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Sometimes, a financial account like a checking account will sit dormant, or unused, for an extended period, and an inactivity fee will be charged. Usually, a bank, credit union, or other financial institution will start to assess an inactivity fee after six months of no activity in the account. However, some banks may wait up to a year before applying inactivity fees to the account.

To better understand and steer clear of this annoying fee, read on. You’ll learn:

•   What is an inactive account fee?

•   How much are inactive account fees?

•   Can you reverse an inactive account fee?

•   How can you avoid inactive account fees?

What Is an Inactive Account Fee?

What is an inactivity fee and why does it get charged? Banks or other financial institutions apply inactivity fees or dormancy fees when financial accounts just sit, without money going in (deposits) or out (withdrawals). Perhaps the account holder isn’t conducting any kind of activity at all; not even checking the balance for a stretch of time.

Financial institutions can apply these inactivity fees to all sorts of accounts, like brokerage or trading accounts, checking accounts, and savings accounts. These fees are a way for banks to recoup some of the costs they incur when maintaining dormant accounts and can trigger the account holder to reactivate the account.

Recommended: What Happens if a Direct Deposit Goes to a Closed Account?

How Do Inactive Account Fees Work?

Here’s how inactive account fees work:

1.    No transactions occur within the account. Let’s say you opened a savings account to fund your next vacation. But life got in the way, and you forgot about it for six months, leaving it inactive. Keep in mind, the definition of inactivity may vary by the financial institution. So, while some banks may only require you to conduct a balance verification to keep the account active, others may require, say, a bank transaction deposit or a withdrawal, to keep the account active.

2.    The account is flagged for inactivity. Since money isn’t flowing in or out of the account, the financial institution flags the account. After this happens, some financial institutions may send a notification to the account holder before they begin charging a fee. The notice allows the account holder to take action before fees begin racking up. But other banks may not send a notification before they begin charging you inactivity fees. That means you are responsible for keeping tabs on your accounts so you can ensure they are up-to-date.

3.    The financial institutions begin charging inactivity fees to the account. Usually, the financial institutions will begin charging an inactivity fee between several months to a year after the last transaction took place within the account.

The account will be deemed a dormant bank account if these fees go unnoticed for a few years. Every state has a different timeline for determining when accounts are dormant. For example, California, Connecticut, and Illinois considered accounts dormant after three years of inactivity. On the other hand, an account requires five years of inactivity in Delaware, Georgia, and Wisconsin to move to the dormant category.

Once the account is considered dormant, the financial insulation will reach out to let you know that if you don’t attend to the account, it must be closed and transferred to the state — a process called escheatment. But, even if your account funds end up with the state, the situation isn’t hopeless. There are several ways to find a lost bank account and hopefully retrieve any unclaimed money.

Recommended: What Is the Difference Between a Deposit and a Withdrawal?

How Much Do Inactive Account Fees Cost?

Inactive account fees can range between $5 to $20 per month, depending on the bank.

Remember, only some financial accounts have inactivity fees. However, if your account does have inactivity or dormancy fees, guidelines must be outlined in the terms and conditions of the account. Check the fine print or contact your financial institution to learn the details of these and other monthly maintenance fees.

Why Do Banks Have Inactive Account Fees?

One of the primary reasons banks charge inactivity fees is that states govern accounts considered inactive and abandoned. Usually, an account that has had no activity for three to five years is considered abandoned in the eyes of the government.

Depending on the state’s laws, the financial institution may have to turn over the funds to the Office of the State treasurer if the account is deemed abandoned. At this point, the Office of The State Treasure is tasked with finding the rightful owner of the unclaimed asset.

Since banks do not want to hand over funds, they may charge an inactivity fee as a way to keep the account active. Thus, the financial institution won’t have to give the account to the state, keeping the money right where it is.

Additionally, inactive accounts cost financial institutions money. So, to encourage the account holder to start using the account, they charge inactivity fees. While some financial institutions send inactivity notices, others may not. Therefore, if your account has been inactive for a long time, you may only notice the fee once your bank account is depleted. At this point, the financial institution may choose to close the account.

Recommended: Can You Reopen a Closed Bank Account?

Can You Reverse an Inactive Account Fee?

It never hurts to call your bank and request a reversal of inactivity fees. However, if the financial institution is unwilling or unable to reverse the fees, you may want to compare different account options to find a type of deposit account that better suits your needs.

Make sure to compare all fees and any interest rates that might be earned to identify the right account for your needs.

Tips to Avoid Inactive Account Fees

Inactive account fees are a nuisance. But, there are several ways you can avoid them entirely. Here’s how:

•   Set up recurring deposits or withdrawals. Establishing a direct deposit into or out of your account can help keep it active and avoid inactive account fees.

•   Review accounts regularly. Checking your financial accounts and spending habits regularly can help you keep tabs on your money and also decide if keeping a specific account open is worth it.

•   Keep contact information up-to-date. If your account becomes inactive, some banks may attempt to contact you before charging you an inactive account fee. If you have the wrong information on file, you may never receive a heads-up about the additional fee.

•   Move money to another account. If you don’t want to maintain an account, it’s best to move the money to an account you actively manage. Then close the account once the money has been transferred. That way, you’ll dodge fees and streamline your financial life.

Recommended: How to Remove a Closed Account from Your Credit Report

The Takeaway

When you don’t use an account, your financial institution could begin assessing an inactivity fee. You can avoid these charges by keeping watch of your bank accounts and setting up automatic deposits or withdrawals. If you discover you’re not using your account, you can empty and close it, so you don’t have to worry about extra fees.

Remember, some banks charge fees while others don’t. When you open an online bank account with SoFi, you can avoid account fees and earn a competitive APY. What’s more, our Checking and Savings account lets you do your spending and saving in one convenient place. It’s all part of banking better with SoFi.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Can a bank shut your account down if you have an inactive account fee?

Yes; if there has been no activity on your account for a while (the timeframe will likely vary by financial institution), your bank generally has the right to close your account. Plus, it’s not required that they notify you of the closure.

Are inactivity fees the same as dormancy fees?

Yes; inactive and dormancy fees are the same. They are both applied to the account when it’s inactive for an extended time.

Besides inactivity fees, what other fees do banks often charge?

ATM fees, maintenance fees, overdraft fees, and paper statement fees are just a few fees banks levy on their bank accounts. Before you open an account, make sure you understand the type of fees that accompany your account, so there are no surprises down the road.

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Photo credit: iStock/Prostock-Studio

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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A payee of a check is the person or business to whom the check is made out and who will receive funds.
While checks may not be used as often as they once were, they are still an important way to make payments, and one that can require a bit of knowledge to use properly.

Understanding who is the payee is one of those details. Read on for more information on this key aspect of checks, including:

•   What is a payee?

•   What is a payee vs. payor on a check?

•   How can payees receive money?

•   How can you identify the payee on a check?

•   How can you handle checks safely?

What Is a Payee?

What is the payee? As briefly noted above, the payee is the individual who receives the payment. When a payment is made via a check, their name is written on the payee line.

A paper check is a form of payment that transfers money from one bank account to another. For a check to be valid, it has to have the recipient’s name (aka the payee), payment amount, and date written on it clearly. Checks can be a very convenient way to make a payment or to give someone a gift. They are also considered to be fairly secure forms of payment as only the person named on the check can cash the check.

It’s also possible to make a payment via an electronic check. The way an electronic check (which can also be called an e-check) works is essentially the same as a paper check minus the paper. It’s possible to send a check digitally and the payment will be transferred via an ACH (automated clearing house) network.

Payee vs Payor: What’s the Difference?

Who is the payee? Here’s the difference:

•   The payee is the party receiving the payment when someone writes a check.

•   The payor on the other hand is the party who is making the payment. It’s also common to hear the payor referred to as the payer. The individual who writes the check is the payer.

It is possible for the payor and the payee to be the same person. An individual can pay themselves via a check by writing their own name on the payee line. This is commonly done when transferring funds from one account to another or from one bank where the individual has an account to a second bank they have an account at.

Recommended: 7 Ways to Tackle Financial Stress

Ways That Payees Can Receive Money

What does payee mean? While one meaning is the recipient of a check, that’s not the only way a person or business can be paid. Payees can also receive funds by a variety of different payment methods, such as:

•   Cash: Yes, dollar bills (and other denominations) still have a place around the world.

•   Credit card: You can swipe, insert, or tap your way to pay for goods or services.

•   Cashier’s check or certified check: These are secure forms of payment with additional assurances beyond a standard check.

•   Money order: These are available for purchase at U.S. post offices and via services like Western Union

•   Electronic transfer: Examples of this include when your paycheck is put into your checking account by direct deposit

•   Mobile wallet payment: Say you have dinner with a friend, but you pay for it and your friend pays you back via Apple Pay/Apple Cash or a similar app.That’s an example of a mobile payment in action.

All of these payment formats have different advantages and disadvantages. So it’s important to research all options individually to see which one is the most convenient, costs the least, and is the most secure. Sometimes you aren’t given a choice about how to make a payment (such as a landlord having a specific preference for how they want to receive rent payments), but many individuals and vendors accept a handful of different payment methods.

How to Identify a Payee on a Check

Figuring out who a payee on a check is isn’t hard, especially since all checks follow the same format. If someone is reading a check and wants to know who the payee is, all they have to do is look at the top of the check where it says “pay to the order of.” This part of a check is known as the payee line, and it designates who can cash the check.

The payee can be an individual or a business when paying bills. When filling out a check, it’s important to write the individual or business’s full name (so if it’s Jane Smith Brown, don’t write J.S. Brown). The payee’s name must be spelled correctly, or they may not be able to cash the check.

Recommended: Differences Between a Deposit and a Withdrawal

Tips for Handling a Check Safely

Fraud can happen with a variety of payment formats, including check. When making a payment via check, it’s important to keep security top of mind to help avoid check fraud (which is notoriously difficult to resolve). These are some tips that can help consumers handle checks safely:

•   Fill out the check using a pen so the payee’s name and the payment amount can’t be changed.

•   Double-check that the payee’s name and the payment amount is correct.

•   Print clearly when filling out a check; cursive writing can lead to mistakes.

•   Don’t sign a blank check — ever. If you do, there’s the risk that a thief or the payee could fill in whatever amount they want.

•   If possible, don’t send checks by mail since they can be stolen. This is especially true for checks for a large amount of money.

•   If you must mail a check, try to use security envelopes, which are the kind that aren’t see-through, so a potential thief can’t tell there is a check inside.

•   When mailing a check, mail it via the post office, versus leaving it in a residential mailbox to be picked up.

•   If you are concerned about making a mistake when sending a check, you can always choose to do an ACH payment instead. When transferring money via ACH, it’s actually possible to reverse mistakes. Another option could be a wire transfer, which may be reversible if one acts quickly enough.

And what if you are receiving a check? Follow these pointers:

•   It’s important to deposit it fairly soon. Otherwise it might get misplaced and expire. How long are checks good for? Typically, they are valid for six months.

•   It’s wise to only cash a check from someone the payee is familiar with and that the check is for the correct amount. It’s best not to cash a check that is for more money than is owed. Here’s why: A common form of check fraud is to give someone a check for more money than they owe and then to ask for a refund. The victim sends the refund, only to discover the check they deposited bounced, meaning they have lost money on this transaction.

•   You may be able to sign the check over to someone else (say, a friend you owe money to); make sure you follow the correct steps carefully to ensure a smooth transaction.

The Takeaway

Financial terminology isn’t necessarily complicated. Wondering who is the payee of a check? The payee is the individual receiving payment via check, and they are usually the only individual who can cash the check (unless it gets signed over). Making a payment via check is very convenient, but it’s important to keep safety top of mind when making a payment this way, especially if the payor plans to mail the check.

Whether you are receiving or writing checks or do most of your transactions electronically, opening an account with an online bank can simplify your financial life. For instance, with a SoFi Checking and Savings account, you can spend and save in one convenient place and have options like Vaults and Roundups to help your cash grow.
You’ll also earn a competitive annual percentage yield (APY), and pay no account fees, which is also part of our better-banking benefits. Another perk? Qualifying accounts with direct deposit can access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What are payee requests?

If someone comes across a payee request, this is usually because they are filling out a form that is requesting the proper information to pay someone. Information such as their name, address, and bank account and routing numbers may be required, depending on the chosen form of payment.

Can you get scammed by a payee?

It is possible to get scammed by a payee. People can request payment for goods and services and may not deliver on their promise. It’s possible for payees to commit a variety of types of fraud.

Can the payee ever be the one who sends the payment?

In most cases, the payee is not the person to send a payment but rather the recipient of funds. The payor (or payer) is the individual who makes a payment. That said, there are instances when a person might make out a check to themself as a way to, say, transfer funds to a different account. In this case, they are both the payee and the payor.

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Photo credit: iStock/AndreyPopov

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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A tax identification number (TIN) is a number the IRS, state governments, employers, and individuals use for tax purposes. It’s a vital series of numerals: Individuals need a TIN to file taxes, follow tax laws, and legally work for a U.S. employer. You’ll likely see a spot for this number to be filled in on certain documents relating to being hired or filing your tax return.

Corporations and non-profits also need tax identification numbers to comply with federal and state tax laws. In rare cases, individuals might have a tax identification number when they can’t obtain a Social Security Number, or if they adopt a child or work as a tax preparer.

Your tax identification number plays a key role in managing your taxes. Read on to learn more, including:

•   What is a tax identification number?

•   What are the different kinds of TIN numbers?

•   How do you get a tax identification number?

•   How do you find your TIN?

What Is a Tax Identification Number?

A tax identification number (TIN) is how the Social Security Administration (SSA) and Internal Revenue Service (IRS) identify individuals and corporations for tax purposes in the United States. The IRS and state governments use these numbers to:

•   Collect taxes

•   Provide tax refunds

•   Create identifying tax documents

Knowing your TIN is an important part of understanding your taxes. Without one, you will like face significant issues in your tax-filing and potentially your financial life in general.

How Does a Tax Identification Number Work?

A TIN provides an identity to every U.S. taxpayer, including individuals and corporations. Individuals submit their TIN to employers to show they are eligible to work. The employer also uses the employee’s TIN for tax purposes.

At tax time, putting your TIN on your documents is essential to filing. This number is how the IRS differentiates between taxpayers. After you file taxes, the IRS provides a refund or notifies you of what you owe. Therefore, a TIN is crucial for ensuring your good standing with the IRS by paying the correct amount of taxes. Because different types of taxes apply to individuals and corporations, a TIN number can help distinguish your and your tax-filing history and status as you pay applicable taxes.

Recommended: How to Pay Less Taxes: 9 Simple Steps

Types of TIN Numbers

If you’re wondering what a TIN in taxes is, it’s not a single entity. There are actually five types of TIN numbers that serve various purposes or apply to different kinds of individuals or entities:

•   Social Security Numbers (SSN). A SSN is used for individuals, sole proprietors, and LLCs made of one person needing an SSN.

   How to get one: U.S. citizens usually receive an SSN when they’re born. If not, you can apply for one using IRS Form SS-5 .

•   Employer Identification Number (EIN). An EIN is for individuals and businesses that have more than one member or employ workers.

   How to get one: Employers can obtain an EIN by applying for one on the IRS’s website or submitting Form SS-4 by mail or fax. Applying physically takes more time, while applying online can get you an EIN almost instantly.

•   Individual taxpayer Identification Number (ITIN). An ITIN is for individuals who pay U.S. taxes but don’t qualify for a Social Security Number. Important note: An ITIN does not make you eligible to work in the U.S., receive Social Security payments, or obtain the Earned Income Tax Credit.

   How to get one: You can apply for an ITIN by submitting Form W-7 to the IRS.

•   Adoption Taxpayer Identification Number (ATIN). An ATIN is for individuals who adopt a minor who is a U.S. citizen or resident but don’t have enough time to obtain an SSN for the minor before filing taxes.

   How to get one: You can apply for an ATIN by submitting Form W-7A to the IRS.

•   Preparer Tax Identification Number (PTIN). A PTIN is for individuals who receive payment to file taxes on behalf of others.

   How to get one: You can apply for a PTIN on the IRS’s website or by submitting Form W-12.

Quick Money Tip: Direct deposit is the fastest way to get an IRS tax refund. More than 9 out of 10 refunds are issued in less than 21 days using this free service, plus you can track the payment and even split the funds into different bank accounts.

How to Find Your Tax Identification Number

You can look at one of your previous tax returns to find your TIN number. If you need your SSN, you can also find it on your Social Security card. In addition, any government documentation related to your tax identification number, such as licensure to open a business or adoption papers, will contain the number as well.

On the other hand, if you can’t access any of the necessary documents and tax time is approaching, call the IRS for guidance at 800-829-1040.

Recommended: What to Do If You Don’t Receive Important Tax Documents

Purpose of a Tax Identification Number

A TIN number allows the IRS and state governments to distinguish you from other taxpayers and businesses. Your identification ensures that you comply with tax regulations and don’t bear the tax burdens of others.

Plus, employers require workers to provide a tax identification number to show they can legally work in the United States. With identification, you can find employment, pay into the Social Security system, and receive Social Security payments when you retire.

Additionally, financial institutions use TIN numbers (usually SSNs) to identify borrowers. Your credit reports link your financial history to your SSN, meaning banks use your number to determine your eligibility for credit cards and loans. As a result, your tax identification number is necessary to open a bank account and access financial services.

The Takeaway

A tax identification number is essential for working or operating a business in the United States. In addition, a tax identification number allows you to pay into Social Security, follow tax regulations, receive a tax refund, and prepare taxes on behalf of others. Furthermore, banks use TIN numbers when deciding to provide services to businesses and individuals. Therefore, it’s necessary information to have year-round, not just during tax season.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Do I need a tax identification number to file taxes?

Yes, you need a tax identification number for all tax documents. As a result, you need one to file taxes, receive tax refunds, and pay owed taxes.

What happens if I don’t have a TIN number?

If you don’t have a TIN number, you can’t show a U.S. employer that you can work legally, pay into Social Security, or register your business. To get a number, apply for a Social Security Card from the IRS with Form SS-5. You can also apply for an Individual Tax Identification number with Form W-7 or an Employer Identification Number with Form SS-4.

Am I allowed to change my TIN number?

You cannot change your TIN number. It is a permanent identifier the IRS holds in its records.

Are there pros and cons to a TIN number?

A TIN number allows you to work legally in the United States, form businesses, hire workers, follow tax laws, receive tax refunds, separate your personal finances from business operations, and pay into Social Security. It also helps you access banking services. The tradeoff is you’ll pay taxes to federal and possibly state and local governments, as all who are eligible must do.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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