As a newcomer to the U.S. Tax System, understanding which number to use for taxes can be confusing. Whether you are creating your first return or have lost the records of a previous return, you must understand when to use a Social Security Number or an Individual Taxpayer Identification Number. In this easy-to-follow guide, let’s break it down.
Why Tax Identification Numbers Matter
When filing taxes, the government needs to identify you. Tax identification numbers serve this purpose. They are used to track your income for your taxes and verify payments. If your number is correct, your tax return will flow smoothly.
What Is a Social Security Number (SSN)?
Social Security Number is issued to the people by the Social Security Administration (SSA). For the most part, it is utilized by U.S. people as lawful everlasting resident foreigners. This nine-digit number is absolutely critical to employment, benefits, and tax filing.
If you work here in the U.S., you need an SSN to report your earnings and to file your taxes. The employers who work for you also use this number to report your wages to the IRS.
Individual Taxpayer Identification Number (ITIN)?
SSNs are for people, and ITINs are for people who need to file taxes but aren’t eligible for an SSN. The IRS issued ITINs to nonresident and resident aliens, dependents, and spouses of aliens who cannot obtain an SSN.
Luckily, the distinction between ITIN vs SSN is essential to understand. Although SSN, as a rule, is mainly used for U.S. citizens or people who have been allowed to work in the U.S., ITIN was created only to facilitate paying taxes. It does not authorize work or eligibility for Social Security benefits. Despite that, not having an ITIN means that non-citizens cannot obey U.S. tax laws.
Do I Need an SSN or ITIN?
The answer to this depends on your legal status in the U.S. and your reason for filing taxes:
- SSN: If you are a U.S. citizen or permanent resident, you will most certainly be required to have an SSN in order to file your taxes.
- ITIN: If you need to file a tax return but aren’t eligible for an SSN, you must use an ITIN instead.
How to Apply for an SSN
It’s easier than you might expect for eligible individuals to apply for one. If you are a U.S. citizen, you will be able to apply for an SSN through the Social Security Administration. There are three ways to do this: online, by mail, or in person at your local SSA office.
What if you are not a citizen and your SSN is available? If that happens, you can do that during the immigration process or go to an SSA office with the appropriate immigration documents.
Applying for an ITIN
And, of course, an ITIN is different for those who can’t get an SSN. In addition, you must submit IRS Form W-7 and your federal tax return. If your application is approved, the IRS will issue you an ITIN, which you can use to file your future tax returns.
When to Use Your SSN or ITIN for Taxes
When filing your tax return, use the number assigned to you:
- If you have an SSN, you’ll enter it on your tax forms.
- If you have an ITIN, this number will be used instead of the SSN on your tax documents.
Using the correct number is essential so your tax return can be processed without delays.
Can You Have Both an ITIN and an SSN?
No, you cannot have both. When you are eligible for an SSN, your ITIN becomes invalid. When you have an ITIN, you get an SSN; you need to tell the IRS because they need to fix the record to reflect what you did.
Renewing Your ITIN
After three years of not using an ITIN in a federal tax return, it needs to be validated. If your ITIN is expired or will expire soon, you need to renew it before filing your taxes. You can use the same Form W-7 for renewals and attach your identification documents.
ITIN vs SSN: What’s the Difference?
It is essential to know the difference between ITIN and SSN. The SSN is for U.S. citizens and qualifying residents allowed to work in the U.S. The ITIN is for people who need to file taxes but need an SSN. This makes all the difference when filing taxes and reporting income.
A correct identification number makes your tax return process quick. Whether you have an SSN or an ITIN, you have to know which number you’ll be using first.
This straightforward guide provides critical information for deciding between an ITIN and SSN for taxes. Keep it handy, and always use the correct identification number when filing your return.
By Chris Bates
