In 1935, the Social Security Act was passed, granting a new benefit to millions of Americans. Since then, the purpose of the Social Security number (SSN) has evolved and is used by many more people for a wide range of purposes, from opening a bank account to reporting wage earnings from jobs.
This unique identifier is assigned to United States citizens at birth but can also be given to non-citizen residents or immigrants later on. How is this identifier used? And can an employer hire an employee without a Social Security number? Here’s what you should know.
An SSN is a nine-digit string of numbers that serves as a unique identifier for U.S. citizens and residents. Originally, it was used solely to track earnings in order to determine the amount of benefit you would receive from the government upon retirement. It’s also used for people who qualify for Social Security disability.
Today, among other purposes, you also need a Social Security number for:
When you start a new job, you’ll need to provide your employer with your SSN so they can report your earnings to the IRS and the state in which you work. For the most part, people use the same SSN throughout their lives. You may be assigned a new one in very unusual circumstances, such as entering the Witness Protection Program and being the victim of identity theft.
While an SSN is used for U.S. citizens and qualifying noncitizen residents, an individual taxpayer identification number (ITIN) allows foreign residents, such as undocumented aliens or dependents or spouses of U.S. citizens or resident aliens, to conduct different types of business in the U.S. It can also be used for some other instances, such as foreign companies that conduct business in the U.S. The ITIN enables these individuals and entities to comply with tax laws without having an SSN.
If the IRS issues you an ITIN, it doesn’t serve as a replacement for an SSN. For example, it does not entitle you to Social Security benefits, nor does it mean you’re eligible to work in the U.S. It also doesn’t enable you to qualify a dependent for earned income tax credit purposes.
Individuals who have recently arrived in the U.S. may work without an SSN on a temporary basis, but they must obtain one within 90 days of starting their jobs and show their employers proof that they have done so. Therefore, you should apply for an SSN as soon as possible. In lieu of it, you can provide your employer with other documentation verifying your identity and authorization to work in the U.S. prior to receiving your SSN. You should also show receipt of having submitted your application.
Every individual who must file an income tax return must provide their employer with their SSN. While an employer may issue a 1099 form to the freelancer or contractor without it, incomplete forms may be subject to a penalty issued by the IRS unless you can prove reasonable cause, including evidence that you asked the individual to provide a W9 form with all their information in writing.
An employer may ask to see an employee’s Social Security card, although it can be difficult to verify its validity, given the many different versions that have existed over the years. While the IRS recommends asking employees to furnish their cards, it’s not required. To verify the SSN, you can instead use the free Social Security Number Verification Service (SSNVS) offered by the Social Security Administration (SSA). This can help prevent tax reporting errors later on.
You’re not required to have an SSN unless you are participating in something that requires one, such as applying for benefits or working in the U.S. Activities that don’t require one include:
If your employee doesn’t have an SSN when you hire them, you should let them know that they must apply for one and are required to have one within 90 days of starting their jobs. They may have already applied for one. In any case, you should take down information concerning their identity, including their full name, date of birth, full address, place of birth, parents full names (including mother’s maiden name), gender and the date for which they applied for an SSN (as soon as they do so), according to the SSA. If their SSN has not arrived by the time you must file their W-2, enter zeros in the SSN field and subsequently file a W-2c as soon as they receive it.
In order to apply for a Social Security card, you must complete Form SS-5. This is available via the SSA website.
This form may be used by both residents and nonresident aliens in order to receive a new, first-time SSN, receive a replacement Social Security Card or correct their SSN record. You must furnish original documents showing evidence of your identity, age and immigration status.
If you have applied for an SSN via Form SS-5 but have not yet received it, you may request a letter from the SSA verifying that you have applied to show your employer. Usually, the SSA will process your application within two weeks of receiving your application, although you should apply for your SSN as soon as possible in order to have it within 90 days of starting your job. If you apply for an SSN and are denied, you may not continue to work for your employer.
If your employee doesn’t have an SSN, let them know that they are required to apply for one and direct them to Form SS-5, as well as get a letter indicating that they have applied. Once they receive the number, verify their identity and information and have them complete the I-9 form. Keep in mind that an ITIN may not be used in place of an SSN.