Difference Between ITIN and SSN

Introduction

The Social Security Number (SSN) and the Individual Taxpayer Identification Number (ITIN) share some similarities in their functions. Consequently, individuals who are not U.S. residents often find themselves perplexed by these two identifiers. It is important to know that having both of them at the same time is not allowed. Moreover, the process of obtaining each number differs, and they are designated for distinct groups of people. In this comprehensive exploration, we will delve into the fundamental distinctions between ITIN and SSN.

What is ITIN?

The Internal Revenue Service (IRS) administers the Individual Taxpayer Identification Number (ITIN) to facilitate tax-related procedures. ITINs are allocated to individuals who, due to specific circumstances, are not eligible for a Social Security Number (SSN) but are obligated to fulfill their tax obligations.

Consequently, ITINs are exclusively granted to nonresident aliens and are not extended to citizens unless they are ineligible for an SSN. Through the provision of an ITIN, the IRS can effectively recognize individuals as taxpayers, thereby enabling them to fulfill their tax obligations accurately. Structurally, an ITIN comprises a distinctive nine-digit sequence following the format 9XX-7X-XXXX. This format dictates that the initial digit is always '9', while the fourth digit is '7'.

Benefits of an ITIN

In contrast to the Social Security Number (SSN), possessing an Individual Taxpayer Identification Number (ITIN) does not confer authorization to reside or seek employment within the United States. Rather, its intended purpose primarily revolves around taxation and related functions. An ITIN serves as a crucial tool for fulfilling tax obligations within the U.S. without the necessity of an SSN, ensuring compliance with prevailing tax laws. Although individuals holding an ITIN are ineligible for claiming social security benefits initially, they retain the opportunity to do so subsequently upon becoming eligible for an SSN.

Notably, all tax contributions made with an ITIN are credited towards Social Security earnings, underscoring its significance even in cases of future eligibility for SSN benefits. Additionally, certain states recognize ITINs for various purposes, such as opening interest-accruing bank accounts and providing identification for driver's licenses. Therefore, for noncitizens who are ineligible for an SSN, obtaining an ITIN emerges as a prudent course of action to navigate taxation requirements and avail of certain privileges within the U.S.

How to Apply for an ITIN as a Noncitizen

If you're looking to obtain your Taxpayer Identification Number (ITIN), the process involves several steps

1. Complete Form W-7, Application for ITIN Number, available for download from the IRS website. Ensure that you select the appropriate option for the "Reason for Applying ITIN" question, whether you're applying as a spouse, dependent, or other category.
2. Depending on your filing status, gather and submit federal income tax documents such as Form 1040, Form 1040A, or Form 1040EZ.
3. To support your application, you should supplement it with additional documents, including your passport, U.S. or other government-issued ID cards, and proof of U.S. residency.
4. Send all the required documents to the IRS office either by mail or by visiting the office in person.
5. It's advisable to provide original documents whenever possible. However, if original copies are unavailable, certified and notarized copies may be accepted.
6. Once your application is processed, you will receive your ITIN by mail. Typically, it takes about six weeks from the date of application to receive your ITIN.

What is SSN?

The Social Security Number (SSN), administered by the Social Security Administration (SSA), functions as a fundamental personal identifier for the majority of American citizens. It is allocated to individuals who were either born within the territorial boundaries of the United States or possess authorization to engage in employment within the country.

Structurally, an SSN comprises nine digits arranged in the format XXX-XX-XXXX, wherein the initial three digits constitute the "area number," followed by the subsequent two digits designated as the "group number." Finally, the remaining four digits are collectively referred to as the "serial number." Originally established to facilitate tracking individuals across a spectrum of services offered by the U.S. government and its affiliates, the SSN has evolved into a de facto national identification number, particularly for tax-related and diverse administrative purposes in contemporary times.

Benefits of an SSN

The Social Security Number (SSN) stands as one of the paramount identification credentials provided to individuals within the United States, wielding substantial significance across a multitude of administrative and regulatory spheres. Its indispensability is underscored by its requisite use in pivotal tasks such as initiating bank account procedures, securing a driver's license, and navigating the visa application process, where it serves as a primary means of identification and facilitates streamlined processing. For non-citizens, possessing an SSN facilitates seamless integration into the U.S. workforce and ensures smooth tax filing procedures. Additionally, SSN holders enjoy the privilege of accessing various tax credits, including the child care credit, which remains unavailable to individuals utilizing an Individual Taxpayer Identification Number (ITIN). Therefore, prioritizing the acquisition of an SSN over an ITIN is highly advisable, given its broader scope of benefits and functionalities.

How to Apply for an SSN as a Noncitizen?

For noncitizens planning to reside or currently living in the United States, obtaining a Social Security Number (SSN) involves a series of steps aimed at ensuring compliance with the requirements set by the Social Security Administration (SSA). The process entails the following steps.

• Form SS-5 Completion: The initial step involves filling out Form SS-5, formally known as the Application for a Social Security Card. This form serves as the primary document initiating the SSN application process.
• Documentation Submission: Alongside Form SS-5, applicants are required to provide a minimum of two documents to verify their identity and immigration status. Acceptable documents typically include a work permit or visa demonstrating legal authorization to reside and work in the U.S.
• Additional Documentation for Specific Categories: Depending on the individual's status, additional documentation may be necessary. For instance, students or J-visa holders may need to submit the DS-2019 Certificate of Eligibility for Exchange Visitor Status and I-20 certificates.
• Submission of Supplementary Documents: Applicants may be asked to furnish any additional documents requested by the SSA, such as an Employment Authorization Document (EAD) or Form I-94, the Arrival-Departure Record issued by U.S. Customs and Border Protection (CBP).
• Visit the Local SSA Office: Once all required documents are assembled, applicants must visit their local SSA office to submit their application and complete any necessary formalities. It's essential to ensure that all original documents are provided for verification purposes.
• Completion of Formalities: During the visit to the SSA office, applicants will need to complete all formalities as instructed by the SSA representative. It may include providing biographical information, undergoing an interview, or signing relevant forms.
• Issuance and Mailing of SSN: After the documents are submitted and verified, the SSA processes the SSN application. Once approved, the SSN card is issued and mailed to the applicant's provided mailing address.

Difference Between ITIN and SSN

Here's a comparison between an Individual Taxpayer Identification Number (ITIN) and a Social Security Number (SSN) presented in a tabular form.

Who is Eligible For an SSN?

Social Security Numbers (SSNs) are primarily issued to individuals who are eligible to work in the United States. Eligibility criteria for obtaining an SSN include.

1. U.S. Citizens: Any U.S. citizen, whether born in the United States or abroad, is eligible to apply for and receive an SSN.
2. Permanent Residents (Green Card Holders): Individuals who have been granted lawful permanent residence in the United States, commonly known as green card holders, are eligible for an SSN.
3. Temporary Residents with Work Authorization: Certain noncitizens who are authorized to work in the United States temporarily may also be eligible for an SSN. This includes individuals with employment-based visas (e.g., H-1B visa holders) and those with certain temporary work permits.
4. Foreign Nationals with Employment Authorization: Noncitizens who have obtained employment authorization documents (EADs) from U.S. Citizenship and Immigration Services (USCIS) are eligible to apply for an SSN.
5. Dependents of U.S. Citizens or Permanent Residents: Dependents, such as spouses and children, of U.S. citizens or permanent residents who are authorized to work in the United States may also be eligible for an SSN.
6. Certain Noncitizens for Federal Benefits and Services: Some noncitizens who are not authorized to work in the United States but need an SSN for federal benefits or services may be eligible to apply. This includes individuals applying for federally funded programs like Medicaid or Supplemental Security Income (SSI).

Who Needs an ITIN?

Individuals who are not eligible for a Social Security Number (SSN) but have tax reporting requirements in the United States may need to obtain an Individual Taxpayer Identification Number (ITIN). Here are some common scenarios where individuals may need an ITIN.

1. Nonresident Aliens: Nonresident aliens who are required to file a U.S. tax return or claim a tax benefit need an ITIN. This includes individuals who earn income in the United States but are not eligible for an SSN.
2. Spouses and Dependents of U.S. Citizens or Residents: Spouses and dependents of U.S. citizens or residents who are not eligible for an SSN may need an ITIN to file a joint tax return or claim dependents for tax purposes.
3. Foreign Investors or Business Owners: Foreign investors or business owners who have income from U.S. sources, such as rental income or business profits, may need an ITIN to fulfill their tax obligations.
4. Nonresident Students or Scholars: Nonresident students or scholars who receive taxable scholarships, fellowship grants, or other types of income in the United States may need an ITIN to report this income and comply with tax laws.
5. Foreign Nationals with U.S. Tax Obligations: Foreign nationals who have U.S. tax obligations, such as income from U.S. investments or business activities, may need an ITIN to meet their tax reporting requirements.
6. Spouses and Dependents of Visa Holders: Spouses and dependents of visa holders who are not eligible for an SSN but have tax reporting obligations in the United States may need an ITIN.

Conclusion

In summary, the distinction between an Individual Taxpayer Identification Number (ITIN) and a Social Security Number (SSN) lies in their respective purposes, eligibility criteria, and usage contexts. The ITIN, managed by the Internal Revenue Service (IRS), caters to individuals ineligible for an SSN but obligated to fulfill U.S. tax requirements. Conversely, the SSN, administered by the Social Security Administration (SSA), serves as a primary identifier for U.S. citizens, permanent residents, and certain temporary residents authorized to work in the country.

While an ITIN enables tax compliance and certain state-level benefits, an SSN offers broader access to employment opportunities, financial services, and government benefits. Despite their differences, both identifiers play pivotal roles in facilitating various administrative and regulatory processes within the United States. Thus, understanding their disparities and functionalities is crucial for individuals navigating the U.S. tax system and seeking to access essential services and benefits.