Whether you’re paying taxes, conducting financial activities, or running a business that employs people, you need identification numbers to help you. SSN and ITIN are two of the most prominent and commonly used identification numbers. Both of these numbers are unique and serve different purposes. However, for most people, it’s not always easy to tell the difference between the two. Read on to find out the key difference between the two:
The social security number is well-known in the United States and the most common form of identification. It’s used by individuals and the government to track someone’s earnings throughout their life as well as the benefits that they would receive against them. If you’re a permanent resident of the United States or a citizen, you are required by law, to have an SSN number.
The Individual Taxpayer Identification Number is used to file taxes. It is given by the Internal Revenue Service to people who are by law, required to file taxes, but are not eligible for an SSN. These people include undocumented immigrants, non-residents as well as resident aliens. Individuals opting for this must have a filing requirement and should also have filed a valid federal income tax. Moreover, they should not be eligible for the SSN.
Eligibility: One of the biggest differences between ITIN and SSN is the eligibility factor. As mentioned above, to qualify for an SSN, one needs to be a permanent resident or a US citizen. However, they can also be given to H-1B visa holders. On the other hand, ITINs are issued to people who aren’t residents. They can be investors, employees, or dependents on people who have an SSN.
Renewal and Duration: SSN numbers don’t change for an individual. On the other hand, ITIN numbers can expire if you fail to file your income tax returns for three years consecutively. To avoid this, you should file tax returns quickly and timely.If you are confused, please do not hesitate to contact us for assistance.
Documents Requirement: The documents required for the SSN holders are also different. SSN requires a legal resident status in the US. Some of the documents that you can show include a birth certificate, passport, or immigration documents. On the other hand, applicants who are eligible for an ITIN have to show some documents to prove their foreign status. This could be a passport of their home country or any other document to confirm their foreign status in the US.
Use in Employment: Another place where the fundamental difference lies is in the use of employment. When a permanent resident or a US citizen applies for a job, the employer usually asks for an SSN to report taxes and to verify the employee through the Form I-9 process. On the other hand, ITIN isn’t needed for people who are looking for employment although some people who are non-resident aliens can be employed to work in the US.
Privacy: ITINs provide a level of security that the SSNs don’t offer. SSNs are used for financial transactions all over the US. On the flip side, ITINs are used only for tax-related matters. As a result, they offer a level of privacy that is not compatible with a simple SSN. Moreover, you should be careful of using the ITIN too freely as it can lead to financial and legal struggles for you. These financial and legal struggles come with heavy cost and can result in severe repercussions.
Issuing Authority: There are also differences in the issuing authority as well. ITIN and SSN aren’t issued by the same authority. The Social Security Administration is primarily in charge of issuing the SSN while the ITINs are issued by the Internal Revenue Services. That’s because the SSN is primarily responsible for looking into program-related matters while the IRS looks into managing taxes effectively.
Main Purpose: There is a difference in the main purpose of having the two numbers. The main purpose of the SSN is to look into the earnings of an individual and any social security benefits that arise from it. On the other hand, an ITIN is used for tax-related purposes only. It allows people to gather benefits related to tax and looks into the obligations and laws of filing tax returns and claiming benefits.
Name Changes: The SSN is subjected to change, especially when a person’s family structure changes as in divorce or marriage. There is nothing complicated about this as you only have to walk into a SSA and give them proper documentation. On the other hand, ITINs can require issuance of a new number when one changes their name and the process is more complicated and intricate.
Building Credit History: Loans, credit cards, and mortgages can only be given when you have a strong history to back you up. SSN can help you with this and ensure that you have a good rating. However, ITINs do not function the same way as they are not needed for credit histories. They can only be used for tax-related issues.
State Benefits: While most states require an SSN to avail certain benefits; for instance, getting a driver’s license or applying for any kind of assistance program, the same is not true for ITINs. AN ITIN might not be accepted by all states so you have to know the eligibility criteria before applying.
By now, you must have a good understanding of the difference between an SSN and an ITIN number. While the SSN is for people who are already in the US as residents, citizens, or even international students, the eligibility criteria for the ITIN number is different as it’s for people who don’t fall into the category of SSN but need to pay taxes. If you’re still not sure, you can talk to a tax consultant and get better input from them.Please visit the IRS website for further information.