's the go-to tax I.D. if you're growing a business during your travels.

Which Tax ID Suits Freelancers on the Move?

Freelancers traveling long-term usually face the question: "ITIN vs EIN?" You don’t need an EIN for a solo business, but if you want to expand later, you can get one. As a non-US citizen, living on freelance income with an ITIN works most of the time but you’re still going to have to file as a business.

Taxes and Residency Status for Long-Term Travelers

Residency status plays a huge role in deciding which tax I.D. works best. U.S. citizens or residents working abroad may require an EIN for their business or an SSN for individual purposes. Non-U.S. residents, however, will often lean towards ITINs when working with U.S.-based clients.

ITIN or EIN for Digital Nomads?

For digital nomads, the choice of tax I.D. can impact how they manage finances and stay compliant with tax authorities. If your income is through freelancing or remote work, an ITIN could be the more straightforward choice. However, EIN is more appropriate if you operate a registered business on the go.

Before choosing a tax I.D., What You Should Consider

Before making a decision, ask yourself the following:

• Do you freelance as a business, or are you conducting a business?

• Do you have to pay people or open a business account?

• Is your income coming from U.S. clients or international ones?

These questions will guide you to the proper tax ID.

Can You Have Both ITIN and EIN?

In some situations, you may need to use at least one (or sometimes both) of these methods if you are not a U.S. citizen engaged with that business and its clients. Nevertheless, you'll still require an ITIN to file your taxes and an EIN to conduct business. By combining these two, you're covered for all your tax responsibilities.

Final Thoughts on Choosing the Best Tax ID

Long-term travelers must select a tax I.D. matching their lifestyle and work situation. If you need help determining which tax I.D. fits best, consult with a tax professional who can consider your residency status, income source, and work structure. Whether you need an ITIN or EIN will depend on whether you're working solo or operating a business.

Choosing the correct tax I.D. ensures smooth sailing as you explore new horizons and keep your finances in order. For more help deciding between ITIN and EIN, explore your options to provide a compliant and stress-free travel experience.